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This episode is all about the fear factor. I don’t know about many of you, but many of you may remember the show that Joe Rogan originally hosted called Fear Factor. The show where you’ve got to overcome your obstacles and overcome your fears. Jumping out of plane, crawling to snakes, eating some petrified penis. Joe Rogan hosted it back in the day. You’ve got to do all these things to overcome your three fears. It was always something disgusting or some physical obstacle and then something else. It was of my favorite shows to watch when it first came out. Then it got weirder. I’ve had some conversations with people who are experiencing their own Fear Factor episode. They are mind-effing themselves. The thing I want to discuss is when you feel yourself getting overwhelmed because I think we all do this at some point. We all get overwhelmed, whether we’re working on paperwork or the tax season or the holidays or getting a deal closed. It’s very easy to feel overwhelmed and have the fear factors start to kick in.
False Evidence Appearing Real
The best thing you can do instead of sitting there and letting fear paralyze yourself is to do a couple things. I wanted to go through those things with you. The first thing is fear. Fear stands for: False Evidence Appearing Real. What does that mean by false evidence? We think we have this evidence. Basically, what it means is we automatically go to the worst possible situation. What’s the worst thing that can happen? That’s what starts to paralyze us. My buddy, Gregory says, “What if not the worst thing would happen, but the best possible thing would happen? I know this sounds easier said than done, but let’s face some realities. Some realities that came to me early on is especially in the note business, is there are a lot of moving parts when you’re going from something that you’re not used to. Whether you’re a yoga instructor or a counselor or working on IT or working on a radio control tower or whatever. We all come from different facets of life.
We All Start Somewhere
Note investing is not something that’s taught in school. The real estate class I took was so generic. It was one of the easiest summer classes I could have taken. What I’m trying to get at is we all go through learning curves when we come over the note space. If you’ve never been a real estate investor, there’s a lot of learning curves and things like that. It doesn’t mean you should be fearful. What I mean by fearful is when I started hearing people like, “I don’t know what to say, “That’s fine. Relax. Let’s talk about something. Let’s talk about what are you so fearful of? I’m fearful of making a fool of myself. What happens if you do? I’m going to lose that lead.” Probably not. You have to realize, and I realized this a long time ago, we all have to start somewhere. Even the asset managers, even the Jaime Dimons who runs JPMorgan Chase. Even Warren Buffett, they had to start somewhere first. At one point, they were the new guy on the block. They were the first-person delivering drinks. They were the intern at some point. They all started at the beginning, brand new somewhere. Even the asset managers of the hedge funds, they started a new zone or even the servicing guys, even the traders selling assets, sending stuff out, all the asset managers had to start new somewhere. Give yourself a big breath.
Take a big breath to remove stress and realize that they had to put their pants on one leg at a time. They put their underwear on before they put their pants on. They had to put their big girl, big boy panties on in the morning. They take a shower. They go to the bathroom and brush your teeth. They have to shave or work their hair. They all had to do the same things that we all do on a regular basis. It’s important to keep this in mind. The reason I talk about this is you have to realize that they’re just normal human beings on the other line that you’re talking about if you’re dealing with them and they’re doing the same things that you do. You often have a lot of common ground with a lot of people that you may not realize that you do. When you take those few things into consideration and realize that we all start somewhere that should allow you to take a little bit of breath.
One of the biggest things that get people fearful of is if they’re talking to asset managers for the first time and they throw him a loop where maybe they’re used to the residential and suddenly the asset manager was talking about commercial. They are like, “What do I do?” The conversation you have with a commercial asset manager is the same one you would have with a residential asset manager, “What are you looking for?” First and foremost, the big thing underlies a lot of people are like, “I don’t have all the money saved. I don’t have the private money lined up to be able to fund these deals.” Literally, you have no idea what the asset manager is going to send. You have no idea what the asset manager has in their books. There’s no worry about going all the way to Z going all the way down to, “I’m not going to be able to fund.” You don’t even know what they have yet. It’s the same thing on the residential side. People call me all the time, “I need help with this.” “What do you need help with?” “I do not have experience with that.” “Do you even know what you’re looking at yet?” “No.” “Do you have a list yet?” “No.” “Why are you going eating petrified donkey dong before you have to get there?” “I want to get my ducks in a row.”
