[MUSIC PLAYING] Welcome to San and the Art of Real Estate Investing. What if you could learn from experienced real estate investors, find out what got them to where they are now, get insight into their daily habits, and take these insights to inspire your own growth? Each week, Jonathan Green shares an in-depth look at the mindful approach to real estate investing. Jonathan is a lifelong real estate investor, advisor, and coach, as well as the founder and team leader of Streamlined Properties. Whether you're looking to start from scratch, get to the next level, or just for a straightforward and honest approach to real estate investing, Jonathan seeks to provide a free mentorship program you can take with you anywhere. Now, here's Jonathan. I'm pretty sure in the intro to this podcast, it talks about being the real estate investing coaching program that you can take with you anywhere. And based on a couple recent episodes, including this one, we're continuing to live up to that with coaches. Today, my guest is Mike Schum, who's been my coach in the on-market real estate world for more than five years. He's been involved in real estate for so long, 30 plus years, like myself, and he brings a very, very detailed technique and mindset to the game of real estate. And now he's bringing it to you for real estate investors as we talk about many things. But one of the most important things is how to avoid the cost of waiting as a real estate investor. You'll understand what I mean soon. Let's go. This is episode 152 of Zen and the art of real estate investing. With my guest, Mike Schum, Mike has been involved in real estate in many capacities for 35 plus years. He's also the co-founder of Profits Coaching, which is an on-market coaching company. But Mike has also been my coach for more than five years and a very good friend of mine. Mike, welcome to the show. - Hey, thank you, Jonathan. I was so excited for this episode. Thanks for the opportunity to talk with you. Whenever I get to meet with you, I learn something. And then just to share a little bit, it's a great opportunity, so thank you. - Yeah, I appreciate it. And yeah, it's fun for us since we are always talking and texting and then coaching to bring this out. And the reason why I wanted to bring you on the investing podcast, 'cause of course you are on my agent podcast that is now defunct, the art of agency, is to bring this more mindful approach to investors and your wide experience in the real estate game. I really think from how much you've helped me can really help other investors who are, it's a little bit of a weird time for real estate as you are well aware. So I think this is really the time for people to bring in the focus. Have you found that just in regard to real estate in general, which does involve a lot of agents who invest that people are kind of biting their nails right now? - Well, yeah, what's happening right now is there's a lot of uncertainty in the markets. So just basic human psychology, what an interest rates are fluctuating, there's new laws coming in from DOJ lawsuits on there, inventories, levels have been really low around the country. We've got these hedge funds buying a lot of houses, builders that are selling, renting their houses. The consumer is like, oh my gosh, what's going on? So when there's a lot of uncertainty in someone's life, the first thing to do is nothing. They're like, I'm not sure what the right answer is. The agents telling me this, the news is saying that, right, they just will definitely stop doing anything, just so they can get more certainty in their life. They don't need more beginning to a transaction that who knows how it'll work out, what interest rates there are inspections and appraisals will be. And this is what you're seeing right now where you see there's a little bit of a flurry of interest rates come down and then there's nothing. It's really quiet or they start to go in and then I had one client yesterday, four deals, did it backed out? They got scared for some reason. So yeah, it's crazy out there right now for sure this year. Probably, I'm trying to compare it to that crash back in '07, different. But I think this one where that almost felt like you have punched in the face and we kind of recovered, this is feel like a long drawn out year plus period where we were not sure exactly, there's no real clear sign when it might get better or easier. Yeah, and that's really important because I think what the problem is there's a lot of people in a variety of parts of real estate investors, agents who say, eh, or just regular home buyers say, you know, I'm gonna take a break for a little while until things get better. And I always say, well, how long are you willing to wait? And what metrics are you using to tell you when it's gonna get better? 'Cause what if it doesn't get better in two years and then you sit on the sideline and don't invest for two years and you don't make any money and you don't make equity, you know, I'm seeing that specifically with investors, they're like, oh, it's too hot now, rates are too high. But, you know, I always say, well, if you buy a good property and you have a good asset and then in two years, it's down to five and you have appreciation, you get that double windfall, is that part of what you're coaching on both? It's like, you should never really be just sitting on the sidelines 'cause that's not accomplishing anything. No, it's funny, you mentioned that. I just gave that the same exact advice to someone that I'm working with. And I was explaining to them, we're in a little bit of an anomaly this time through, is historically in real estate when interest rates went up, prices went flat after it came down. And now we have increasing interest rates and, so what are you waiting for? To pay a lot more money for the same house, hoping that the interest rates will come down. Part of the problem, Jonathan, from all I read is, a lot of people think that this three, four percent is gonna be an option again. The experts, but no way in hell will you see that probably in your lifetime. If we get into something with a five on it, you're probably in great shape and maybe low sixes. So yeah, I don't call that the cost of waiting, that you're gonna wind up paying, you might save a little bit of an issue, you may not, but the equity that you would gain by buying, say, this year at a higher interest rate and refinancing at whatever it gets down to, it is what it is, six percent-ish on there, is you're gonna be behind the eight ball, I would say. Yeah, I jump in now, like I told them. And like I do, I refinance when the time is right, but you gotta jump in and play the game. Yeah, I mean, I love the words cost of waiting because it's not just the financial part. If you're waiting, you're always inherently not doing the work 'cause you're scared of everything. So I'm not even gonna get educated right now because it's too hard. And then, oh wait, now everything's better. People think, oh great, the rates get down to five. So for some people, that's gonna be a great time to refinance. Guess what else that means? Six million more buyers into the market, that includes regular home buyers and investors. And one thing that I really wanna talk about is part of the biggest problem for investors now, and I talk about this all the time, is that your traditional home buyer is now in competition with investors because they're so little inventory that they're willing to try to buy more dumpy properties thinking that they can renovate 'em and they can pay way more than investors 'cause we're investors, we're not living there. Are you seeing this across the board? Wow, we definitely think alike, 'cause this is definitely one of the topics I wanted to bring up today. Go back to like the '07 crash. That's exactly what I saw, kind of the same situation with stocks. A Bitcoin is a good example a couple of years ago, is, if you understand the early adoption curve, most Americans are scared of early adoption, so they're waiting to see what the masses start to do and they have to jump into a Bitcoin or GameStop when it was flying a couple of years ago. Yeah. And then all they just have is downside. So it's the same thing there, is that in '08, the investors like enough foreclosures that we're playing, and then as we started to come out of that, my clients with the retail buyers said, "Hey, I'm a flipper now. "I got a partner, I got a money guy." And without evaluating enough properties and just looking hungry for something that everyone's making so much money on, they bought properties, rehab them, and then called me and said, "Oh shit, we're upside down, what should I do?" I said, "Yeah." "You're gonna lose money, you're stuck, "there's nothing you could do." And what's so crazy is, it wasn't just them, it was giant company, Zillow and Opendoor did the exact same thing in Arizona. They're like, "Oh, well, let's buy a bunch of properties "at too high of evaluation." And then they eventually had to dump them all. I mean, one of the terrible business decisions, but the single regular people and regular investors are following these trends. I think they feel like it's such a weird time because you have the subset that we're talking about who sit on the sidelines, and then you have this other subset who feels so desperate that they have to get something, so they make a bad decision. And there has to be a good way in the middle. Where's the way to keep the mindset right to stay in the middle and not be so crazy that you overpay crazily for something and then can't make it back, and also don't just sit on your ass for a year. - Yeah, I have two comments there, actually. The first one is your Opendoor Zillow comment on there. Real estate is a cyclical market, right? Just like most industry, it goes up and down. That model, in my opinion, works really great as long as the markets are going up. Opendoor is pulling you by here, lipstick, you sell, 'cause houses are slowly appreciating. As soon as that market turns, you bought house here, lipstick renovation, now it's worthless. You can't win, you're gonna lose that game, and that's what happened. So we got kind of a caught in that, and then markets change. So that's a very, in my opinion, a horrible model in a down market. So yeah, they will stop. Now, if things turn around and gets hot again, they'll flourish, right? You'll get more, but I think at the time, I remember, I think those sales, even as popular, they sounded, only count to about 5% of all transactions. So not a big number there, at all. What was your other comment that was about investors? The second part of that? - We're, I've got to into that last question. - Sure, but then the investor, right? So the question was, how do you become a good investor? - Well, how do you stay in the middle of being desperate or sitting on your ass for a year? - The answer is that you should always, if you know at some point you're in that game, you should always be evaluating deals. So when the market shifts, you know what a good deal looks like. - Yeah. - I can tell my viruses. Start looking, go see some houses, see what they sell for. So you kind of get a gauge of what it's selling for. It's impossible to jump at any markets. Oh, that's a good deal. You have no perspective. But I think that's a problem. They don't keep a perspective to understand. Then all of a sudden, they hear on the news, which is what a 90-day lagging indicator to what's really happening. And it's a good time to invest. And now they're three months behind, right? 