Beyond Multifamily: The Case for Retail and Office Assets

If you take one of those suburban office parks, you know the kind that got built during the tech boom where it's maybe four, five, six buildings, anywhere from four to 20 stories, and they created these suburban office parks, you know what they all paid for them because they went for top dollar.

If you can get one of these buildings at auction for 20 or 30% of what they paid for it, you now have such an advantage because you're leasing out a very similar product for half of what your competition is leasing it out for.

These other guys and girls, they can't afford to cut their lease rate because they would be underwater.

You can go in there if the market's at $10 a foot, put up a giant sign, guys, $5 a foot, come rent office for me.

Every broker, every person looking to move their company into an office building, they're coming to you.

Welcome to Truly Passive Income.

I'm Neal Henderson.

And I'm Clint Harris.

And today's guest is Ash Patel.

He leads Invest beyond multifamily.

He spent 15 years in corporate roles before shifting full time into commercial real estate.

Over the past 15 years, he has bought improved and managed retail, office, industrial flex and mixed use assets across the Midwest and Southeast.

His work focuses on value add deals, hands on management, and protecting investor capital through conservative structures.

Asha also mentors investors who want to move beyond residential and crowded multifamily markets.

Friend of ours, known him through the best ever conference for several years now and I'm very excited to have you here.

So, sir, how are you today, gentlemen?

So glad to be here.

This is going to be a lot of fun.

I love it.

Yeah, I agree.

I saw this on my calendar today and I knew it was coming.

I was like, oh, today's the day.

Yeah, we actually had, we actually had two more podcasts on the schedule today and our, our schedule just got crazy and I was like, all right, we got to clear some space off.

And I was like, I'm not getting rid of.

That's right.

Yeah, we booted the lowly mortals all of the schedule today and here we are.

So.

All right, listen.

A lot to unpack, a lot of background.

You got a very well rounded, robust commercial real estate investing career.

So give us a little bit of that background.

Maybe don't go too much into the detail, but I'd love to hear about the different asset classes that you focused on so that people understand how much of a privilege it is for us to be having this conversation.

Yes.

So first building that I purchased was mixed use building in college Town apartments, convenience grocery store on the first floor.

Saw that the college kids were destroying my apartments, calling me every time their toilets are clogged or whatever.

And the commercial tenant was making repairs to their own space, new H vac system, fixing the exterior lights, re striping the parking lot.

And I thought to myself, why would anybody do residential when the commercial tenants will do a lot of the heavy lifting?

They take a lot of pride and take care of your space.

So that was a pivotal moment for me.

From there, whatever I could afford.

I wasn't working with a lot of money so I bought some heavy value add, you know, vacant retail buildings, half built office buildings and just stayed on the non residential side.

Made the mistake often of buying a few single family houses, buying more apartments, did terrible.

With every residential investment actively managed.

Right.

I'm not good at it, but over the years just progressed with getting larger and higher value add properties and ended up somewhere around $50 million of assets under management in 15 years.

Yeah, that's amazing question for you.

Your trajectory is a little bit non traditional.

For a lot of the people that we talk to, the traditional trajectory is like single family house, maybe getting into brrrr.

And it takes a lot of years for, for people to realize that's a really slow strategy that doesn't scale very well.

And it only works in markets where the interest rate and the prices are in the right ratios.

Very hard to do right now.

And eventually those people move on to small multifamily and kind of work their way up maybe into multifamily and then eventually into commercial.

And then like times that over 20, 30 year period, that guy finds out that he would rather just be a passive investor and he would rather invest with other people that are better operators.

And that's kind of the life cycle.

You moved into commercial like kind of before it was cool, right?

Like you were in pretty early for a long time and then you dabbled in residential.

And it sounds to me like that just validated what you had already learned.

Like no, no, no, I started this on second base and we just need to keep going instead of looking backwards.

Yeah, you're giving me way too much credit.

It was really a stupid reason why I bought that building.

And it was the first floor of that building had a giant convenience store, let's call it.

They basically sold a ton of beer to the college kids on campus.

And I thought, okay, when their lease is up, I can put somebody in there and I could run this store and have a different source of revenue.

An additional source of revenue.

So that was my mentality.

It wasn't, oh, let's become this, this great commercial investor.

It was, hey, this seems like a great opportunity.

Let's run a convenience store.

So it was dumb luck, right?

That just exposed me to the commercial side of things.