Ducks can be put in a row pretty relatively quickly. What I want you all to realize is fear is not a factor for most of you. That was one of my favorite lines, “Fear is not a factor for you.” What I’m trying to get at here is we all start to worry about different things. A lot of times it’s like a hot potato. We eat something and we throw it to somebody else. We got to throw it somewhere. Chill before you start throwing. You might not even have anything to look at first. Don’t be willing to throw the deal to somebody else. I want you to take some time to look at. If you can’t handle it, then bring on a professional, bringing on a partner because the big thing with commercial assets, a lot of times people get into commercial assets, but they’re not even the principal. They’re bringing on the team and bringing on experts. There’s a lot of partnering going on in the commercial space where the people are used to doing. We had Sal Buscemi on talking about a lot of people on the commercial space aren’t experts in self-storage. They are not experts in multifamily. They’re not experts in mixed use. They go fine and align themselves with somebody, who will run the operations. They’ll run that, put a team around them. That’s one of the biggest things I can tell you if you’re getting stressed out because you’re seeing commercial assets.
It’s the same thing. “Here’s what we’re looking for. We’re looking for stuff in these markets.” It’s very similar to your discussion with a residential. “Here are the states we’re looking on buying. Here are the major markets. We’re open to looking at a variety of things, but we need to know condition, meaning cashflow. That’s the big thing about commercial assets. You need to know cap rates and NOIs to figure out prices and stuff. If it’s a vacant asset, there’s not any cashflow. It’s a longer play with commercial assets. You’re not going to fund in seven days or 30 days like you do on the residential side. On the commercial side, you get longer. You are going to take that bigger break and go from there because asset managers, they just want to know, “Are you looking at buying? Can you fund at some point?” and we’ll go from there.” They understand that there’s a longer process in the commercial side of assets, reviewing operating expenses, all those rent rolls, and things like that to make sure it’s a done deal before you fund. The big thing too, a lot of people get flipped out, “It’s commercial. It’s more expensive. It’s higher priced.”
Share What’s Going On
What you have to realize is it’s a higher priced asset but that’s okay. There are a lot of people that are looking for those types of deals. They’re looking to fund those types of deals. Take a deep breath and realize you’re a few phone calls probably from talking to somebody who handled it. You do not have to go out and fund $25 million now. Most marketers require you to send a proof of funds letter until you go to start bidding on stuff. If you use a $25 million asset, most of you aren’t going to be able to find that anyway. That’s okay, but if you look at, “We’re looking at stuff in these markets,” probably a smaller loan balance, $5 million less or $2 million or less, depending on the project. We’ve got a variety of private investors behind us and that is true for every one of you. You all have plenty of private investors in your stable. Maybe you just don’t know they’re your stable yet. You’ve just got to share what’s going on. You’ve got to share the deals that you’re working through. You’ve got to start talking to people that are in those arenas.
When an asset manager sends a list, especially commercial assets, you’re going to look at and see if there’s anything. You may not know what you’re looking at first, that’s the first phone call, “What am I looking at here? What makes sense? What’s the fastest thing?” The best thing that I did initially, early on is when I started getting these asset lists ten years ago is I reached out to experts, “Can you walk me through a dealer to here? Can you walk me through this? Does this make sense?” That’s the first thing that you probably want to do. If it’s something that’s in your wheelhouse, I usually reach out and say, “I got sixteen assets or 26 assets in my backyard. I sent it to a realtor.” I’m like, “Why would you send it to a realtor immediately?” It’s in your backyard, jump online and check out the crime maps fast in Trulia. Check them out on Zillow.com. Here’s the original font, jump in a car and driving around and look at the assets. If I’ve got 26 assets in here in Austin, San Antonio, Dallas or Houston, I would jump in a car and drive around and look at those assets.
Look At Online Values
That’s the whole reason why Steph and I flew up to Ohio. We drove around Columbus. We drove around Cleveland. We drove around Akron. We drove around Canton, Toledo, and Cincinnati. We drove around those areas looking at assets. We wanted to get a feel for the neighborhood and see what’s going on. It’s the same thing in Michigan. That’s why we flew into Detroit. We drove around Detroit and Flint, Pontiac up to Base City, back down to Ann Arbor and Lansing. You have to realize, if you get a list of assets in your backyard or within a couple of hours of where you’re at, the best possible thing that everybody could do, especially if you’re brand new is take a deep breath and go take a look. If the asset manager says, “I have to bid by tomorrow.” “I’m not going to get a bid to you tomorrow. I’m going to drive by these assets. I can have a bid for you next week.” Work on the initial due diligence, jump online, check out taxes, look at some online values on Trulia to maybe narrow the list down. If you see it’s in a rougher area, maybe narrow the list down from 26 down to fifteen. Still, the best learning experience you can have is to step up to your fears, not run, screaming, running away. That’s the thing I want many of you to realize.