'Cause those are closed sale data, not leading indicator data when they wrote the offer. Now you get all these people to jump in 'cause they've heard this data and they overpay. - Yeah. Well, the news brings me to another good point I wanna address with you because I feel, generally people are watching the news, so they're seeing these gigantic things about rates and they're not focusing on their own local market. I feel like no matter what rates are at, no matter what's going on in the market, if I'm an expert in my local market, no matter what part of real estate I'm in, I can find and make deals because I know it better than everybody. Is that something that you believe as well? - Oh my gosh, being the hyper local expert is everything. There are pockets everywhere within neighborhoods and areas, some will move faster. I'll give you a good example there. Most of my career is working on Long Island. And of course, everyone's enamored with the higher price points, the luxury market. There is so much old money up in the North Shore on Long Island, when the market slow down, the turnover becomes 1% annual. It's impossible to market or do farming 'cause you can't get enough of a return on there. So I believe, firmly, I learned it's from the stock market. This funny quote was somewhere told me that bulls make money, bears make money, but pigs get slaughtered. So if I'm a luxury broker and if that market's not moving, I learned I have to move to another market. Even though it may not be the ideal one for me, then when I enjoy most, so in a good example, doing retail all through, I started in '03. So retail retail five, six, seven, Long Island, one in four homes with a short sale. And then the foreclosures came. So I opened up an Indy Mac account and I did for about two or three years. Did I like them? No, but that's what the market was giving me. So I didn't want to challenge it. Where is the opportunity? There is always, whether it's up or down, there's always an opportunity in a market. It's hard job to find it. Yeah, and I think investors suffer from that kind of FOMO of the major market. It's like someone who comes to me now and says, oh, I want to invest in Austin, Texas. I'm like, well, you're definitely 10 years too late. Not that you can't make money there, but I always say like, okay, just as you were saying, you take the town, whatever it is, say Smithtown, that's your town, okay? And then you go two towns out in each direction and see which one is just trending a little bit? Wait, is that a trader Joe's coming in? Then you just focus on that neighborhood. And I think that as an investor, you can do that if you're a baby investor or experienced, you just have to kind of adjust and go with it and keep your foot on the pedal. It doesn't, I think the problem with what people think is when we're saying like, keep out it, take action, they think that means buying. You don't have to buy to take action. You have to be in motion so you don't lose your momentum, right? Yeah, now you're talking about right there. As you hear a lot of these great speakers out there, you got to fall in love with the journey, not the outcome. Love of evaluating yields, finding markets, then the market will present opportunity from time to time. If you're always like, I got to find a deal. I've got to make this margin on this flip. If the markets are tight, it won't be there. You'll be disappointed for a while. And then you might buy something just because you think you have to do a deal. No, the job is to fall all over the idea of identifying and evaluating continually. And then when the good one pops up, you grab it, that's-- Yeah, I think that people have to adjust what they think is a good deal. Like sometimes they're just like, oh, well, 70% of ARV and they're just creating these formulas in their head and they forget that they have to look at an asset, what you know me well enough, what I'm really good at is finding an asset that everybody else is missing. And it would never work on a spreadsheet. It wouldn't make sense the way that they're saying, but I'm seeing something different. And if you become that local expert or just somebody who doesn't stop looking and stays on top of development in the area, looks at, well, wait, that house sold for that. And this is a unique one. I think they can help with that. Do you think that that's something that can really help people kind of, again, stay in that middle part or they're not desperate, but they're not just taking a break? Yeah, that's a great point, actually, that you bring up there. Great investors. I noticed they have incredible vision, where I might look at it one way, very black and white, where you can see, I can add a second story on here. I could change the floor plan and it becomes a lot more desirable than the upside, right? You actually create the upside almost like you do with rentals, right? If you add in a washer dryer or AC, you can crown moldy, you can charge more per month. This thing here, if you could find ways to make the asset, rather just blipstick or just refresh it. Yeah, you're amazing at that, right? You can take this, I don't have that, I'll tell you. Like, I see something, I can't imagine it could be like some of the projects you've done, like holy crap. How do you figure to do that? This little, that one was like a closet, you turn into a closet. The wine closet, that was the good one. I was like, I don't know what you even think of that, but that's a really great idea. Like, that's what you're gonna do. Yeah, and I think that goes to using our own unique superpowers because I wanna be different, I don't wanna be cookie cutter. I have nothing against flippers who are large scale flippers. If you're doing 30 flips at a time, of course you're gonna be running some type of thing. But one thing that you and I are both good at, which I think is important for investors to do, you said this similar to me and we both said it, I think for a while, both of us, we were buying single family homes, living them, then we sell them and made money, but we didn't really think that we were investors. But the best investments that I've made pretty much across the bar are all houses that I lived in, whether I really flipped them at the end, what I call back flipping, where I just lived there for five years and was like, that was nice. And then I sold it for $200,000 profit 'cause I know how to buy, you too, right? That's exactly how you mentioned that number that's usually my March and I, in California, we probably doubled a trip of that a couple of years ago 'cause it's crazy appreciation, but yeah, that's exactly. So when I buy a house, I don't have your vision, but being in real estate for as long as I have, you kinda know what buyers are looking for. So while I'm living in a house, I'm making that appeal to a lot of buyers that when I go to sell it, then here's something else I do differently based on some observation I made years ago. As we got much better with marketing properties and we got professional photos and we got video and floor plans and information to public records and stuff, I believe today most buyers, whether it's investor or retail, are coming to a property not to necessarily see if they wanna buy it, but coming to see is the reason why I shouldn't buy it. I know the price, I've got 50 of the best pictures, I've got a video, I've got a floor plan, I've got a-- - Great point. - On there, so just about like when I'm about to sell my house in California a couple of years ago, I had a painter come in, repaint the whole house, I had corporate replaced in the bedroom, I had all the gates replaced, and literally I walked to the house like I'm a buyer, is there anything that I'm seeing that a buyer might find scary or not like a color I might neutralize? - They're trying to disqualify it. - Yeah, so when I sell my houses, Jonathan, honestly, I can't think of a buyer who's asked me for a credit or a repair. 