445: Words of Encouragement in Troubling Times

SHOW NOTES FOR EPISODE 445: WORDS OF ENCOURAGEMENT IN TROUBLING TIMES

It’s not a matter of if but when the next recession will hit.  Some will survive.  Others will thrive.  In today’s podcast, entrepreneur, real estate investor, multiple business owner, author, mentor, and community philanthropist Rod Khleif shares how he lost $50 million in the Great Recession and rebounded and how he is preparing for the next big one.

What You Will Learn

• How not to lose money during a recession
• Why your mindset is critical to your success in the next recession
• Should you be fearful of what is ahead?
• The reasons why Rod lost $50 million in the Great Recession
• Why an interest in real estate investing is never enough to succeed
• Know how to play to your strengths
• How the people you hang out directly with impact your ability to succeed
• Why tenacity, gratitude and contribution are critical to your success

About Our Guest

Rod Khleif

Rod Khleif first appeared on the Old Dawg’s REI Network October 24, 2016  (043: Single Family vs. Multifamily Residential Investing). Check it out!

More about Rod

• Immigrated to the U.S. at 6 years of age from Holland in 1966
• Ended up in Denver, Colorado
• Did have much money
• Wore clothes from Good Will and Salvation Army through high school
• Lied about his age at 14 to get a job at Burger King just so he could earn the money to buy his own clothes
• He knew he wanted more out of life
• His mom had a good work ethic
• She babysat kids
• When Rod was 14, his mom bought the house across the street of where they lived with her babysitting money for $30,000
• By the time Rod was 17, his mom said the house went up in value by $20,000
• Rod couldn’t understand why she didn’t take advantage of the equity
• Rod was so amazed at what had happened to the value of the house and real estate in general that he decided to not go to college but to go straight into real estate

Fast Forward to Today

• He has since owned 2,000 houses and some apartment complexes
• In 2006, Rod’s net worth increased $17 million
• In 2008, he lost $50 million!
• Rod believes that the horrible recession he experienced back then is happening today, as soon as the stimulus stops
• How to overcome fear and limiting beliefs

Should You be Fearful?

• If you’re focused on CNN, ABC, NBC and Fox, you will be fearful
• The news feels it’s not their job to inform you, it’s there to startle and scare you!
• When Rod and Bill talked in 2016, Rod was just getting going again.
  • He just started his podcast
  • Today:
    • His podcast has exceeded 8 million downloads)
    • He has 400-500 coaching students
    • He does live events around the country – which have now gone virtual via livestream
    • Bought a thousand doors with his students
    • Actively closing on another 500 doors currently
    • He’s back financially
• Even though things are going well for him now, it’s kinda deja vu of what he experienced in 2008
• He feels we’re headed for some pain
• You can’t have 45-46 million people on unemployment and not have a lot of businesses go under and not have a lot of real estate impacted
• There was research study recently conducted by Costar, who owns Loopnet.com, that there are 13,000 commercial CMBS loans that will go into default, that will not be able to recover – that’s just the commercial CMBS side of things
• He personally saw a lot of “skinny deals” being done recently in the multifamily sphere – people “overpaying” for deals – that will result in upsets

Getting the Proper Mindset

• Should you be afraid?
  • No!
  • Why?  With crisis comes opportunity!
  • But the key is to DIRECT YOUR FOCUS!
    • What you focus on will grow
    • If you focus on the news and the negative, you’ll become more and more fearful and stressed
    • Focus on what you want and “re-associate” with what you want
    • In his live events, he takes his students through a “goal setting” process first thing
    • Because he says, “How can you get what you want if you don’t know what you want?”
    • See Rod’s Facebook account for January Goal Setting, also a livestreaming event in October
  • You need to set your mind on THRIVING through this period – not SURVIVING
• You need to guard the door to your mind
  • Don’t watch the news and if you do, don’t let it discourage you
  • Whatever you focus on will only get bigger and drag you down in the process
• Get focused!
• If you’re in real estate investing, now is the time to learn the business!
  • Build the relationships
  • Find people with money to align with and do deals with
  • Pick a market to target
  • If you do all this stuff, there will be exponential opportunities ahead
• A crash is inevitable!
  • It may not be this year, next or 2022 but the crash is coming but so are the opportunities
  • At the end of 2008, Rod said he was hiding under a rock because he thought he was set for life!
    • If he had jumped back into the market instead of hiding, he would probably be on his yacht right now and not on this podcast
    • The most successful investors he knows made their wealth in 2009, 2010 and 2011
• Manage your focus
  • Step-up!
• Innovate/Re-Invent Yourself
  • You need to think and prepare quickly at this time
  • His live events were his biggest money generator but he had to stop, re-engineer and move forward with live-streaming events instead
  • Threw up a website in 3 days
  • If you don’t love real estate, learn how to get excited and do something else
    • Associate pleasure with it – associate it with searching for buried treasure
    • Partner with or delegate to people who can do the “not so fun” stuff
    • But if you can’t get to a point where you love, go do something else – life to too short
    • The only way you are going to influence people is through your passion
      • The only way you are going to have passion is if you’re inspired
      • The only way you are going to be inspired is if you’re doing what you love