Looking at the assets is one of the best things you can do. Ask questions, “What do you see about these assets? What’s going on that?” If you go to an expert in a field, expert in notes, experts in apartments, and you asked for their counsel and they give you counsel or they give you deals to look at and things like that and then you turn and say, “I need to speak to my advisors.” What does that mean? I need to go speak to my advisors that aren’t in the note space. What value can they add to you? That’s the biggest slap in the face that you can give somebody you reached out to you. If I reached out to my buddy, Corey Peterson, who is an amazing apartment investor or if I reach out to Jason Bible, who is doing great stuff in the Houston market and I asked him to evaluate a deal for me. Then I’m like, “No, I think you’re smoking crack. Can I call somebody else?” That’s not a good thing. If you reach out to somebody for some help, they don’t give you the answer you like and you think you can find it from somewhere else, you have a problem. It’s a confidence problem.
Evaluate Your Day
If you’re not going to do any of the groundwork yourself, I’m sorry, don’t be wasting people’s time asking them questions and then going back and countering what they gave you. That’s just not a professional aspect of things. The thing you want to also keep in mind is to be respectful of other people’s time and respectful of your time. If you were feeling cramped, you’re feeling like you don’t have enough time to get some things done, evaluate your day. Look at your day, “What am I focused on?” and realize maybe you’re not going to get to everything in a day. Pace things out a little bit. That’s the big thing is if you look at your schedule, a lot of us get to run around like a chicken with its head cut off, “I’m not getting anything done it.” Why are you not getting anything done? Because you’re wasting your time with little items. Are you running all over the place not being organized? When we have the stress of time, of constraints, that leads to us feeling scrunched up. That’s when the fear kicks in, “I can’t get everything done.”
If you can’t get everything done, then you either got to look at what can you cut out of your schedule or do you need to bring on some help? Do you need to bring on somebody to help you out with some evaluations? Do you need somebody to come on as an assistant to help you with your paperwork so you can focus on the things that you need to get done? Because in this age, you can hire VAs, virtual assistants for $3 to $4 an hour or $5 an hour to help you with a lot of the menial things. The due diligence aspect of things. You can jump on their software up. We had JD Bates on talking about the NoteProz and some of the asset management stuff that they’re looking that he’s added to NoteProz. Simple tools can often save you a lot of time and energy, but ultimately at some point, if you want to take that next step, you have to realize and overcome your fears and go ahead and hire somebody. That’s one of the best things that you can do.
There are many people that posted in the WCN Crew. Some people posted in there, “Here are my goals for the year. I want to do twenty deals. I want to do 120 deals or I want to do $10,000 in cashflow or $5,000 in cashflow.” How are you going to get to that? If you’re still working a full-time job, it’s hard to hit 120 deals. If you’ve got a flexible schedule, it’s a different aspect. I’m not singling anybody out. What I’m simply saying is looking at what you’re doing. A 120 deals or even 50 deals requires almost a full-time focused on what you’re doing. If you’re a full-time focus is still on the job, that’s okay as long as you have your system is in place. As long as you may be bringing on the people that help you out in your business. We’re not talking about full-time position, but maybe ten, twenty hours a week or 40 hours a week. Somebody to work remotely across the country, across the continent.
Those are simple things. They’ll help you alleviate a lot of the fear because the fear factor in life often comes from pressure, “I will not be able to get things done. I do not have enough time in the day.” You do not know what you’re looking at. Not knowing what you’re looking at is not an excuse to be fearful, that should be a driving force to pick up the phone and call somebody, which is great. If you have questions, I’m always available. Drop me an email. I’m glad to help out if I’m available. If not, if I don’t know the answer, but I’d put you in touch with somebody. That’s what it comes down to more than anything else. The fear is not a factor for those that know where to turn, know who to call, or what they’re looking at. It doesn’t mean they’re going to eat any dry donkey dong, but it does mean they’re going to whom it probably does taste like chicken and go from there.