'Cause everything, they have no excuse not to buy the house, what I'm trying to do is give them no excuse not to buy the house. - Yeah, and that goes to one of the things that I've done, you know I did it on the house that I lived in in Montclair and I call it back flipping, it's not something that a lot of people know or understand, so I live in the house, it's still a nice house, but then because I have the ability to go buy another house and move, then I actually back flip the house, which is flipping it at the end of my time of ownership because trends have changed, things have adjusted, and just like you, I wanna make sure it's there, but I really did a full flip on my Montclair home when I left, upgraded the bathrooms, fixed everything, and then I made like 250 grand just because I didn't just move out. You know, I moved out, ended a renovation then, you do have to have the money to bridge the timeframe, but that actually works for the same principle, and I think more people on their homes should think about back flipping, it's like you're gonna move, if you can just get a bridge loan to move even, and then you do these things that are really important. I mean, just think of all the times as agents and just as consumers, we've gone to houses and they're really nice, and then you see a stain up in there, and they're like, oh no, that was from an old leak, we just didn't paint over it, and it's like, well now I think everything is wrong. (laughing) - You nailed it, yep, that's, 'cause I've learned from working with buyers for like decades, that's one of the biggest fears, like, oh my gosh, that leak could be much bigger problem, the roof might need to be replaced, that could have started over here, I've been traveling down some rafter. - And that is also true though, and I think for people who are flippers out there, we're giving you direct advice. If you're a flipper and you have never been a real estate agent and you don't understand what you're doing when you put something on the market, you have to make it perfect because the second that you have someone who pays $500,000 more for your home, and then they realize that you just don't have an exhaust vent in the bathroom like you should, now everything's wrong, and now they're coming for you, an inspection, like you said, whereas the best thing people could do is to do a pre-inspection before they list, even if it's a new build, have a home sector come in, check everything, and then fix everything, 'cause then you know, wow, they're gonna be excited about winning, they're never gonna think twice about it, right? - Yeah, the other reason too is understanding and working with buyers, their psychology, if they see a repair, they kinda know what it costs, but they will double a triple re-double in their offer for that repair or cost on there. - Yeah. - Rightfully so maybe they've gotta get inconvenience, they've gotta do the work, they're gonna lay out the money, so yeah, I don't wanna, if I can fix something for around 500 bucks, I don't want a couple thousand dollar lower offer because of that. - Yeah, and I think that people see the heat of the market and all the overbids on everything, and they think like, "Well, it's no big deal if I like don't have a right," but even though that is true in some context, we have this other part where there's way more people getting cold feet right now, because rates are really high, so not much needs to throw them off into a tizzy, where they're like, "I just don't want, I'm not ready." You know, "I'm not ready, it's a seven and a half percent." You know, and now I'm getting nervous because the survey said there's one foot that's unaccounted for, and now I think the whole lot screwed up. I mean, this is gonna become a thing even more, I mean, at some point, I'm in a steaming hot market, it doesn't appear to be slowing down, but we're still seeing more cold feet in there. Sure, there's backup offers, but it still doesn't make your property look good when somebody hops out of a deal right away. - I've got pure opinion on this, actually. So I had this conversation yesterday, someone was asking about the future of real estate. So he didn't really understand absorption, right? In a sense, like if you're at six months supply, it's an equal supply of houses and prices are kind of flat. So we've been in most markets in this country between one and three for-- (laughing) - It's crazy. - But I don't believe that we'll ever get past six months. I don't think we'll get past four or five in most markets. Just understanding that builders don't build on spec anymore. So there's not enough inventory there. Understanding that these Wall Street is buying tons of these houses here, and I'm in Vegas, they're buying at times out here. They're gonna, then you got these investors, like the gap between the poor and the rich. And unfortunately, or fortunately in this country, depending what side of the fence you are on, if you make a lot of money, one of the best vehicles for avoiding some taxes is to make buy a house, do a cost segregation, of those kind of things. So you got the investors in the market, you got the builders, and some of the builders I mentioned earlier, renting instead of selling on there. So I don't see how inventory levels can become a buyer's market for many years or something significantly changes. - I agree. I mean, there's millions of handcuffed sellers who want to sell, but they can't, 'cause they're rates 2.75 and they'd have to go buy into a bigger house in the same neighborhood at 7.5 and compete against everyone else who doesn't have a house to sell. So they're handcuffed, and as you said before, and I agree with like, five is my linchpin. Like if we get to five, everyone needs to refinance, because I'm not so sure it's going below five, ever again, our parents were in the teens if they were doing mortgages at the time. So it's just historically, people were spoiled, but I don't know that it's going back there. And that's another reason why we can't take our foot off doing the research and paying attention. Deals show up when you're paying attention, and you're there every day doing the work. Deals will fall to you at some point. But like anyone, if you take three months off, you're just not going to be that good. It's the riding a bike principle, which of course, a lot of people that I've never even ridden a bike. But people say, oh, you can just hop back on. It's just like riding my, I don't think it's that easy. And real estate investing, not that easy, if you pass on three months on your market or on multi-families, and then you're just like, oh, I'll just hop back in. Things are totally different. And as you said before, the news is 90 days behind anyway. - Yeah, not a market, it's always changing. You gotta keep, it's almost like I tell the teens I coach, you gotta stay in momentum. You gotta have your finger on the pulse. You can't jump in and jump out, just thinking of finding a home run deal. And that seems very, very unlikely to be on there. - Yeah, and I just, I don't think that you're effective as a business person in any context when you don't have momentum, because if you don't have momentum, then you're clearly sliding back. If you use the person who's pushing the wall up to the top, then you're sliding back until you can start pushing it up. And you have to do so much more work to get back to where you were. And that's classic, a real estate agent thing, but it applies to real estate investors too. It's no big deal, just take the summer off. But then you don't know anything when the fall comes again. You can't just restart. You're gonna need three more months, wait, now it's already Christmas again, now we're on another break. You know, it's just like, you were saying, I mean, you have to love real estate in general if you wanna participate in anything. And if you don't, and you look at it as a numbers commodity, you're gonna get too tied into the spreadsheet. You're not even gonna know what you're looking at. You know, they're treated like stocks, and it's not stocks because you can do value add. - Right, what I would say there, is one of the things I've done in a career is I kind of told, I don't know, cheesy phrase, model the masters kind of thing. But I'd kind of like listen to investors, like, and listen to their podcast or their video, whatever, and what they're doing. You know what the common theme is? To all the people who are doing seriously investing and they're seriously, you know, they're doing a good job and they're getting good results. If you listen to all of them, there's one thing that they say on how they measure what they do. - I know this isn't the answer, but I'm gonna say patience because I know it's real estate and weight, but I know it's something else. It's patience to purchase, but what they're all doing, the ones that are really being successful, they always will tell you how many deals they're evaluating every day or every week. - Yeah, for sure. - They're, how many do it, this guy, he's like one of the biggest multinationals, and he's like, yeah, the guy's like, probably three to four every day, three to four deals I'm evaluating every day. - Because those are reps, you know, and if you think Malcolm Gladwell tipping point, you need to get those reps to get to the 10,000 hours. You're not just go from one to zero. You know what the funniest thing is? I feel appreciate this, as someone who's been a coach for so long. My least favorite phrase of all time is overnight success because it's just such bullshit. They just, nobody knew about what they were doing before. Now they're successful. Do you want to know how hard they worked? I mean, look at Mr. Beast. They're like, oh, Mr. Beast, he's so famous. He's making a billion dollars. That guy made videos for 10 years before everyone even looked at it on YouTube. And then we have new people, agents and investors are like, oh, my new YouTube channel, I only have a hundred followers. I'm gonna quit. - Yeah, yeah. (laughing) - That's funny to mention, I just heard him on Joe Rogan podcast recently. He's like, I made all these videos. I got like no views from like-- - None. - Yeah, nevermind dollars on there. And yeah, it's that that's the hard work that no one sees. And all of a sudden, like he's a billionaire. Everybody wants to be Mr. Beast. But I learned this actually from him, where most people would never even fathom getting to his level and the things he has to do. Do you know how much money he invests into his thumbnail? - Oh, I'm assuming a lot. - $1,000, he has a thumbnail editor professional and they invest $100,000 just to get-- - Yeah, because I know exactly what they did. Do do tremendous demographic research and studies on what will work, the A/B test, everything. I mean, that's why he's done so well on YouTube. For somebody like me, I don't wanna do that 'cause I don't wanna get there. But like, that's exactly what you're saying. Like, oh, he just got lucky. - No, no, no, no, no, no, no, no, no, no, no. - So you're, you're, you don't even know probably but you're 1,000% correct. So in those early days, you found a couple other geeky friends who love this new platform. - Yeah. - And they were in eight or 10 hours analyzing 1,000 videos. How bright is that one? Well, what's the font on this one? What's