Josh Cantwell: So, hey, guys. Hey, welcome back to Accelerated Investor. Hey, it’s Josh, and today, like I’ve just been reflecting a lot over the holidays, over Christmas, New Year’s. When you test positive for COVID and you’re quarantining, you’ve got quite a bit of time to actually reflect and think. And I was thinking about, what are all the things we’ve accomplished in 2021? We’ve accomplished a tremendous amount and we’ve bought almost 1,400 units of apartments. You add it all up, it’s over $120 million just in purchase price, about $180 million in stabilized value. I could go on and on about all the things we’ve accomplished, but it’s not really what I want to talk about today.

What I really want to talk about was overcoming my fear of getting into commercial real estate, overcoming my fear of setting big goals, overcoming my fear of accomplishment and making the move from residential into commercial real estate a couple of years ago and how I was able to go forward even in spite of fear. So, I think the first thing is as you set your goals for 2022 and beyond, every goal you set, if it’s important, is going to have a sense of uncertainty and a sense of fear and a sense of failure that comes with it. I feel fear, I’m afraid every time I buy a property, every time I do a new joint venture, every time we evaluate a new deal and make an offer. There’s part of me, frankly, that says in my head like, God, I hope this doesn’t even go through. It’s a very small percentage, but it’s there, it’s there.

And so, I feel fear, I feel it very strongly. It’s not like it’s not there. It’s not like fear just doesn’t exist. It’s not like I’m superhuman, Superman, and I just have no fear. I feel anxiety, I feel fear every time we make an offer on a property, every time we go under contract, every time I put up $200,000 or $400,000 of earnest money, especially hard earnest money, like we just did on this Brookside Shady deal that we just closed on a $14.65 million purchase, 220 units. We put up $250,000 of nonrefundable earnest money. We actually had a clause in the contract that if we close before the end of the year that we would actually get a $200,000 reduction in the purchase price. So, the original agreed-upon price was $14.85 million, and we agreed that if we could close by the end of the year that the price would get reduced to $14.65 million.

And so, you have hard earnest money up, you’re buying a big asset that’s not cash flowing because the rents are so low, and you’ve got an opportunity to save $200,000 if you close by the end of the year. So, when we wrote the offer, I wasn’t scared. I don’t know if scared is the word I would use, but I have this sense of fear. And when you think about that, the question becomes it’s not like you’re living without fear, but it’s the reflection of, is something more important to you, something more important to me that forces me to overcome that fear? Is there something that’s more important? Is there something that means more to me that forces me to overcome the fear? And so, some of the things that motivate me is that my father is gone, my mom is alone.

And so, one of the fears I have is that my mom is not going to have enough. And so, that motivates me and that pushes me beyond my fear of, well, if you don’t buy this property or you don’t raise enough money, like it’s more important to me to provide and have the resources to give my mom than it is for me to not buy properties. Like so the fear of not buying a property is there, but the importance of taking care of my mother is more important than the fear I have of failing at commercial real estate. Are you following me? Okay, the fear I have of my kids not having enough, not enough money for high school, private high school, private college, is more important. That importance of my kids is more important than the fear I have of buying a $15 million piece of real estate. So, as you think about this and you think about your desire to do more and have more and buy more properties or start a new business to raise more capital, to begin a new venture, whatever that is, you’re probably scared. You probably have some fear built into your body.

So, the question really becomes is what’s more important to you, and focusing on the importance of that and making that more than the fear. Okay, so I listen to a video recently from Elon Musk that talked about when he started Tesla, that starting an electric car company, he looked at that and said, “Well. It’s important to me to change the face of the Earth, to not be reliant on carbons, not be reliant on gas and oil that I’m going to start an electric car company, that’s more important to me than the fear of failure.” And he resolved himself to say like, “Well, if I start this electric car company, there’s only a 10% chance that this will actually succeed.” So, that 90%, he told himself in his own money, 90% chance and 90% opportunity to fail. But the importance of changing the globe, changing everything about the way we live and drive, and global warming and all these types of things were more important to him than his fear, which he said had a 90% chance of failure. So, that 10% opportunity to change the globe and change the world through electric cars and electric vehicles was bigger and more important to him than the 90% chance of failure.

