949-392-1999
SHOW NOTES FOR EPISODE 282: REAL ESTATE INVESTING ROCKSTARS’ BIGGEST MISTAKES – PART 2
It has been said that we learn from our mistakes but, on the Old Dawg’s REI Network, we also learn from other people’s mistakes. In Part 2 of this unique podcast episode series, you’ll hear from some of real estate investing’s biggest rockstars – Rod Khleif, Vinney Chopra, Nizan Mosery, Chris Urso, Samuel Freshman, Frank McKinney, J. Scott, and Ken McElroy – as they share some of their biggest real estate investing mistakes, followed by Bill’s take on how you can benefit from their goofs.
Why We’re Doing This Podcast
- Every guest on the Old Dawg’s REI Network Podcast is asked “What is Your Biggest Mistake?”
- With nearly 300 podcasts, we have a lot of great answers from a lot of great real estate investors who have really been in the trenches
- We have had some amazing guests – many of which you may know and some you haven’t
- One reason we have our guests on is not so they can brag about how great they are and make you feel discouraged but so we can learn
- And one of the reasons we even started this show in the first place is to share our own personal real estate investing mistakes (the good, the bad and the UGGGGLY) so you, hopefully, you will learn from my mistakes and not repeat the same
- But, besides hearing Bill’s endless flow of mistakes… we also have our successful real estate investor guests share their mistakes as well
Podcast Part 1’s Recap of Guest Mistakes
- Poor due diligence (Joe Fairless)
- Didn’t raise enough money (operating budget & capital improvements) (Joe Fairless)
- Started with too big a deal (420 units) (Dave Lindahl)
- Low occupancy (Dave Lindahl)
- Bought unfamiliar asset class (Gino)
- Too cheap on new hires (Jake)
- Rent control/Section 8 (Michael Blank)
- Wrong property management (Michael Blank)
- Thought “cheap price” meant good property (Brandon Turner)
- Didn’t analyze deal first (Brandon Turner)
- To listen to last week’s “Part 1” episode, click here: http://olddawgsreinetwork.com/rei-rockstars-biggest-mistakes/
Rod Khleif – episode #043
Rod Khleif is the Director of Investments at REM Real Estate and Management, where he uses his expertise to guide the firm in identifying and acquiring undervalued apartment complexes and mobile home parks. Rod has personally owned more than 2,000 single family homes, and multiple apartment communities. Before being named as a director at REM Real Estate and Management, he was president of Gulf Coast Management Inc., a real estate property management company in the Sarasota, FL area. He is also the host of the top ranked Lifetime Cash Flow Through Real Estate Investing Podcast. Rod has also built several multi-million dollar businesses and has dedicated himself as a community philanthropist, forming and leading the Tiny Hands Foundation, which has benefited more than 40,000 underprivileged children.
Biggest Mistakes (He calls them Seminars)
- When 2007-2008 hit he was devastated with his houses
- Values plummeted
- Had sold Denver houses to buy in Florida. If he had held on to those houses, they would have done better than some of the other homes he purchased – it does matter where you buy
- Didn’t cash flow that great to begin with
- He calls the hard lessons “seminars”
- But the multifamily apartments did well
Vinney Chopra – episode #027
Vinney Chopra is a Mechanical Engineer, but after graduating from George Washington University, Washington D.C., and finishing his Master’s in Business Administration in marketing, he shifted his focus to sales, marketing and motivation, becoming a motivational speaker. Vinney and his wife started real estate investment investing in 1983, becoming a broker in California and started buying single family homes and multifamily units in Texas, California, Arizona and India. Over the last seven years, he has been president of a multifamily investment company— The Ideal Investment Group—which has acquired and is presently managing assets worth approximately $60 million. He recently established Moneil Investments Group with assets at $57 million.
In addition to real estate investing, Vinney has been a professional fundraising consultant, business coach and motivational speaker for over 35 years. He has given over 10,000 speeches and seminars on fundraising, positive thinking, enthusiasm, goal setting, and balanced living.
He travels and gives live presentations and webinars on Wealth Building. Creating Wealth with Multifamily Investing, Value-Add Win/Win Negotiations, Emerging Markets, Market Cycles, Economic Funding, Commercial Properties Analysis, Due Diligence, Investing in Multifamily and the Art of Raising Private Money. Vinney is married to Kanchan, has 2 children, Neil & Monica, and lives in Danville, California.