But also, yes, then I did get into single families apartments.

And if you guys were around back then, in multifamily, the returns were 26, 28% annualized returns with sale depreciation was phenomenal.

So it was a great few years of passively investing in what was arguably one of the best asset classes of its time.

Multifamily, you get, there's an unbelievable wave.

And now it was kind of a situation where it felt like you couldn't miss.

Everybody was doing well, making money hand over fist.

And now we've had some significant economic headwinds with first Covid, that was unbelievable, like unprecedented.

And so it was like a double whammy, like back to back, that really just put the whole thing on ice.

And the people that weren't operating at maybe the best level, a lot of them got exposed.

The people that have been operating at a high level and have relationships to get fixed rate debt into place have still done well.

But it, it was not a good look for multifamily and it was not a good look for office, which obviously that got decimated by, by Covid.

But the run up to that, that previous 10 years, five years especially, but pre 10 years was, was unprecedented.

So before we get into kind of what happened and, and any pivots and opportunity that you've seen in the market, I have a question for you.

As you get into the commercial space, a lot of things that becomes a challenge for people is money, right?

And as you start getting into those commercial assets, a lot of times that leads into strategic partnership or syndication, because you need capital.

And that's a way that you can raise capital from a group of people.

So at what point after that first building did you start looking into syndicating, raising capital, strategic partnerships, and how did that grow for you?

Man, that's a great question.

That's another thing that I really screwed up on.

Joe Fairless was a good friend of Mine lives down the street.

And every time I did a deal, he would say, hey, did you raise money for it?

And I'd say, no, no, I got this.

And I would stay my little comfort zone of maybe 200,000 to $700,000 purchase prices.

And every time I bought something, he would get so tired of asking if I raised money, he would just say, hey, should have raised money for it.

Should have raised money for it.

And I'm like, okay, like you do you.

I'm going to do me, and I'm doing great.

And you know, I also lied to myself saying the best deals are between 2 and $800,000 because that's what I could afford, right?

And I really believe my own nonsense.

And in reality, I was just too afraid to take other people's money.

And it wasn't until my wife is physician and a lot of her doctor, a lot of our doctor friends would invest in bars, marijuana companies, all kinds of different crypto schemes, and they would never get a return on their investments.

They would often come to me and say, hey, Ash, come to this pitch of this marijuana grow operation.

I want to hear your opinion.

And I would say, guys, none of this makes sense.

Like their own projections don't make sense.

No, I'm not doing it.

You shouldn't either.

They're like, oh, you know what?

Like, we're going to take out an SBA loan or a home equity loan and we're going to put money into this.

And it wasn't my job to rain on their parade.

I just gave them my opinion.

But these investments never paid off.

And it was at that time, I'm like, okay, like I should let these guys into our deals.

That's what changed for me is I'm actually doing them a favor by letting them into our deals.

And Fearless had said up on stage one day, he's like, guys, if you've mastered your craft, you.

You're being selfish by not allowing others into your deals.

So a lot of that resonated and it was truly a game changer because then we started doing bigger deals and we realized our bottleneck is finding great deals, not capital.

And that's the way it should be.

Your.

Your conversations with Joe mirrored a lot of my conversations with my partner, now partner, Eric, who was a successful mom and pop self storage operator, slowly kind of building his way up.

He was built doing deals with his own money.

And I was working with Joe at the time too, who's also a good friend of mine as well.

And Joe, you know, I'm telling Eric all the time, joe, eric, you gotta start syndicating, man.

You gotta start taking other people's money.

And Eric was like, nope, nope, I'm not ready.

I'm not ready.

You know?

And what you and Eric both did was you prove the concept with your own money first before putting the investor capital at risk.

And I think that displays an extraordinary amount of integrity, a lot of patience, because, you know Joe.

We've all seen Joe.

You know, Joe's had a rocket rise.

You know, he's struggling like a lot of multifamily people are now.

But it really.

A lot of the people who have really gotten into trouble with multifamily over the last five years were people who had never really proven the concept before.

They started taking investor capital, and they just jumped in.

They were really good at marketing and really good at raising capital and not so good at underwriting deals and managing.

Managing multifamily in a down market.

So kudos to you for being patient.

But.

And I think Joe is also right, and he's used that same line on me, which is, stop being selfish with the money that you're making and offer this opportunity to your friends and family, the people who don't know about it.

Yeah, Neil, a lot of good points there.