You see, if I was real honest with myself, my drive, a lot of this in a very weird way, comes back to my desire to feel important. When I was in grade school and I started noticing girls, and I was in high school and college, I wasn’t the best looking. I wasn’t buff like my friend Mike. I wasn’t funny like my friend Josh or my buddy Sean. I wasn’t really charismatic like my buddy Scott. I was semi-popular, I was a pretty good athlete, but I was never the best looking, the most funny, the best athlete, I was never any of those things. And so, I always dated beautiful girls, but they were always girls that I thought I wanted to go after, but I was afraid because I had already concocted in my head that I wasn’t good enough, I just wasn’t.

And so, today, now at 45 years old, though, I’m happily married, a beautiful, gorgeous wife, and three amazing, beautiful kids, I still have this innate desire to feel important. I don’t know, maybe that’s not right, maybe that’s not important to you, but to me, it is, which goes all the way back to seventh grade. Okay, so I have this desire, this desire to feel important, and for me, to feel important, one of the things that I knew that I had but very few other people had is I had the great fortune of being raised in an entrepreneurial family and I had a dad who was really comfortable with risk and I became very comfortable with risk.

And so, the one thing I had that my buddies that were funny didn’t have, my buddies that were really good looking didn’t have, my buddies that worked out every day and he’s gorgeous, buff bodies, and my buddies that were the best athletes, like all of those are personality traits or physical traits, cosmetic traits, to me, I had what I considered to be maybe the greatest trait of them all, which was a capacity to accept risks and to push the boundary of risks. And so, when I look at my possibility of failure, similar to the way Elon Musk looked at the possible failure of SpaceX, he literally said SpaceX had like a 1% chance of actually making it. When he put billions of dollars into it after he sold off PayPal and made billions of dollars and put all kinds of money into SpaceX, he said there was maybe a 1% or a 2% chance that the company would actually make it. But he said, “Look, maybe there’s an opportunity where we advanced the technology, our company goes bankrupt, but somebody else picks up the technology. They take it on step number two or step number three, and then it goes and it succeeds from there.” So, he was comfortable with the possibility of complete bankruptcy and complete failure because he wanted to advance that technology and possibly go to Mars. So, that was more important to him than the fear of failure.

So, when I looked at, okay, how do I take a look at my risk of investing in commercial real estate? You might be saying to yourself, “Well, how do I compartmentalize this and put this into context of how can I be successful, although I’m still scared? How can I be successful, although I have fear? The question is, is there’s this thing hanging in the balance like we’ve all seen those balancing scales where one is more important than the other? Okay, well, the question is if fear is on one side of the balancing scale and your desire, for whatever it is, is bigger, it’s more meaningful than the fear, then you will be willing to accept the risks and go forward anyway in spite of the fear.

So, for me, the desire to feel important, for whatever reason, is so meaningful to me. Other people’s opinions, they’re meaningful to me. But also, real estate, being successful with real estate makes me happy. Cash flow makes me happy. I can’t build technology. I owned a technology company called Realeflow with my buddy, Greg Clement, who still owns that company. That company might be worth $50 million or $100 million. It’s worth a lot of money. I sold my shares of it back in 2010, 2011 because I wasn’t into technology. But real estate is like the average man’s way of getting rich. And still, in the last year, we’ve bought $120 million worth of real estate. And what I mean when I say $120 million, like a big part of that portfolio, I own about 40% to 50% of it. Our limited partners own some, and I have some junior partners, my partners, Glenn and Tyler, that own some, but I own a huge chunk of that, 40% to 50% of the equity.