the pixel size on this one? And literally they would identify all the qualities that would make a good thumbnail. And they would, but every day for hours before them would mastermind, trying to figure out why videos perform, which didn't, what was the right length and all of that? - But it doesn't stop too because then they take 10 years of data that they already have and then they're still over laring it with the new stuff. They bring in the new stuff. Okay, there's a minor adjustment here and that's why I can go so far. He, I mean, he's beyond smart and what he's done in terms of like syndicating by languages too 'cause now he's like number one in every YouTube in every country. - You know how we found that out? - I know. - He saw a statistic that only 10% of YouTube's leadership is English. - Yeah, right. And he immediately did everything to adjust. - And that's staying on top of it. - I'm not like, this is why I thought you have vision. Like he had vision for YouTube. Oh, we're gonna do these in foreign languages 'cause, but he didn't just go dub them in foreign languages. It sounded like in Japan the most. - Exactly. - We're an anime person. So everyone recognizes the voice and you got the amazing video. It's a super home run. - Yeah, but again, for 10 years, he was making videos like in his basement and no one knew who he was. It's just, it's just a matter of what you're willing to do and he loved what he was doing and you have to love real estate to be a good, well, I wouldn't say you have to love real estate to be a good real estate investor, but if you don't love real estate, you're eventually not gonna get successful. You may get to a point where you're like, I can put this on a little bit more autopilot, but you still have people working for you that are doing work. - I think that applies to any profession. Going back to the hedgehog concept in good to great. Like, what do you naturally great at? You naturally love to do this that you think about it in your sleep. Those are the only type of things that you'll ever be great at. The other ones you're making money to do something with it on there, but when it comes to path like coaching for me, like honestly, Jonathan, 24 hours, seven days a week. I'm either helping someone or I'm studying it or I'm learning about it and it fills my cup. It's like so exciting to me to talk about this every day. It's not a job for me. I get paid to do something I love to do that I do for free a lot actually throughout the week on there. So yeah, the passion, the very important part, I think of the success of there. And then the other part would be controlling emotions. I think it's an investing side is not like the retail side or a lot of emotions. This is numbers, right? This is for profit. - It should be. (laughing) - It should be. And I guess that's two, sometimes others, like things have mistakes I've seen is that they don't realize like almost every job is gonna be take longer and it's gonna cost you more. - Oh yeah. - I think a permitting issue that you've had also with the talent and stuff and delays like that and not prepared for that. And then they'll go with their pants down, they're running out of funds and what do I do? Kind of stuff. I get a lot of those kind of calls too to kind of get them out of the situation. If they didn't do the research. - Yeah, and they I think again, emotionally if they're too invested, you remember where Mike was talking about a deal I had where I got a red card on a flip and it took me 22 months to eventually start. I was fine. I mean, I wasn't thrilled with what was going on. I ended up like breaking even still after 22 months, which is a miracle, but like I love that house. I still love that house. So I mean, I was emotionally prepared but I'm high EQ low emotion in general. But I think it's really important, especially for new investors to learn because the reason why people are overpaying as investors is because they're too emotionally invested. You know, they feel like they're desperate. And when you're emotionally invested to a piece of real estate, you make bad decisions. You know, it's like three heirs who say, hey, we don't wanna sell because our parents lived here. I understand the emotional connection, but like you three are never gonna agree. So let's just split the money and get it done. And the second thing you say, well, this is the only house for me. There's literally houses everywhere. You know, like as a regular buyer when they're like, oh no, that was the one. And then next week they go out. Oh my God, look, this is the one. It's like, yeah, that's gonna happen every week. - Oh, I need a good story there actually. So a lot, a large part of my retail career was doing either corporate relocation or these other situations. So here's a human behavior I've noticed over the years. So it was very common now. Seller doesn't mean I wanna list because they can't find something to buy, not much. So what I would tell them is I would say, let's put your house on the market and I'm gonna put a clause in the contract that says, if you don't find a property, you're not obligated to sell yours. I mean, you need to find a buyer to agree to that terms. And then a hot market, it's not that hard. I'll tell you, but let me tell you what happens. So they're like, oh, we don't see anything. They go out to an open house this weekend. As soon as they get a great offer on their house, all of a sudden they kick up house buying into high gear. Then they become a lot more, well, you know, this school district isn't bad either. Or, you know, do we really need 3,000? I think we just created whatever. They start making adjustments. And I haven't had one client ever who's got that offer, not find a house very quickly. Yeah, it's a motivation they need. You know, it's, yeah, am I gonna find something? And you're like, wait, well, that's a really good price that they gave us. We don't want to lose this now. We need to go find something. And then exactly, like you said, they're starting to think, wait, all of our kids are graduated. Why do we care about the school district? Yeah, sure, that helps on resale. But yeah, that's a really good point. I just think that people, when you're tied to a property emotionally, and of course, you know, I've lived in my house with my kids. It's a great family home. But I learned from my dad growing up that when the house is worth a lot, you sell it. I remember my dad coming, we had this house in Westchester that was like the greatest house I've ever lived in. He got it at a foreclosure. It was like 60 acres and he did everything. We had like a regular house, a back house, basketball court, tennis court, two goats, chickens, pond in the front pool. Like it was amazing. You know, like, and then he comes to me one day. He picks me up for the weekend. I'm probably like, I don't know, like 12, 13. And he's like, oh, by the way, we're selling this house. I'm like, what? Are you kidding? This is like the greatest house ever. He's like, well, we're going to make a million dollars. I'm like, okay, even at 12 or 13. (laughing) This is starting to make sense. (laughing) But you know how people are like, this is actually, this is a good discussion to have because I think, you know, we were saying, most of our biggest investments all start as a personal residence, but I think unfortunately, people are in this like forever home mentality. Nothing's a forever home to me. I like moving. And when it's worth a lot, I want to take the money and buy something better or downsize and take more money and invest in another property. - Yeah, but they don't understand. I learned this concept doing commercial real estate and business brokerage. All businesses, and all, for most of the case in commercial buildings, if you talk to their owners, everything is always for sale for the right price. - Yeah, yeah, yeah. - They're not attached, it's a business. It's making me money. If I can get a great price for the building or the business, it will sell. You won't see a lot of them for sale, right? 'Cause they don't need to sell, but for the right offer, every one of them probably would sell. - Yeah, and that brings me to something really helpful for new investors because I've always coached new investors to write those handwritten letters to people in the area. If you make someone an offer, they can't refuse and you're doing your data generation, right? You find people who've lived there 40, 50 years, you're focused on absentee homeowners, and you're writing that. You might hit the right spot, even though it's not on the market, just like you're saying. Everything is basically for sale if you've been willing to pay the price. The worst thing you can do is contact someone off market and then try to underpay them. And I'm a hot market, I mean, that's a silly. That's what they say, well, no one's available, so can I pay you a little less? Like, no, you have to pay me more. - Right. - That's the whole point. - Yeah, that would logic for sure. - Yeah, but I think that people forget that you're negotiating with a person. So if you catch someone, you have a huge help that no one else is involved. So your job is to build the conversation, do the one-to-one and see what they can do to figure it out. That person may be emotionally attached, but you have to figure out what's it gonna take for them to remove that part if you want to buy the house direct from them. - This is where I love working with you, being friends with you. 