Do you remember speaking with people pre Covid and the answer is, what would you do differently if you went back in time?

Go bigger faster was always the answer.

Right.

And that kind of resonated with me, too.

It's like, you know what?

Damn.

Like, if I had gone bigger faster, I could have been at the top with all these other guys.

But in hindsight, looking back, going bigger faster was not the greatest idea.

Right.

Slow and steady.

Don't ever lose investor capital.

Play defense.

Slow is smooth, smooth is fast.

Yep.

I think the people that, you know, everybody on the podcast is tired of hearing me saying this, but Warren Buffett, I'm tired.

Warren Buffett made the quote, you can't tell who's skinny dip until the tide rolls out.

And that just resonates with me of what's happened in the syndication space over the last few years.

The people that jumped in that were the quickest to take other people's money and put it to work.

I think a lot of them got exposed, and I think that it's given everybody a little bit of recency bias about the industry.

But I do think the people that started off putting their money where their mouth was and doing it right as an operator first, the way that you did, the way that Eric Hemingway did.

I think that there's a lot of value in that if you're hesitant to take other people's money until you know you can get it right.

To me that speaks to character.

And you know, I've, I've done some pretty cavalier, stupid things with my money that I hope that no one would ever do with investor money.

Right.

But sometimes you gotta test the water and you try things.

That's not the time to use other people's money.

That's the time to use your money, that it's okay if you lose it.

But the reality is it also, in my opinion, creates a little bit of opportunity.

And I think there's maybe room for a conversation shift here.

Now you're looking at around.

We've all seen operators that their social media has gone dark.

They've had capital calls or pause distributions as most people have in a lot of different industries.

And we've had our challenges too.

We have projects that are behind where they're supposed to be in terms of lease up for self storage because the housing market essentially froze.

But I do think that it creates opportunity to look at the people that are still operating right now and just know those are people that have been stress tested.

That's a different investor.

They've learned a lot and a lot of times what they're going to tell you is going to change.

So in my mind, there's a part of it that makes it a good time to look for operators that share the core values.

They've been through some hard times, but you saw their communication, their ethics and their morality shine through.

And yeah, maybe the deal had struggles, but it's an opportunity to bet on the jockey and not the horse.

And now as we're starting to have more or opportunity open up, I think it's easier to identify the operators that you probably want to partner with to embrace that opportunity.

Something you said, I think everybody in your audience, every potential passive investor should ask syndicators and it is, how many deals did you do on your own, for how many years were you on your own before you took investor capital?

You know, you hear these people, oh, the top 10 things to ask any syndicator.

How many deals have you lost money on?

What you said I think was probably one of the most important because if they jumped into syndication right off the bat, playing with investor capital, I would question that a little Bit Right.

But if somebody put the work in and they grinded for years and a lot of their, a lot of their own deals and they want to prove the concept first.

How, how important is that?

I've never heard it said that way.

So your audience should really take note on that one.

That's a very important question to ask syndicators.

Thank you so much.

Cause there's a lot of boutique.

There's still a lot of little boutique guys out there that are doing multifamily that have never lost money.

They always had fixed rate debt, they always had heavy value add, vertical integration, but they didn't scale to a billion dollars.

They're sitting around 10 million or 5 million.

And they've always done well.

So, yeah, that's, that's a great point that you brought up.

Thank you, sir.

Appreciate it.

So you, you often describe retail and suburban office as overlooked areas.

We're going to shift here for a second.

What specific data points or signals are you seeing that tells you the demand is still strong or improving despite the negative headlines?

Because everybody is like, retail's dead, office is dead.

Prove me wrong, Ash.

Yeah.

Guys, I gotta tell you, even when I talk to real estate professionals at conferences, when I speak at places, I ask by a show of hands, who here thinks retail is dying?

And you know, I have slides up where Toys r us, gone, JCPenney, gone, Sears, Kmart, Bed Bath and beyond, all the headlines.

But you never see headlines where Dollar General's opening 800 stores, Aldi's opening 160.

Those don't make the clickbait headlines.

So the metric that you're looking for, Neil, is retail is the healthiest, healthiest it's ever been in recorded history.

And that comes from CBRE over 20 years ago.

They started recording retail vacancy Metrics.

It was right around 4%.

It's ticked up a little bit closer to 5%.

But that tells you something, right?

It's the best time ever to be in retail.