What Crushed Him in 2008-2009

• The Great Recession
• Rod had 800 houses and multiple apartment complexes
• It was the houses that pulled him down
  • And here’s why:
    • He was at 30% loan to value – he only owed 30 cents on the dollar and he still crashed and burned
    • His houses were 2 hours north and 2 hours south of him, along the Gulf Coast of Florida, and everywhere in-between
    • It logistically was a mistake
    • Because Florida doesn’t have personal income tax, the State makes up the difference by having higher property taxes
    • Many of his properties were in wind and flood zones so he had to pay for more insurance to cover for those things – thus impacting cash flow
    • If he sent someone to one of his apartment complexes, everything is the same, HVAC , plumbing, locks, appliances, etc. are the same so they could stockpile parts
      • If he sent a maintenance man there, they could get in and out in an hour
      • Conversely, if he had to sent someone to one of his houses an hour and a half away, they’d have to:
        • Travel there and back, plus the time to do the work
        • They’d have to identify the problem
        • Then, they’d have to find a Home Depot or a Lowes, which could be an hour round trip
        • Then, after they get into the job, they’d realize they need something else – another hour round trip
        • What happened?  What took an hour at his apartment complex, took all day at one of his houses
        • You multiply that by 800 and the fact that they were C class houses (which require more maintenance) – it greatly hurt his ability to cash flow
        • Plus the fact that most of his tenants were in retail or construction – the hardest hit industries during the recession
      • That’s why his multifamily properties did so well during the crash
      • Unfortunately, he cross-collateralized the houses with the apartments to get 50 basis points on interest rates and lost the apartments too
      • The apartments lost income by 11% (the national average at the time) but they still would have survived
      • If you’re going to invest in anything during a recession, multifamily is the only way to go
      • Multifamily has proven historically resilient
      • Multifamily, if purchased right, is a very safe investment

Creating the Desire to Succeed

• Especially during these challenging times, you need to create a burning desire to succeed
• Napoleon Hill, the author of Think and Grow Rich, says you have to want it
• That’s why the goal setting is so important

What You Should be Looking At Now to Thrive Through This Process

• You need positive expectation and optimism
• You need to focus on what you want
• People connect, unfortunately, through negativity, pain and struggle
• You’ve got to expect to win!

Fear and Limiting Beliefs

• When Rod immigrated to the US, he didn’t speak English
• His mom through him into school
• Rod discovered what a bullies were
• Because his mom was a proud Dutch woman, she would send Rod to school in lederhosen shorts and wooden shoes
• He got his butt constantly beat
• He started to develop “limiting beliefs”
  • I’m not good enough
  • I’m not young enough
  • I’m not old enough
  • I’m not smart enough
  • I don’t have enough money
• These things will hold you back for the rest of your life if you don’t deal with them
• Rod used to be incredibly fearful of being humiliated or rejected
  • He wouldn’t raise his hand in class
  • Didn’t want to draw attention to himself
  • Today, Rod speaks before thousands of people
  • He’s not afraid anymore because he now consciously exams the core of why he was afraid
  • He looks at his fear rationally and sees that it has no basis in fact

You Have to Make the Decision to Succeed and Overcome

• The the Latin root word of the word decision means to “cut off” – it’s done!
• When you make a decision, you should be 100% committed
• When you’re committed, you’re like a train on a track
• There’s a difference between being INTERESTED and being COMMITTED
  • If you’re interested in something, you can be knocked off track
  • If you’re committed, you won’t be knocked off track
  • MOTIVATION is what gets you started but it’s being committed that brings you home
• You’ve got to make that decision to take that first step
• With real estate investing, making that first deal is the hardest step
• But once you’ve done the first deal, it’s easier than you thought and you can then plow forward without fear
• If you don’t take action, you will usually have regrets