'Cause sometimes you turn me on to some brilliant concepts that seems so obvious, but I never understood it, and you see it doing done a certain way, and you're like, oh, that's the way you do that. This is when you taught me that for most people, when you're offering to buy their house when you send these cards out, they're like, we'll buy for top dollar and sell really fast. But a block per cent of those people, the worst thing to do is to move quickly. They've been in the house you've mentioned for a long time, they have a lot of stuff, you're stressing them out. They actually probably prefer, hey, give me my price, but give me a lot of time to get out of it. - Yeah. - And I was like, wow, that makes sense. Wherever else is like, fast to sell, and at least an hour of time, we'll buy your house seven days or a cash, and you're probably eliminating a lot of potential opportunities with that. - Yeah, that person, the one that you're using and the example, they're a perfect, they'll sell to you for like, not that much now, if you just lease them back the house for six months for free. - Right. - That's it. Still taking care of they live there, they need time to pack, oh, you want eight months? Sure, I'm just gaining appreciation of Hot Market 'cause I'm getting a good deal. It's because you know this, we always talk about this. In general, people, especially these days, are all short-term thinkers. They're always trying to find a life hack where a hack to get more money quicker, but everybody who's a successful investor has always been long-term. I mean, because they would have crapped out in 2008 and quit after that if they weren't long-term thinkers. - Yeah, you just remind me if you check two deals specifically. The time thing is uber important and it's not always faster as better as I had two older people in their homes. One was going to a nursing home and besides giving them time to whatever get their stuff at it, both of them had accumulated a lot of stuff in these homes. So to make the deal even easier for them and see who was most motivated buyer is we said, who would take the house as is with all the contents? - Yeah, always. - Personal belonging to a nursing home, everything else, you'd take care of it and it made it, he was so happy to have to go through all his stuff for 50 years and throw it away, even painful. And sometimes that's another great way to put a deal together to benefit your seller, if you will, and it's not faster again, it's not better there. - Yeah, and I think if you're really focused on the person then you even go the extra mile and you say, you know what, this is how it's going to work 'cause I definitely done this. You take these blue tape, anything that you put blue tape on, I'll have a mover delivered to your nursing home where you're going, they'll set it up, I'll pay for it, anything without a blue tape, you just leave here and I'll take care of it. Sometimes they have good stuff and you can sell it and sometimes if they don't want to do in a state sale you just say, you know, I'll sell a bunch of stuff on Facebook Marketplace, I'll give you half the money and then you have a little bit extra money where you're going. I think that people forget, especially when they're dealing with pre-foreclosures which you were involved in a lot, you know, your job if you're doing an off-market acquisition and somebody's in pre-foreclosure is not to highlight the fact that they can't pay their mortgage 'cause that's embarrassing. You're just trying to find out what number, what's their number and how can you give them about 5,000 bucks more than their number 'cause that's all they need. They have to get out of it. You can't say, I'll give you 200 if they own 220 and do you know how banks work? - No, I learned that strategy when I was working for IndyMac, most of those properties were owned but rented out. - Right. - So they would send me over to the house with cash for keys and they would, hey, you know, 30 days but-- - When it used to work. - When it used to work, right? So if you had clever, right, I'd send them like a letter saying, hey, I just received the check from the bank something to do with your mortgage. You don't want to drop by and then I would have to explain to them, yeah, I'd give you the check but you have to be out. But I realized they didn't have much money. They couldn't get out unless they could put it down on something else. So the checks were around five grand I remember or so and yeah, they were gonna get evicted anyway. So most of them actually took it not happily. They thought they were paying cash for their rent and he was keeping it not paying the mortgage. - Yeah, yeah. I mean, that's a weird time though. I mean, I think now we shouldn't go into one of those disasters where people are but there's still plenty of homes that go into foreclosure where a tenant has no idea. They're paying their rent into a hole. They're paying rent to an owner who's not paying their mortgage. - Yeah, that's what a lot of them are talking to do and they're shopping. What do you mean? I'm not late, I came to-- - Yeah, the house is nice. It's fine. - Yeah. - Yeah, that's our home. - Yeah, and some of these not nice landlords are playing games in the background and there. So yeah, I've been through a bunch of those. It's been interesting now, 35 years, just to see the different cycles or different types of investments and just to see some people make it and a lot of people not make it. Yeah, it's been an interesting journey. - Sure. - Hey, it's Jonathan. On this brief interlude, I wanna give you an update because our new website has launched. Zen and the art of realestateinvesting.com is live and you can go there and check it out. I really want you to go check it out because we're gonna still be upgrading more but it's going pretty well so far. This is a very guest focused podcast website. Each guest has their own profile with their own links, links to our 10 minute clips on YouTube and also links to the episode. You can search for guests using the alphabet or you can search in the search bar. Soon we're gonna have tags up as well so that you can search in certain categories, short-term rentals, mid-term rentals, syndicators, multi-family, and then you'll be able to link to the episodes on that. I have really put a lot of time into working with my team to get this website to be extremely visitor friendly and very guest friendly. I hope you enjoy it. At Zen and the art of realestateinvesting.com, let's get back to the show. So as a coach, this is something that I've tossed around a lot. Just in investing circles, obviously, you know, there's a lot of like, I guess, click funnels that turn into $50,000 programs. Some are good, some I don't think are that great but I also think that if people do the work, almost any program will work and you'll make connections but how is somebody a real estate investor who's out there looking around, they think they want a coach, when's the best time do you think for a real estate investor to look for a coach or a paid mentor of some kind? - Ooh, that's a great question actually 'cause in preparing for this, I realized you've gotta find a way to learn but you gotta find the way that you learn best because in my career, I've only had a couple years of coaching, 35 years, I don't know, for me, my mentor or books, I read a lot of books and I find out what to do and that's the way I learn so I don't know if it's necessary, it has to be coach or mentor but you've gotta find the conduit to learn what you need to learn. There's probably two, basically, I would simplify coaching what really all it is, is just a shortcut. Someone knows what to do, how to do it and you could pay them to teach you so you can get there faster. So there's probably two most important moments. One could be at startup, like you have no idea exactly, they educate you on different investment types and how to maybe evaluate deals and what's a good deal and all that stuff so you kinda got your feet wet. Then I would believe, I would probably work by myself learning the business and then once you're ready to get to the next level of investing, you bring in a more seasoned coach and you're kinda like going through plateaus, right? If I'm here, they get you here and you know, I'll grow that and you get to the next more sophisticated coach on there. Yeah, I like a group program for somebody in the beginning that's either pay or not pay or maybe a small pay so you have some accountability and then I always think after you have a little bit going and you wanna go from a little to a lot when scale becomes the word that you're talking about, you can't scale without a coach effectively 'cause you're gonna mess up and lose a lot of money. You may still be successful but your trajectory will be much slower and if your whole goal is to maximize it the right way, which isn't a hack, it's getting a professional who's been there before to keep you focused. Two things here, here's the second one. This happens to me all the time. It's as the coach of a lot of these great big teams on there, I get calls. Mike, oh my gosh, the TC department just walked out, you know, we just lost 10 agents, this and that. What's happening here is that they're very emotional about the situation. I'm here in Las Vegas, 10 of these people nor do I care about them. So when they call me, they're like, oh my God, what should we do? I can be very black and white objective. Well, just fire them, they're not working. It definitely helps to create clarity. The way I describe it to the clients is, it's much easier to be outside the bottle looking in than inside the bottle trying to look out through all the noise, figuring out what to do. So yeah, they call me sometimes like, I don't know, they're like in two second one. Just do this, obviously, isn't it? Like that's the right way. - But then when you tell them they're like, okay, that makes sense. It may be hard to do in practice because again, emotion gets in the way. But businesses, there's very few business decisions that you'll make based on emotion that have been good. On your gut, I like the gut, but the gut's not emotion. The gut is your intuition and intuition and emotion are very different. - Yeah, here's the other one too. Is that I was taking a Darren Hardy class recently and he reiterated this good fact. Is that any human, all humans over any given time will not be consistent? We just can't do it, we're not wired that way. So the other part of coaching, a lot of people, probably the number one reason people hire a coach is just for accountability. Then I'm gonna do this, almost like working out personal trainers. Like it's not that hard to walk on a treadmill and I'll do curls, like you probably master the, right in a week, but like I was painting a guy from a while, $700 a month, right? He was a metrics bodybuilder, champion, right? But it wasn't so much that he was teaching me. It was like, I paid him a lot of money and I better show up. - Yeah, so. - I think that working out as a, my brother and I