Now, from an operator's perspective, historically when we wanted those great national tenants, we, we'd have to chase down a broker, try to get them on LinkedIn or just scramble to get their attention.

Now the national tenants are coming to people like me and saying, hey, I see you got some vacancy in this strip mall.

We want in.

That never happened before.

You look at these cranes in every major city, they're building apartments.

They're not building retail.

Right?

Not.

There's no high Rise, retail buildings going up.

There's really not that many strip malls being built.

So retail is the easy one to answer.

There's just not that much supply.

Supply hasn't kept up with demand.

But office, on the other hand, that's a little bit more challenging.

You know, when the COVID work from home debacle started, people really thought it was going to be permanent, it was going to be a forever thing.

So office leases were abandoned, they were not being renewed.

And these, these investors who own these trophy buildings, suddenly they were 100% vacant.

They couldn't make their debt service.

They're going to auction foreclosure.

You guys have seen some headlines on the most iconic buildings in some of these downtowns.

Pittsburgh, Oregon, and the most beautiful buildings are being sold for 10 cents on the dollar of what they sold for just five, six years ago.

So this is a once in a lifetime opportunity to buy office for pennies on the dollar.

Now, if you want to dive into metrics, I've really been trying to follow where's the bottom?

And I don't have that.

But what I do have is employers.

As of a year ago, they had some metrics.

They said, okay.

When Covid first started, they were shocked because on average, the workers that are working hours more productive per week.

Reasoning for that is if you would get in your car at 8am to go to work, instead you just go to your kitchen table and start working.

Well, guys, over the last few years, you go out and you see people in the middle of the day having cocktails, long lunches, kids are at the park walking their dogs.

This never happened.

Pre Covid.

Right.

The amount of people in society just freely roaming at noon, 1 o', clock never happened.

Pre Covid.

Now, we've all learned how to game the work from home system.

So we're doing laundry, we're scheduling lunch meetings.

Hell, people are going on vacation, still on the clock, right?

So the latest metric is, on average, employees that work from home are four hours less productive per week.

The most conservative companies, Google, Facebook, Disney, JP Morgan, they all said, okay, everyone, back to the office.

Enough of this experiment.

So office buildings are becoming repopulated.

But how do your investors, how does your audience capitalize on that one?

I would still avoid anything downtown.

Those city centers, nobody wants to park or pay to park and then walk a few blocks.

And if an employer is like, wait a minute, do I make my employees come down town, fight traffic, pay to park, walk to the office?

And all these restaurants and bars have already closed because of COVID or do I just get some suburban office close to where most people live?

So suburban office is on fire.

Always has been by the way.

Never skipped a beat except for those high rise, mid, mid rise buildings.

Right.

Anybody who has small office and a walkable suburban downtown, I've never heard of a story where those have gone to foreclosure or they had any challenges.

We've always had waiting lists for those.

So suburban office is where I would really look now.

It makes sense.

You know, the, the, the good headlines that I do hear about office is like New York City, New York City office vacancy is way, is way down.

But New York City is a very, very unique city.

I mean this, people are used to using public, you know, they're not driving into the city typically to, to go to an office in New York City, usually taking public transit which is just, you know, light and night and day difference in New York City than say Atlanta.

And I think you bring up a great point as well, is that the, the infrastructure that supported the desirability of that downtown office building in a lot of city centers has crumbled because you know, you got all those restaurants and you know, all the services, things like that, those have gone away and, and it's going to be, it's going to need for all of that to come back as well before I think you'll start to see a recovery in those sort of downtown urban center office towers.

Yeah, you both bring up a really interesting point here because a lot of times we follow New York because as goes New York, so goes the nation in terms of the real estate market, housing, whatever price is going up, dropping, whatever it may be.

So I think that's the natural canary in the coal mine that everybody's looking for.

But Ash, you just made a very interesting distinction about city centers versus suburban.

That's not a differentiation that I've really focused on.

So if you really break it down, it is, it makes total sense that there's an opportunity there that is being missed.

Because when you think office, what is the first thing we said?

We said it before we started recording.

Well, Atlanta, Austin, New York, Chicago, Seattle, like we.

Where are the indicators, where are the heavy office indicators that we look at?

It's always high rise office in a major metropolis with majority of people thinking about New York City.

But office is not relegated to high rises in New York City where you have to move into the city center.

And I think that you're maybe breaking that down into subcategories is something where there's things that are being missed here.