Dealing With Borrowers
Especially when you’re dealing with borrowers in the note space, they have a lot of fear going on. They know they’re behind their mortgages. They know they’re behind in their payments. They’re worried about being foreclosed on and sometimes the best thing that you can do to help avoid that fear factor is to talk to them, “What are your plans? What are your goals?” As your market always like to say, “The first conversation that they have with Singer Law Group when they’re reaching out to a borrower on behalf of us is, “What’s the situation? What’s your story? What do you want to do?” It’s just to have a conversation. Let’s alleviate that fear that I’m the big bad banker and I’m going to foreclose. I’m willing to help out with you if you’re willing to talk to me. That’s one of the biggest things I know a lot of people get into, “What do I need to say?” In some cases, you don’t need to be saying anything. You need just to turn it over to the good people at an attorney’s office or your servicer or special servicing to get things rock and rolling.
Face Your Fears
The biggest thing I can tell each and everybody out here, we all have fears. Everybody, myself have fears. I hate snakes. One of the things that I do is like, “Can I get away from the snake? I’m fine. Can I have a sharp object to kill the snake? I’m fine. I’ll be okay. Steph always likes to joke about that. I don’t get scared or stressed out by anything. I’m stressed out about a lot of things, a variety of things like a portfolio or working to get things done or classes. There’s a lot of things that affect me. One of the best things that I do is I go face my fears. Let me work on this. I have a process. What are the big rocks that I need to get done? What are the things that I need to go? I had a great conversation with my buddy, Val Sotir from Watermark Exchange. We’re talking about, “Where do you think the market is going?” A lot of people are very fearful of the markets. It’s the unknown that causes fear. It’s the unknown. “What’s that taste like? What’s our next move? Do I need to be saving? Do need to be buying. Do I need to be selling?” Val said a couple of good things that I totally agree. You can’t try to predict the market. If we started thinking back when we got into this business back in 2008, ’09 and ’10, many of us said, “We thought this will be a three-year run.”
Eight years later, a three-year run, we’re still sitting here. We’re still buying assets. We’re still selling assets. We’re still buying nonperforming notes. We’re still seeing defaults across the board. One of the big things that drive me bonkers when I talked to students. I need to prove the concept. What do you mean you need to prove concept? Wall Street is doing this. What more do you need to know? Goldman Sachs is doing it. Do you think they’re proving concept? Don’t be afraid that if you’re working through a deal and the numbers make sense. You’re reaching out to advisors, your counselors. You’re seeking counsel, not advice. There are plenty of opportunities in the market. One of the biggest things I want you to look at though is realize that those are opportunities. If you have an opportunity for something like that and the deals make sense and you believe in the deal, a lot of times that’s what it takes for people to invest with you. That you understand the numbers. You know where this deal is going.
One of the big things people get upset with is when private investors like, “Tell me about the deal.” That’s a good thing. They should be willing to talk about the deal. You should be willing to share the goods and the bads. This was originally 26 assets. We narrowed it down to sixteen because of this and this. Out of these twenty-six and we narrowed it down to fifteen. We believe that ten to twelve of them get re-performing because of this. There are the taxes are paid by the borrower this year. The utilities have low balances. They’re only a few months behind and based on the payment history, we can see that they’re paying. We believe these are some decent deals. The unknown, what happens when the thing hits the fan? What do we do? They don’t pay. They don’t work with us. We’re going to start filing foreclosure. We’re going to start legal action. I have my attorney. Here are my big bad guys with the bat, not me. We have our attorneys. We have our servicing companies because that’s one of the biggest things that you have to share more than anything else.
The best thing I can tell you is learn to embrace those questions and have them prepared. If there’s an elephant in the room, it’s best to address the elephant right off the bat. What happens when the thing hits the fan? Who’s your insurance company? Do you have a title company? One of the things that we talk about all the time especially at the Virtual Workshops is you rely on your vendors. Rely on your vendors to help you overcome your fears. Rely on your tribe, rely on your masterminds, and rely on your experts. If I have a legal question, I need to call my attorneys or I’m calling and talking to people that I respect. If it’s about real estate, I’m probably calling Daniel Singer or one of my attorneys in the state, like Franco Barile. If it’s something to do with entities, I’m probably going to call Aaron Young or I’m going to talk to Kevin Day about my estate planning and things like that. If it’s servicing, I’m going to call Shante or Joel Markovitz.