trained with the runner up, Mr. America in college and it was like, if we weren't there, he was literally gonna kill us. Like he was gonna come to our house and be banging on the door. We were terrified of them. - Yeah, like now, like HU worked out with Mikey, he'd been at his girlfriend for a month. I would probably work out a lot less things this month because, you know, so, but if I was paying a trainer across the street here, a decent amount of money, I would have mine, but at that gym, every day I was supposed to be there. Yeah, so the accountability is probably another huge part every day. I'm gonna ask you, did you do what you said you were gonna do and why not? And then sometimes, depending on the client, you get very directive, like you said, like that bodybuilder and people cry on the call sometimes and this and that and that. - Yeah, I mean, that's part of the work. I have an interesting question for you. It just popped into my head because I think this, we know from years that this plays a role in agent game, but for investors, how do you stay motivated when the things in your life are not going the way that you want? You know, like people are going through divorce, people have relatives who are get sick and then they think there still has to be a way to stay connected to what your journey is or you're gonna fall behind and I think they kind of, they're like, just give up because their life's not perfect or they're depressed, which is fine, but how do you stay motivated on business when your life is not just like on all cylinders? - Yeah, that is a great question and something doing this as long as I have. I've been through a lot of personal bad situations on there. It's the same thing I would tell you if you had anyone in your team or in your group. The best way to keep any human motivated is you have to create a compelling future for them and show them how you're gonna help them execute that they're living in the now, right? Life sucks, I just got divorced, my so-and-so cheated on me, whatever. We had a miscarriage, like I've been through so many things. This sucks. If you can't see there is a sun-shiny day, not too far down the road, it's very hard to get out of the fuck. But once you realize, right, this sucks, but hey, it's a motion, right? It's gonna take time for that feeling to wear off, that's just real, but as long as you're like, hey, this sucks, but hey, we're gonna be okay and this is the next chapter of our life and so on and so such, you gotta go into the future, help them create that picture, and then as a coach, I'm the guy that's gonna help you get there and get through this together on there. - Yeah. - But here's the good news, bad news about that. Do you know who the most successful people in my schedules always are? - You mean besides me? (laughs) - Besides you, the ones that have the most stars, right? They've been to-- - Well, that trends for me just fine. (laughs) - Yeah, I realize that. You know, you know this stuff, when you first start coaching, it's more business-like, but after you speak with someone week after week for any period of time, you start hearing, "Oh, this happened, and that happened." And I see the direct correlation. The ones that had the toughest upbringing, scars, detriments, right? And then they seem to succeed. The ones that had a good life, it wasn't so tough, they just don't have the same drive. - Yeah, I'm gonna give the listeners just because we're at 152 episodes. I'm gonna give them a little insight into me that they may not know, 'cause we've been talking about this a lot. You, as my coach for well more than five years now, think that I work at my peak when I'm fighting with something or someone, right? Yes, and why is that? 'Cause I am, I'm popping on all cylinders. It just could be like a forum fight on bigger pockets, or it could be someone, you know, trying to negotiate a crappy deal with me. I get some like juice out of having some type of conflict, although I'm not a seeker of conflict. - Right. So this I would tell you is the number one trait of probably all the best coaches. Is when you're coaching, yeah, I'm gonna be coaching a real estate business or something like that. It is what it is. That's just black and white. What makes a great coach is the calibration, 'cause you're gonna be getting someone who's more analytic, someone who's more driver-like, someone who's amable. So the way I coach is tremendously different to every client I have. And it's based on first you gotta learn. And first what do they wanna accomplish, right? This is how we'll do it. But the way you go there is dramatically different than, hit a good example. You're a high analytic, super detailed. Right, your spreadsheets are perfect. Beautiful, all of that. I have another client who is like zero C and 105i. Never talk about it, a number of the numbers would hurt her brain, right? - Yeah. - So you gotta know who you're working with and then what is their drivers to get them to accomplish what they said they wanted to do. And it's very different for someone like me to challenge them and call them out on their shit. - Yeah. - The other one, they would cry. And why are you so weak to me? Why do you talk to me like that? - Yeah. I just think it's funny because like at least a month ago we were on me and Crystal and you're like, is he having any fights with anyone right now? And Crystal's like, no, it's like pretty smooth. He's like, he needs to fight with someone. And I mean, what we're saying, yeah, go ahead. - For me coaching gets better over time 'cause I observe, right? And I'm learning so much with you. Like I was just thinking, you know, what does some of the things in Jonathan's past when he was succeeding and then what, and there was a conflict in every single situation. I was like, and there's no conflict now. So it's like an obvious observation conflict. - Yeah. - We succeed when there's nothing he sabotages, right? 'Cause he meets that. No, that's very unique. I've had too many of the people my, I've known ever. - I think, I mean, it definitely goes back to, you know, 10 years as a lawyer, it's like you wake up and then you just start arguing from the morning until the whole day is all modified arguments. I think generally, and I've always said this, because of my background and you can verify this. Real estate to me is never gonna be emotional. It's nothing to me because I used to put people in prison for life or I had clients who were going in prison for life. So when I look at real estate and we're talking, someone's like, oh, I'm gonna collapse a deal over $500, I'm like, go for it, man. You're gonna regret this for 30 years. I don't really give a shit. And I think that helps give me this kind of air away that some people find as like some type of arrogance, but it's not, it's not that I don't care about the deal. It's just that in the grand scheme of the universe, it's so nothing. - It really does. I learned a lot from my Eastern clients too. Whoever is not afraid to walk away from the deal, almost always get the better end of the deal. So as you become a little bit attached to that, you're gonna get the shorter end of the stick. So sometimes, I've learned that for sure. - For seasoned negotiators, I mean, total Chris Voss technique, once I know that somebody's emotionally attached and I'm gonna direct one-on-one negotiation, I'm gonna use that against them to keep making it better. You know, you can do that in law, but like, it's like this is the classic scenario. The person comes to the open house, they don't realize the agents in the other room and they're like, oh my God, I'll pay anything for this house. Well, you just gave me leverage. And if people give you too much information, you have leverage, a good person, which I still believe I'm a very good person, I'm not gonna drive the knife unless they really are being a pain, but I will bring it up and say like you've said this, now I use it as an honesty technique to settle somewhere in the middle. You just told me this, most people are gonna take you all the way down to this. I know that's not what you meant, so let's meet in the middle and I think that's like a fair negotiating tactic. And that's really, a lot of people do need coaching on dialogues, right? Because in the on-market world, a lot of people are doing role plays, there's very few real estate investors, maybe some wholesalers, they should be doing role plays. If you're making 300, 3000 calls a week, you should be role playing these scenarios, or of course you're never gonna win when you get on the phone because it's not the same phone call every time. - So that's a big one for me. I noticed this recently on what I do compared to, it's probably not taught nearly as much. So, the scripting, I call the science, right? You gotta learn the questions to ask and the series, maybe if they're in some kind of order, which is all good, we all have to do that. But understanding that communication is only 7% is verbal and 93% is all our physiology, energy and all that good stuff. So I focus most of my training and coaching on the art of the conversation. - Yeah. - On there, on how we deliver reflective listening, mirror and matching, tie downs, level shifts, all these techniques, there's like a, I trained a video, but it's like 20 techniques. If you listen to it carefully, the guy is using, he calls and expires, right? And like, no, we don't wanna work with you, no, we hate agents, no, we never, never, never. But using the art of these techniques, he slowly just wears them down, wears them down and gets the appointment. - Yeah. - Well, art, the script, an expired script has been the same since I started real estate 20 years ago. - Yeah, I really agree with that. I do think it's an art, 'cause if you just look at the, you know, Phil Jones book, exactly what to say, the things in there are great. Those are great turnarounds, but what I'm seeing now is all these stupid brokerage recruiters are sending me an email with like, would it offend you if we had a conversation? I'm like, I just read the book. Are you, like, you have to take it and put your own spin on it or else you're gonna be just like everybody else? You know, you can't read Horamosie's book and then just write exactly what he wrote 'cause