Biggest Mistakes
- Choosing the wrong partners can hurt you for a long time
- Must be trust worthy
- Bad partners can hinder you
- Non active partners can increase burden on you
- Didn’t have much control in first partnerships and people took advantage of that
- You need to have third party audits
- Had problem with property managers
- Took money from tenants
- Didn’t post expenses in financial software
- Pocket tenant money
- When you get good people – reward them!
- Buying a property is like a marriage
- Key areas you MUST do well:
- Due diligence
- Exit strategy
- Lenders involved
- $9.7 million property, built in ’73-78, in B+ emerging market neighborhood
- Hired local guy to do inspection and didn’t do video camera through sewer lines
- THREE KEY INVESTMENT SUCCESS FACTORS
- Investors
- Acquisition/Due Diligence (inspectors, lenders, legal)
- Property Management
- He has improved his success by creating companies within his companies to control some of these areas
- Moneil Investment – Investors & Acquisition
- Moneil property management – Manages all properties
Nizan Mosery – episode #025
Nizan Mosery has been involved in real estate for the past 20 years and currently owns over $120 million in properties nationally and internationally. While living in New York, he owned a construction company and worked on numerous single family homes, multi-family and commercial projects of up to 300 units. In 2009, he relocated to Florida and became a licensed real estate professional, serving the South Florida market. He owns K.E.A.N Realty Solutions a Florida-based real estate brokerage firm and one of the first Commercial ReMax franchises in South Florida. Mr. Mosery and his team head up the multi-family division. He is the also owner and C.E.O. of K.E.A.N Management Solutions, a hands-on boutique professional management company. His background ranges from managing commercial assets, recognizing emerging markets, property management, syndication, mentoring and advanced creative financing techniques. He is also the founder of the South Florida Mastermind Society, one of South Florida’s first Commercial Real Estate Investment Groups. He studied business law and marketing at Pace University, which subsequently allowed him to secure a position at Lehmann Brothers. After leaving Lehmann Brothers, Nizan traveled the world for many years, spending time with foreign dignitaries and the Dalai Lama. He was a member of the Israel Defense Force.
Biggest Mistakes
- Taking what people say at face value
- Not having a local team in place before purchasing your out-of-state property
- Consult with your team on the ground before purchasing anything in “their” market
- Making decisions without checking with your mentor first
Chris Urso – episode #081
Christopher Urso is managing partner of URS Capital Partners, a private multifamily real estate firm, based in Long Island, NY. URS Capital Partners has acquired over $100M worth of multifamily properties throughout the Midwest and southeast and services over 150 active investors. Chris has raised over $33M in private capital for his real estate projects.
Real estate has been his true passion since purchasing his first property more than 15 years ago; Chris started out leading a multi-state team to acquire, renovate and sell over 60 single family homes. In 2010, he directed the firms’ efforts towards multifamily with the purchase of a vacant 40 unit building and has since taken a very systematic path to acquiring over 1,800 units.
Biggest Mistakes
- Starting too small
- He should have gone straight into multifamily
- If you had $50K to invest – better to invest in 10 deals at $50K each with people who have a track record of success then buying 10 $50k houses
Samuel Freshman – episode #091
Samuel K. Freshman, is Board Chairman of Standard Management Company which performs real estate acquisitions, bridge finance, and property management. Active in real estate investment for 60 years as an attorney and investor. He has been an expert witness in real estate, legal matters, finance, lecturer at the Stanford Law and Business Schools, chairman of a bank, title company, and a theatre exhibitor. Chairman Emeritus Stanford Professionals in Real Estate (SPIRE). Author of books and over 20 published articles, Mr. Freshman is working on a series on saving entitled “The Smartest Way to Save,” “The Smartest Way to Save More,” and “The Smartest Way to Save Big” about becoming rich on a modest income. Sam received a Stanford BA (Pre-Legal, (1954) and a JD (1956). (E-mail: sfreshman@standardmanagement.com
His Two Biggest Mistakes
- He didn’t buy enough
- He sold
- He started buying 1920s high rise office buildings in downtown Los Angeles
- 11 stories would be vacant
- Bought a building for $1-2 million
- In 3-5 years, sold for $2-3 million and thought he did very well (50 years ago)
- Today, the same buildings are worth $100 million
Frank McKinney – episode #119
Frank McKinney is a Real Estate Artist, 5-time International Bestselling author, superhero meets Robin Hood, Philanthro-Capitalist, Ultramarathoner, Actor, and Visionary who sees opportunities and creates markets where none existed before.
Now, Frank creates real estate markets where others fear to tread. He has built oceanfront spec homes (homes built without a buyer) valued in the tens of millions of dollars, shattering price records with each new project. Frank started with a $50,000 fixer-upper crack house, and climbed all the way to a $50 million oceanfront mansion!