You bring it up a very, very interesting point.

So speak to us a little bit more.

That, like, what types of areas, what size buildings, what size properties and projects are you looking at?

Yes.

If I may, let's talk about how this domino effect happened to city centers.

So one, we started with the COVID lockdown, and, and employers said, okay, you guys can just work from home.

So those downtown office buildings stopped being populated.

These millennials at the time that were living in their overpriced little downtown boxes, often with a significant other, a pet, they're now cooped in their little apartment because they can't get out, can't even go to the park, right?

So then, because the office population is not coming down, the bars and restaurants have no business, so they're closing now.

It's no longer attractive to live downtown.

Why am I overpaying for this apartment?

Why don't I just move out to the suburbs?

A lot of those bars and restaurants reopened in the suburbs.

Housing prices went through the roof because the millennials who were eventually going to buy a house, it accelerated that process.

They're like, I'm getting out of the apartment, I'm buying a house.

All these things happen in the suburbs.

All the growth happened in the suburbs.

So, Clint, back to your question.

What are we looking at, especially for your audience?

I would one, avoid office conversions.

They really don't make sense unless you're in New York, not even Austin, like taking, you know, a 2 million square foot office building, converting it to apartments just does not make sense.

It really, it never has.

It's avoid that.

What I want people to look at is office buildings that are positive cash flow and have a lot of upside that you can buy at a very low basis so that you can lease it out lower than anybody else around you.

So if you take one of those suburban office parks, you know, the kind that got built during the tech boom, where it's maybe four, five, six buildings, anywhere from four to 20 stories, and they're, they created these suburban office parks.

You know what?

They all paid for them because they went for top dollar.

If you can get one of these buildings at auction for 20 or 30% of what they paid for it, you now have such an advantage because you're leasing out a very similar product for half of of what your competition's leasing it out for.

These other guys and girls, they can't afford to cut their lease rate.

Cause they would be underwater.

You can go in there if the market's at $10 a foot.

Put up a giant sign, guys, $5 a foot come rent office for me.

Every broker, every person looking to move their company into an office building, they're coming to you.

It's the same product.

Imagine in multifamily, you know, a class B apartment that is half the price of all the other apartments.

They're getting full first.

So the key is buy something that's cash flowing on day one.

Don't buy a vacant building hoping you're going to turn it around.

There's a lot of factors, if you're not experienced that could burn you.

So gotta be cash flowing and there's gotta be proven upside.

And the market rents, you've gotta be able to way undercut them.

I love that.

Very simple.

There's so much overlap with what you're saying, with what we're seeing in our industry, which is self storage.

We primarily focus on, we don't focus on primary markets like a Charlotte, North Carolina, but we do have a facility 15 miles away in Gastonia where we bought the old Sundrop soda bottling facility on the main strip and we converted it.

Why?

Because there's a tremendous amount of young people that are getting pushed out of these more expensive urban cores into these secondary and tertiary markets.

That demographic shift is out of the big primary markets into the secondary tertiary markets which are having explosive growth.

And then buying an old building like that and converting it into storage, that's what we do.

Because if you convert that into multifamily, that's like 500 kitchens and bathrooms and all kinds of stuff going in there.

We take a big box, we chop it up into a bunch of little boxes and we rent out boxes of air to people.

And believe it or not, that is really challenging.

And our construction department does stuff that a lot of other groups walk away from.

And we have picked up several deals that, that other people started to try to convert into climate controlled storage, which on paper sounds very easy.

And the reality is it's just very challenging because the buildings were not built as that thing.

So if that's all you do and you're going to do it really specialized, it still only really works in those secondary tertiary markets where you get what you're talking about.

A bulletproof basis.

Your basis is the purpose of doing a conversion is because you can get that building for less than the replacement cost.

And our goal when we're finalizing a self storage conversion is that at the end of that conversion, we have done it for half the cost of new development and in half the time.

And the time, believe it or not, is actually worth more than the price per square foot that we're saving.

So.

And a lot of that is following, following the same demographic shift that you're, you're pushing.

It's interesting how there's so much overlap there.

And my thinking is the type of office that you're talking about actually would probably work very well in the markets that we look at, secondary tertiary markets that are being fed with really strong growth as people are moving out of the more expensive primary urban core markets around there.

And most of that is being pushed because of affordability and renters versus owners.

It's exactly what you're talking about.

So kind of all one big shift.