And so, when I looked at real estate and I thought about the risks of it and I thought about, well, how am I going to compartmentalize the risks of real estate? Because my desire to have happiness, my desire for cash flow, my desire to feel important is more important to me than the fear of failure. Like Elon Musk, it was more important for him to get to Mars, it was more important for him to create an electric car than the fear of failure, it’s fear. So, then I thought, well, how am I going to deal with this? How can I reduce the risks? And I thought, well, if I did this on my own, I might have a 50% shot of succeeding, like Elon Musk had a 10% shot with Tesla or a 1% shot with SpaceX. I thought, look, I could still be successful at real estate. There’s a lot of people who are successful with real estate who are not nearly as motivated or not nearly as gifted or not nearly as talented as I am. I know a lot. I’ve been around for a while. I can be successful at commercial real estate, so I give myself a 50/50 shot at success.

And then I said, “Well, how can it increase the odds? How can it increase the odds in my favor? So, another way to overcome the fear is to get comfortable with the downside. Get comfortable with the downside. What’s the downside? Well, the downside is, is that of a 50% shot of success, a 50% shot of going bankrupt. And I thought, look, if I go bankrupt, I already know how to raise money, I’ve learned that skill, I could do it again, right? I’ve learned how to assess properties and underwrite properties, I could do that again. I’ve learned how to flip properties and do rehabs and wholesale properties, I could always do that again, even if I go bankrupt. So, for me, putting up $250,000 of hard earnest money and having the opportunity to buy the property with a $200,000 discount if I close by the end of the year and close within 40 days, we got it under contract in the middle of November, officially under contract and closed December 30^th, 40-day closing, with dealing with Thanksgiving, with dealing with Christmas, with dealing with New Year’s, dealing with people off, dealing with people with COVID, dealing with people taking vacation time. I’m comfortable with that risk because I said, “Look, even if I don’t succeed, what’s the downside?”

Well, if the price goes up to $200,000, I’m still going to close it in January. But buying this property that doesn’t cash flow, that’s a whole ‘nother risk. So, how did I get comfortable with that risk? Well, basically, what I told myself is that in order for me to increase the risk of a 50/50 shot of success, I’ve got to surround myself with great people who know how to help me execute this turnaround plan on this $14.65-million-dollar piece of real estate. And so, I said, “Alright, I’m going to surround myself with the absolute best property manager.” So, I interviewed property managers left and right. We interviewed about five or six, we axed four or five of them. We finalized our final agreement to work with RHM Property Management. CEO is a guy named John Joyce. And they manage about 13,000 units in the Midwest. They’re based in Cleveland, Ohio. We had lunch with them, we met with them, had several Zoom meetings, got comfortable with them. I said, okay, being around this guy, being around this company increases my odds of success.

Secondly, we hired a VP of construction. His name is Dave Lytle, who works for us, actually Glenn’s cousin. And Dave’s got 30 or 35 years of commercial construction experience. So, I thought I could increase my odds of success by surrounding myself with great people and leveraging what they know about property management and construction so that we could turn units, raise the rents, and get this thing cash flow positive as fast as possible. And so, my solution to the fear of failure that I have still every day when I buy properties and the fear of failure that I had when I bought this property just a few days ago, right before New Year’s, I thought, look, I’ll take my own risk doing this on my own or I could increase my chances of success by bettering my network, surround myself with Glenn Lytle, our Chief Strategy Officer who oversees our CapEx team, surrounding myself with Tyler Brummett who’s our COO and asset manager, and then putting underneath them, Dave, our VP of construction under Glenn and RHM, our property manager, underneath Tyler, all of this is going to increase our chance of success.

And so, my desire to feel important at the end of the day is more important than my fear of being poor, my fear of not caring for my mother, my fear of not caring for my wife and kids, my fear of not being accepted like I was in seventh and eighth grade. So, my desire to feel important, my desire for financial freedom, my desire for cash flow, my desire for happiness far exceeds my fear of buying the wrong property, doing the wrong deal, having the wrong partner. All of that in my mind will work itself out because my fear is not as important as my happiness, my fear is not as important as caring for my mother, my fear is not as important as caring for my wife and kids, my fear is not as important as the cash flow, the financial independence that I can have from owning cash-flowing multifamily commercial real estate.