Frank’s latest creation? His Micro Mansion – McKinney’s totally new concept in ultra high-end homes was just unveiled and is taking the luxury real estate world by storm!
Frank spends quite a bit of his time on philanthropic causes, specifically, his Caring House Project Foundation, www.chpf.org, a non-profit (501 (c) 3) organization that provides housing and a self-sustaining existence for homeless families primarily in Haiti and here in the US. By the end of 2016, a total of 10,400+ people will have been sheltered in Haiti alone because of CHPF, and thousands more are alive because of their efforts.
Biggest Mistake
- Waiting too long to get started
- Fear and risk prevented him from getting started
J. Scott – episode #169
Scott (he goes by “J”) is a full-time entrepreneur and investor living in the suburbs of Washington, DC. J is an engineer and business guy by education and spent much of his early career in Silicon Valley (California), where he held management positions at several Fortune 500 companies, including Microsoft and eBay. In 2008, J and his wife Carol decided to leave their 80-hour work weeks and the constant business travel behind. They quit their corporate jobs, moved back East, got married, started a family and decided to try something new. That something new ended up being real estate. In the past nine years, they have bought, built, rehabbed, sold, lent-on and held over $40 million in properties. J runs the popular website 123Flip.com and is the author of three books on real estate investing, including his best-selling, The Book on Flipping Houses. His books have sold over 100,000 copies in the past five years and have helped investors from around the world get their start with real estate.
Biggest Mistakes
- J feels, If you’re always doing your best to make good decisions, it’s not necessarily a mistake
- The first flip deal they did, however, stands out
- They bought the property in 2008
- They over-paid about $10,000 for the property
- Underestimated renovation costs by $15,000
- Thought they could sell it for $115,000 (over-estimated)
- Held onto it as a rental for 2.5 years
- Tried lease option, lease purchase but buyers couldn’t qualify for re-financing
- Renovated it again
- Eventually sold it in 2011
- Made $1,000 on the deal
- Made every mistake you could make on a flip project
Ken McElroy – episode #185
Ken McElroy is the epitome of the word entrepreneur. For over two decades, Ken McElroy has experienced massive success in the real estate world–from investment analysis and property management to acquisitions and property development. With over $700 million investment dollars in real estate, Ken offers a unique perspective on how to get the biggest return on investments.
Ken is the author of the best-selling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, The ABC’s of Property Management, and most recently his book on entrepreneurship: The Sleeping Giant.
As the Real Estate Advisor to Robert Kiyosaki of The Rich Dad Company, Ken and Robert have co-authored several audio programs including How to Increase the Income from your Real Estate Investments, How to Get your Banker to say “Yes!” and How to Find and Keep Good Tenants. Ken is also a chapter contributor in the newly released, The Real Book of Real Estate.
A champion and advocate for entrepreneurs and real estate investors, Ken has spoken worldwide at top industry events. With media appearances on television and radio, Ken also hosts Entrepreneur Magazine’s Real Estate Radio program, where he helps listeners navigate the financial and legal arenas of real estate.
Never taking life for granted and continually giving back, Ken is active in the community and has been the Chair two years in a row for the Autism Speaks Walk in Arizona. Ken has also served on advisory boards for Child Help, and AZ Food Banks where he conducted the largest food drive in the state of Arizona. Ken and his family reside in Scottsdale, Arizona.
Biggest Mistake
- Lost a bunch of investors’ money in a condominium conversion
- Sometimes when market gets hot and frothy you can lose sight of some of the basic fundamentals and get caught up in the hype
- In 2008, he was converting a 300-unit apartment building in Scottsdale, Arizona into condominiums
- Banks were shutting down
- Was selling the units off individually to investors and/or home owners
- The financing for the “take out buyers” went away overnight – no one was lending
- He had no buyers
- He lost a bunch or money
- His investors lost a bunch of money
- Extremely painful
- What he learned
- Communication is key
- You need to “over communicate” to your investors
- You need to stick to models you have more control over
- If you buy something today that you think will be worth more next year, you are taking a risk
- How his philosophy on “forced equity” has changed
- If he buys a building, for example, for $10 million. Before he buys the building, he can know that “operationally” he can improve the value to like $15 million. That has nothing to do with markets going up or cap rates going down. It has everything to do with rent growth, expense savings and growing the NOI
IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.
Check out our other podcasts at olddawgsreinetwork.com.
Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.
Episode Sponsor: Meno Studio – menostudio777@gmail.com