Yeah, we're still seeing a lot of demand.

We're signing probably one new office tenant per week.

So people are really interested in having office space companies just run more efficiently when their employees are face to face, no matter how big or small.

Yeah, completely.

Is there anything specific that you're seeing that is unique?

Like is price the, the by far the commanding thing right now or is it amenities?

I mean, obviously location and moving closer to your employees makes a lot of sense, but your ability to undercut everybody else on price and play the pricing game if you need to.

You're, you're basically buying occupancy.

Right.

Of all the occupancy available in there, you want it first.

Correct.

You definitely don't want those stale institutional looking office buildings of the 80s and 90s with the cubicle farms, the wide open floors and you know, nobody wants to come back to an office that resembles a hospital or just a sterile environment.

So anything with a hipster vibe is really cool.

A lot of co working that's doing very well.

Just be unique.

You have to have plenty of parking.

If you could be in a growth market, that really helps certainly avoid declining populations.

One of the more important things are city government.

Make sure they're progressive and business friendly.

Go to a city council meeting, find out if they're fighting with each other or if they're really cohesive and they all get along.

I'm telling you, that makes a massive, excuse me, a massive difference in just having great Leasing people, passionate leasing people.

I actually want to follow up on that that we working comment.

That's actually something that I've focused on of like, okay, how do you go fractional here?

How do you reduce your overall fixed overhead footprint?

By maybe being able to grow with a space and more of the cowork type model.

In fact, our most recent conversion In Rocky Mountain, North Carolina, it's a Kmart.

It's a total 171,000 square feet Kmart conversion with a retail strip mall.

And the Kmart conversion was most recently a call center.

And call center's basically been put out of business by AI.

So we got rid of the giant call center farm with all the desks and the phones everywhere, but the front of that had their call center C suite office space, which is like 12 or 15 office spaces.

And we decided to leave it.

And for the first time we're going to be renting that out as co working space, which is not something we've done before, but it actually was a faster pathway to cash flow.

And everything's there, it's built.

It just makes sense.

So is, how hard are you looking at that model?

Is that the portion of that you're doing as co working space?

Are you seeing anything there that's unique?

No, we've done, excuse me, we've done a bit of coworking.

It's not something I'm interested in because, excuse me, it's really a job.

Right.

And then we made the mistake.

We had a really well run co working space in Atlanta and very profitable.

We actually bought it from somebody else that established it.

So we're the second owners of the coworking space.

And again, it was running on all cylinders.

My partner who lives down there wanted to sign one of these big companies.

There's, you know, national coworking companies to manage it.

And that's not been done well, it's the same story I hear from a lot of people, let's just build it and we'll give it to this XYZ company and we just sit back.

It doesn't work.

A lot of horror stories around that.

But for co working, just have something with a cool vibe, something unique, something inviting, warm, light, you know, crazy colors, maybe some graffiti.

Just hipster type vibes.

Inviting.

So you avoid long hold periods and you, you rarely exceed five years.

How does the shorter duration change accountability and decision making for sponsors and investors?

Neil, if you remember four or five years ago, nobody had syndication deals that exceeded five years.

It was all three to five year holds.

Well, now it's 10 years, 10 plus it's generational holds.

And I hate that because, excuse me, I hate that because you're telling me your deal can't work in three to five years.

That's why you need investor capital for longer.

And that's all they're doing.

They're buying more time.

They're using time to help overcome a potential bad decision.

If our deals don't work in three to five years, we're not doing them.

And all these syndicators that are doing 10 plus year holds, they used to do three to five year holds and they stopped because the deals didn't pencil out.

They need the factor of time to help their deals work.

You know, for a, for a period.

We really wanted to explore what we called generational holds.

It was like we, and it wasn't because the deals didn't pencil, it was because we thought investors would want, you know, they were tired of that three to five year, you know, rollover.

I've now gotta go find, you know, a new place to put my money and things like that.

And, and we're like, listen, this is a legacy hold.

You know, this is the kind of thing you're gonna, you're gonna give to your kids.

It's gonna, you know, it's gonna cash flow at some point.

We're gonna do cash out refinances periodically, you know, depending on the value and interest rates where they are, things like that.

And we loved landed like a thud with investors for the most part.

You know, we had a few investors here and there who loved it.

But by and whole, by and large investors like no, I don't want my money tied up for 10.