What you have to realize, the experts will help you avoid the fear factor in life. They’ll help you avoid eating some dry donkey dong because that does not taste good. What I’m trying to get at more than anything else is you can see where you’re headed. It’s up to you to steer the ship especially the conversations. I’ll give you an example. A lot of people are very nervous. They get fearful every time they’re going out to meetup groups or going out to the real estate club. I’m hosting a podcast meetup group here in Austin on the North side of town. I put it together. I’m like “We do see some good things taking place with my buddy, Chris Krimitsos from Podfest.” He started the Florida Podcasts Association. They meet once a month. I could meet once a month. I could carve two to three hours of time out of my schedule to meet once a month. It’s 24 hours out of my year to meet with the people around here to network. It’s just going to be a round table. I’m going to be meeting people and talking about their podcast. We’re talking about what we do here.
How can we help? Any tips I can learn, the traits, that’s how I started it. We only got 40 people that have signed up and been a part of that group of fifteen people, twenty people at this thing. It’s going to be a round table, for the most part. An hour and a half round table to whose needs the most amount of help, what subjects they want to face on and go from there. It’s the same thing with Real Estate Investing Club. I travel a ton. I know working with local investors like you a lot of times. We’ve met some of us on here that host local groups. I made a presence like, “There are plenty of real estate investment clubs here in Austin. I need to probably go to attend more.” I reach out to and see there’s one literally not too far, Cedar Park Investment Club, which is not too far from my house, a couple of hundred members. I’m like, “Awesome.”
I see the President, his last meeting was November. He started a quick leave. I reached out to him and saying, “I see you’ve taken a leave. You’ve done a good job with the group here. I’d be glad to come in and help host a meeting or two until you get everything up and running again for you or until you get over your hurdle.” I’m not trying to recreate anything. It’s the same thing. It’s the first year, we are the goals. What are some things you want to accomplish? Also, we get the word out a little bit to what we’re doing, but it’s not my group but I’m glad to help out that guy. He reached out to me, “That’d be phenomenal. Let’s talk this afternoon.” I’ll have to do it later in the month because Steph says, “What’s another day in the machine? Keep going.” That’s the thing is I’m not fearful to add something a little simple extra to what we do. God knows we have plenty, but it’s still a win-win. I’m not fearful for that. Maybe it’s one or two means if nobody shows up, nobody shows up. I have my night back. The thing I’m trying to get at, everybody, you have to realize is most of your fears, most of the factors we have, failure of trying to get things done. They’re up here between our head.
The biggest hurdle that we will all have in life is dealing with that four to six inches between your ears. What I’m trying to get at with more than anything else is if you’re not having the success you’re having because you’re constantly being fearful, you’re scared of failure, embrace it. What’s the failure aspect of it? Have you even attempted anything? Who are you getting your advice from? Are you getting counsel or are you getting advice? Are you seeking counsel from idiots who’ve never been or even attempted what you’re trying to do or never even got their own land? They let fear bringing them down. They’re trying to draw you back into it, it’s time to eliminate those relationships or step away from those. Go out and surround yourself with a new tribe that will help you overcome your fears. I look back to the last ten years, it’s totally different. Now, I’m not doing what I was doing ten years ago. What’s going to happen over the next ten years is it’s probably going to be a lot different than what I’m doing now in the real estate arena. I’ll still be doing notes, but who knows what’s happening?
The thing is we as entrepreneurs, we need to be constantly growing. If you’re not growing, you’re staying stagnant. That’s not a good thing. One thing that Steph and I are constantly looking to say, “What do we need to do? What do we need to freshen things up a little bit as far in the note business? What do we need so we’re not staying stagnant? What are the things that we’re doing going forward?” We laugh a little bit because we see some great people doing some amazing things and that’s great. They’re out doing some of it that is not in our wheelhouse. That’s fine. Does it make sense? Probably not. Let them do what they need to do. We’ll just stick to what we know is working and we’ll keep adding to that. We’ll keep making what we do better. We’ll keep adding new things to what we do to keep it fresh, but that doesn’t stop us from experiencing fear. Is this going to fail or is it going to go well? If it succeeds, it’s great. If it doesn’t succeed, we can always move on because of more opportunities were at lost in indecision than making a decision.
If you can fail forward and learn something along the way, trust me, more times you fail literally, you can’t fail forward and take a step back. It’s physically impossible for your fall on your face and do by taking a step back. You always want to learn something more by overcoming your obstacles. Keep moving forward. The more times you fail forward, the less fearful you will be of taking on new things. Ultimately, fear will not be a factor for you. Once again, thank you so much for tuning in. Thanks for contributing. Once again, don’t be scared, go out and make something happen. False evidence appearing real, that’s fear. Slice through the false evidence and realize you can find out what you’re fearful of and overcome your obstacles. When you do that, you get closer to us. See you all at the top.