Play to Your Strengths

• He recently interviewed a group of “20 somethings” who, combined, had $70 million in assets
• The ones in partnerships had one person that was analytical and the other was out-going
• They’re super successful because they play to each other’s strengths
• If you play to your strengths, you automatically do well because you love what you’re doing because you’re good at it
• Don’t try to maximize to your weaknesses
• That’s what’s great with multifamily investing – you can align, partner or hire to your weaknesses
• Rod’s partner is a CPA that loves spreadsheets
• Rod doesn’t enjoy math but he loves people and being out in front of and encouraging others
• The only way you can influence people is to be passionate
• And the only way to be passionate is if you love what you are doing
• And you’re only going to love it if you are doing what you’re strong at

The Importance of Your Peer Groups

• Who you hang out with is who you become
• You’re the sum total of the 5 people you hang out with
  • That’s not just financially
  • It’s personally
  • You’re going to be as happy, healthy and successful as they are
  • So choose your friends carefully
• Be careful who you allow to influence you
  • Sometimes, they will hold you back because of their fears and limiting beliefs
    • Maybe they’re afraid of feeling like a failure because you’re a success
    • Or maybe they’re afraid to lose you because they’re not interested in what interests you
  • Especially be careful if they are family
    • Love your family but chose your peers
• If you want to know how you’re going to end up, just look at who you hang out with
• You want to be around people who think what you think is difficult is easy
• That’s why he started a Multifamily Boardroom Mastermind
  • The members have about $10 billion in assets
  • He wants to be around people who challenge him to be better
  • Some members have 20,000 doors

Never Give Up!

• Have tenacity!
• It’s very easy to succumb to your fears
• But you need to be persistent and determined
• Have staying power, endurance and stubbornness
• To keep going even when you’re tired
• Tenacity will beat talent every time! – it’s one of the most important components of success
• Never, never, never, never give up!
• Winston Churchill said at a speech made 29 October 1941 to the boys at Harrow School. “This is the lesson: never give in, never give in, never, never, never, never—in nothing, great or small, large or petty—never give in except to convictions of honour and good sense.”
• Rod had a litigation support company that he almost abandoned and bankrupted it in 2010.  Instead, he stuck with it, came up with a new business model and it kicked but and became a $10 million company that he recently sold
• Have courage, resolve, strength of character, strength of will, backbone, toughness
• Real estate business is a marathon – not a sprint
  • Are you going to have setbacks? Yes
  • Are You going to have failures? Yes
  • He calls them seminars!
• Rod has built 24 businesses
  • Several have been worth $10s of millions
  • Most have been spectacular, flaming “seminars!”
  • He didn’t give up!
  • He failed his way to success!
  • Don’t fear failure! Fear regret!
  • See your failures as a gift that tells you how not to do something!
  • Fear being in the exact same place you are in right now – unless you absolutely love where you are right now!

 The Importance of Gratitude

• If you want anything, you have to incorporate gratitude (an attitude of thankfulness)
• It’s the most important emotion we have in our lives
• Every morning, Rod focuses on all the things he is grateful for:
  • His wife
  • His kids
  • His nonprofit foundation
  • His coaching students
• Gratitude strengthens our immune system, makes our hearts stronger, lowers our blood pressure, brings us closer to God
• It’s a foundational resource and emotion we need for our lives
• He uses “vision boards” and one is a “gratitude vision board”

The Importance of Contribution

• Whatever you give, you receive
• If you want love – give love!
• If you want happiness – give happiness!
• If you want money – give money or give of your time!

How to Reach Rod

• To get Rod’s “Goal Setting Worksheet”: Text 2020goals to 41411
• Find out about his bootcamps: Multifamily Virtual Bootcamp – 2-day event for $97
• His Website: RodKhleif.com
• Podcast: Lifetime CashFlow Through Real Estate Podcast
• Facebook: https://www.facebook.com/rodkhleifofficial/

DISCLAIMER:  Many of the above strategies take knowledge and have a higher degree of risk.  You need to do your research and/or work with someone who is experienced to reduce your risk.

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