half of us read the book also. - Yes, matter of fact, I was speaking with Spring, my partner over at Prophets. - Yeah. - She's got a lot of stuff going on. So she made this observation. If you think about it is so true, whether it's retail or investors, everybody is looking for the easy button. Nobody wants to put the hard work in, spend the time, like you said, to 10,000 hours. It's like, what's the shortcut? How can I get there? How can I become an overnight success? - Yeah. - So that's what they're all looking for. And then I see a lot of people promoting products out there that promote the easy button, but they don't work 'cause it's just an easy button. You don't have the art or the skills yet. Easy button alone doesn't work. - Yeah, I mean, when we first met, you must have thought, this is the weirdest person I've ever met. I'm the only person probably who distasts the easy button. I want the hard button and the harder the button it is, that's what I like because I know no one else is gonna do it. That must be weird. - Well, it's not enough for your weird club because I say that all the time. It's too easy, I get bored, and the harder it is, I know the least competitive. It will be 'cause most people will avoid the hard thing. So yeah, I get to the hard thing also. - Yeah, but I mean, that's a great way to finish up with one last tip for investors. Like don't take the easy route, take the harder route 'cause you'll be a much polished version of everybody else in the market. You know, it's the same thing. Why do you wanna be swimming in a sea with everybody else? You know, you have to swim the other way or do something different. It's the blue ocean versus the red ocean. I mean, every single time. - Yeah, we can quote Jim Road here, right? Don't wish the work was easier, wish you were smarter. (laughs) - Yeah, and if you can't be smarter, do the work to gain more knowledge. Your IQ may stay the same, but the educational awareness that you have from doing all the work will place you at a much higher level. You know, regardless of what people's IQ is, if you continually do the work and you get to 10,000 hours, you're going to be better than everybody else. - There's another challenge there, because especially here in the States, we go to a public school. And public school teaches you, don't make a mistake. You'll get points off. You'll get trouble. You don't follow all the rules. So then we get out of school, we get into investing and all of that. It's all, we either, we try something, we either win or we learn. But if we don't try, we could never learn. So failure in business is actually I'm going to mitigate the catastrophes. But I try things all the time and I have no idea if they're going to work or not. I call it A/B testing and things that work. I do more of the things that don't, okay? That doesn't work, more do that again. And I'll try something else. But constantly and probably weekly here we're A/B testing something. - Yeah. - Where most people just are afraid to lose and that mindset from back in school, oh, you'll get penalized if you do it wrong. People are apprehensive to take chances that they should be taking to learn from not to necessarily gain from, you know, monetizing. - I think the quote was failure is an incomplete success and that makes, you know, complete sense to me. It's like that's, it's part of the journey. I mean, you should have backups. Like I think when I stop being a lawyer when somebody leaves their nine to five to go to investing, people say like, oh wow, you know, that's a big thing. I'm still a lawyer. If I wanted to, I could just go back and be a lawyer. It may take me a little while to get back in, but I still possess, you know, a JD. So I think that people forget like, you can make a leap. Hopefully you have some runway to make the leap to try something new. But you know what the worst case is? You just go back and do what you didn't like before 'cause you're already good at it. - Oh my God. There's nobody who asked me these things like, I'm involved in like all these things on a pretty big level. So just the last few months I've literally gotten called 'cause real estate's getting harder. - Yeah, yeah. - And laid off people. People say, hey, Mike, I got laid off or I'm not making money, real estate, you know, and all that. And then just to me, it seems obvious, but it's not obvious to the masses. And I was like, well, you don't have to do that. Going back to hedgehog concept and good to great. Is there something you really, really like to do a lot and you're kind of naturally good at it? But why don't we do that? Why don't you go to a different, I had a speaker with spring come up to Utah to teach us about the image revisited. She was like one of their speakers. - Yeah. - Real nice girl, like a teacher. It's really talented. I said, oh, maybe I can, I was like, if I can collaborate with smart people who work with them somehow. So we had lunch together. And she's like, oh man, I really don't like this job. And this and that, she's doing some coaching and then she's doing like speaking. So I was like, you don't have to do that. And we didn't have time to speak there. So she set up a Zoom call with me when I got back. And I started speaking with her. So she's like, you know, what do you think? And I was like, well, tell me what you really, what do you really like to do? She's like, oh my gosh, I love traveling. I love going to different countries and experiencing all they have to do. I look great. If you could make money doing that, would you want to do that? Well, yeah, but I said, what if as you're going there, you're just vlogging, letting other people learn about what you do. I follow a whole bunch of people. Some interview me, some are here and there. And I can tell from the following on YouTube, they're making really good money. And she's like, wow, I never thought of that. Like, it seems obvious to me, but people get pigeonholed. Like I'm, they get a label, like I'm a real jerk. So I do realtor stuff and that's what I'm doing. And they're afraid to change that identity. Well, I'll tell you for me, roughly about every 10 years, I change my identity. - Yeah, me too though. Yeah. I mean, we just did it. I mean, I think it's a good example because this podcast is so important to me that as part of trying to help this grow and because I'm more passionate about it, I released my entire real estate team in one day because this is my true vision. Like, you know, I made it 150 episodes. Now I need to turn it up a notch and you know, our discussions over the years helped me make that decision because sometimes you do have to change, you know, what your general identity is. And I didn't want it to be exactly that anymore. Don't have to be that much different. - Well, I had a gantry of a real big moment just a couple of years ago. I was working for a company doing coaching. And then my son, Mikey, got really sick, as you know, and I literally had to stop. Like he was getting close to where he might die at 22, 23 years old. - Yeah. - So when I did that, it kicked off a one year non-compete. So kind of like, I know it was like eight years or so, I think I was over there. Everybody knew me. This is my name. People call me Coach Mike. Wasn't even Mike Schum anymore. You're Coach Mike. (laughs) I have a new name now, right? On there. And then because of growing up in the business that I did, my word is my word. So the contract said if you leave this company, you can't do any sort of coaching for at least think it was 12 months or a year or something like that. I get a lot of calls, but my word is my word. So now I'm like, okay, I'm going from working like a hundred hours a week, literally on Friday, on Monday, I look at my Google calendar and the year off. - I remember. - Yeah. Oh my gosh, psychologically, that was really tough. I'm like, well, I can't do coaching, you know, what can I do? So what's somewhat related I like to do. So in a similar kind of fashion, when not coaching was a new prop tech software company had called me and said, hey, we're building something to do with real estate, would you want to be a consultant, an advisor kind of role? And I was like, okay, it was kind of like coaching them on how to build something. It's not coaching real estate agents and doing that. So I did that for a year. Then it was a great experience. I learned probably like technology, that field, like I don't probably fit in as well as my more expressive driver. But I didn't talk about Star Wars on all the calls or side, I've never seen any of those things. It wasn't relatable as far as the personality type, but man, what a great experience. I learned how tech works, I learned front end, back end. When I've learned, another one of the secrets of my success is over 35 years, I've built a lot of different companies and a lot of different industries. I believe, especially real estate, it's like the most bastardized one, is I can find away different industries like pharma, medical device or hospitality, whatever, and see how they're doing things, and I bring them into real estate. Because real estate, I've learned, is nothing more than one person figures something out, and then 1.4.99 million others copy. Like there's all over it, there's no, people, I give you something funny, is a, that's my role. I often am asked to evaluate a listing presentation. Hey, can you check out a listing presentation? Can you check it out? I will tell you now, I'm gonna share this with you. I was sharing with the world. I probably looked at like 1,000 or more of these. They're all exactly the same. - Yeah. - You all start out telling me how great you are, number one on this and that, and then you tell them you're gonna take professional pictures, a video, you're gonna put it on 400 syndicated sites. You're gonna do, there are so, so identical. There's little, no differentiation. You guys are saying all the same thing, I'll tell you. - Yeah, but that's funny because, of course, you know, I always go, I never had a listing presentation. I'm the listing presentation. I'm just hanging out, you know? Oh, they're like, you know, why did, it's just like people would say to me, you know, for when you're an agent, they say, "Oh, why did you bring the paperwork to the listing agreement?" I'm like, why? Why didn't I bring the contract to the off market appointment? Why? They're just, I'll just send it to them later. Oh, well, someone else might come in. Okay, I don't care, you know? They're not gonna be able to work with me then, you know? I think that's the, you have to get to a confidence level where you don't need to try to force someone to do something right then, that's basically duress. I mean, it's why contracts get voided all the time 'cause you're forcing someone to sign it instead of just allowing the world to take in and focusing on your attributes, you know? I think to be a good coach, you have to know that you're the asset in the situation. That person's coming to you, if they're not prepared, like they're not gonna help themselves and they're not really worth your time as a coach, right? I mean, that's a, I remember, I think I'm a good coach, but I don't like direct coaching because most people don't do the work. And if they don't do the work, I'm firing them. I can't do it, so then I start with five clients and then I have zero clients the next week. (laughing) Yeah, there is a patient factor that we said, investing with coaching as well 'cause sometimes you realize people are paying a lot of money, you're asking me what to do, you tell them what to do, and then they tell you they didn't do it, which blows my mind some time, but it definitely does happen a little bit in there. Go back to, what was your comp? What were you talking about just before that? I wanted to comment on that. - Probably some anomaly of my personality. (laughing) I was like, "Oh my God, oh, I know what it was." This agent, where you don't bring the contract, like if they send it out, here's why. There is such a fear of loss or just a hungryness to get business. They have what was coined years ago, commission breath. And they're just like, "I gotta get this, I gotta get it." And they'll drop their pants with the fees they charge sometimes, or they seem desperate, and the consumers pick up on that. It goes back to what you're saying earlier about not being afraid to walk away from a deal, you'll always get the better deal. Same thing here, I agree with you. I used to take away clothes probably the most. Okay, I have a lot of other clients, if you don't want to listen to me, that's fine. I got more work, I'm sure I get you a better result than others, but if you want to try working with them, it's up to you. - Yeah, I mean, the markets are all hot now, but one of my best direct-to-seller negotiating tactics for my time as a lawyer was always the time constraint. Doesn't really work now, 'cause there's multiple offers on everything, but I used to say, "Here's the offer, it's good for one day." If you don't contact me and accept it by the one day, it's down $10,000. I swear, if you're one second late, I'm taking $10,000 off the price. They never believe me, and I always do it. And then they don't want that. And they're mad about it, 'cause now it's 10,000 less. They're like, "Well, you must not want this deal." Yeah, exactly, I don't need the deal. I might want it, now I want it less, 'cause you're not complying. You know, they're like, "Well," they think that's like bullying. It's like, "We're in a one-to-one negotiation. "I want the answer by then." If you have a great reason, you can tell me, again, this market is not conducive to that type of negotiation, just because there's other people in. But look, a market at some point is gonna come around where you can use time leverage. And there's markets across the United States where time leverage is a lever that you can use now. It just depends on what's going on. And that's, again, going back to our whole discussion. That's staying in motion, keeping your eye on the market, and making sure that you're doing your due diligence on the person who's across from you, and knowing everything. If you know more than the person on the other side of any negotiation, you're in the driver's seat. I totally agree, knowledge is power, right? I mean, that's probably the one thing came up a lot, actually, this year, more than ever, 'cause I'd spoke a few times once in Utah, Austin recently, I think it's weird. I don't like talking about myself, but I'll share with you. 'Cause I've, for 35 years, all I've done is entrepreneurship and business, and I've read all these books, and I've done over 30,000 coaching calls. I picked up a lot. Let's frame it that way. For like, three times, I went to events, and one person's like, here's a brains of our operation, Mike, or hey, I would never pay a coach, but I paid Mike just last month because he's so smart. There's value there. No matter what you need done, he can provide the value. But, and then same thing when I was, I had a strategy I could share. If you guys are in retail, maybe investing too. It was an easy way to get a client to work with me, is when I would meet with them purposely, I would deliver in the first 15 minutes, what I would call three knowledge bombs. Three bits of information I knew, no one else shared with them, and they didn't know about, and I high percent of the time, shortly thereafter, before we were about to disengage for that showing or whatever that meeting we were in, I said, man, Mike, I was so glad we found you. You're just so smart, right? On there, that's it. If you're smarter than the other realtors, and you can prove that in 15 minutes, you won. It's really hard in that. - Same if you're going to an off-market seller appointment, and you're the only one out of 10 wholesalers who's looked at every sale on that block in the last 10 years and knows all the people's names, and you say, hey, did you know Bob and Sally at one, you know, a semester, they're like, oh yeah, they were friends, well, they sold for 30,000 under the value too, 'cause their house wasn't in great shape either. You know what everybody else is doing? I'll buy your house quick for cash. (laughing) - You look coaching, Ash, you're like, like I can show a need sometimes, like in a couple sentences. They call, hey, Mike, maybe, I don't know if we should work together or not, and I ask him these two questions. First, what is your exit strategy? What's that? - Okay. - What is your monthly percentage of profitability for your current real estate team? Most people don't track that, or they definitely don't know it, well, those are two of the reasons why you should hire me. Let's just start there. There's probably a thousand others, but clearly, two of the most basic things in business, you're failing at miserably. - Yeah, and look, if you're an investor listening and you go into buying a property and you don't know what your intended exit strategy or what your alternative exit strategies, maybe your flip goes over, so you have to figure out if you wanna do a short-term or long-term rental, you have to know all these things, or you're gonna be stuck with a one-note investment. - I thank you for that. I have a lot of, so as my clients make more money, they often get into investing, so I just, I passed your advice on, it's like you're looking to buy this as either a flip or whatever, but I tell them, I'm gonna know three different ways you get out of the process. Flip, short-term, long-term, on a wholesale, whatever, but if you can't get out of it at least more than, at least one way, don't buy the property, 'cause I learned from the market chain, but look at these short-term rental laws that are changing, right? How many people are going to call out with these properties to either over-saturation or change of law? Now, if you can't do a short-term rental, then you can't do rules. - Got it, you have to know that you can do other things. Yeah, if you evaluate it only the short-term rental, and that was 4,000 a month, and then your long-term is 1,800 a month, and your mortgage is 2,500 a month, like you're in trouble. - Yeah, I think that your pond springs out in California, it's gone to something with that, right now where they had all these things, I'm like, "Wait, we don't want all these short-term rentals on here, so now..." Not demand is way down, 'cause it was heavy investment, it almost like Florida back in the crash. - Yeah, yeah. - We'll do some sort of investor in the market terms, "I'm out of here!" And then you got a soft market, all of a sudden, interesting. - Yeah, awesome. All right, Mike, well, I appreciate it. Glad I got you on this show as well. As always, it was a pleasure. Thanks for dropping all your knowledge from 35 years. - Thank you for the conversation. Always a pleasure, and let's do this again. Really good. - Absolutely. The best place to find Mike is on Instagram, you can find him. It's Mike Shum_ that's at the end, and Shum is S-H, I'm sorry, S-C-H-U-M-M for all the years. And then his coaching site for Real Estate Agents is Profits with a Y, which is PRO-F-Y-T-Z.com. Mike, thanks a lot, I appreciate it. That was Mike Shum, the co-founder of Profits, I'm Jonathan Green. We'll see you next episode. Wait, you have reached the end of the show. This is the part where you're gonna get ready to check out, but I've actually changed this part. For over 120 episodes, you heard the same thing. Well, now I've changed it. I've thought about doing intros to the next episode, but I'm gonna hold off on that for now. These are my pitches at the end. I've got nothing to sell you at all, but I do wanna remind you that it really would help us if you support the podcast in the right way. All that means is subscribing to the podcast so you get it on Monday and Thursday. Writing us a five-star review, if you believe that we deserve a five-star review, sharing it with your friends and being a participant in the Zen and the art of real estate investing community. Soon there's gonna be a new website launched, maybe when you're listening to this, it's already gonna be out there. That's where we're gonna have collaboration. You're gonna be able to see a lot from the guest. It is coming soon, and I just wanna tell you, for me to you, I don't know how I got here over 100 episodes. I'm so appreciative of you listening to the podcast and especially sticking around to hear this part. We'll see you next episode. (upbeat music) (upbeat music) (upbeat music) (gentle music) [BLANK_AUDIO]