Even though we were saying, listen, we're gonna, our plan is to get your get, get you all of your money out in three to five years and you'll have no money in the deal and it will be an infinite return.

Even that there's just something psychologically people are just like nope, nope, I just want to be in and out and done.

Glad you confirmed that because we have the same issue when we pitch a deal that's we'll tell them on our last one it's going to be closer to three years, not five.

And they were pissed.

They're like dude, like why, why can't you keep my money longer?

And it's like, don't you want the returns back and reinvested?

You're right, you can't win.

But the right thing to do is not do deals and need more time for Them the three to five years has worked a long time.

Stay with that.

Yeah, totally.

All right, I've got a question.

This is a little unique.

I think this is actually the only time I've done this.

And this is what, 150 something episodes in OR.

So I have a question that I was asked to ask you.

I've got a good friend of mine named Danny, and Danny's a wildly successful entrepreneur.

Entrepreneur, owns a restaurant franchise, a beverage company, and a lot of other things.

He's got a lot of things going on.

But I told him I was excited about this interview and he had a question, said if we had time, he'd love for me to ask.

We're taking listener questions now for the first time.

I didn't tell you ahead of time because I was worried about your reaction, but I'm going to get this question in.

And so the question is surrounding people's hesitation to ever take their first step in pursuing their dream.

So it's a little bit of a unique question, but the question is this.

And he typed it out for me.

He said, I know your team has helped countless entrepreneurs on their journey and investors.

I'm curious, what has your team found to be the reason that so many people have delayed searching for the funding that they need to launch their own concept or take it to the next level?

Like you talked about your hesitation to raise money from other people to scale because you wanted to get it right.

And to me, that signals integrity and character.

Right?

That's very, very important.

Once you make that jump to looking for capital that's going to help you launch your dream project, it's different once other people's money is involved, there's a higher standard, there's a higher responsibility, and it's scary for a lot of people, but there that does create the opportunity for analysis paralysis.

What do you think is the reason that stops most people from pursuing their dream and stop letting a lack of capital be a reason for that?

It was the same thing with me for 10 years.

It was fear of the what ifs, you know, especially when you first raise capital.

It has to be friends and family.

You don't have these crazy funnels and marketing teams.

It's literally friends and family, everybody.

So imagine the fear that paralyzes you, knowing if you go to your family's Christmas party and if you go hang out with the boys, there is this cloud above you.

That's the guy or girl that lost my investment money.

I gave him or her $100,000 and they're all Whispering in the background, don't put money in with him or her.

That fear is paralyzing, right?

And the reward of taking somebody's money and maybe doing a better deal and giving them a 20% return, that doesn't overcome the fear.

It's like, okay, the reward is kind of cool, but the fear will change my life.

So how do we overcome that?

Why not?

Well, one, you know, we just talked about people that want a three to five versus a lifetime.

Hold the one thing that's really important, and I'll share a story.

This was years before I ever took investor capital.

I was at a doctor's retirement party.

The doctor comes up to me and says, ash, hey, man, you're in real estate now.

Congrats.

Like, yeah, thank you.

Okay, so from time to time, you probably need investor capital, right?

Me being stupid?

I said, no, not really.

But tell me, like, what are you looking for?

And he's like, well, you know, I'd love to make 6, 7% returns on my money.

And this is when rates were really low.

And I said, Dr.

So and so we don't even get out of bed unless it's a 20% return.

And he said to me, oh, my God, 20%.

No, no, no, that's too good to be true.

Never had another conversation with him again and actually didn't return my emails because I was way out of line for his expectation.

So everybody should have a conversation on what these investors expect for a return.

Now, in hindsight, if I had taken him on as an investor, I could have given him 8% debt guaranteed on a deal, and that would have been the greatest investor ever, right?

Cheap money.

So there's still a lot of investors out there.

Some do want to just park their money and not get monthly checks, quarterly checks.

They want annual distributions because it's just an accounting headache for them.

They want to make it big on the.

On the long run.

Find out the appetite of your investors.

That's how you do them the most service.

You know, if somebody doesn't want risk but they want higher than a savings return, then give them a debt deal.

Put together a debt deal.

But it's.

The fear is so overwhelming compared to the reward.

How do you solve that?

Take on one or two partners on a deal.

Don't take everybody, Be selective.

Stress that you can lose money on this, right?

Only put in what you can afford to lose.

And I think once you have a deal with an investor or two, it's a slippery slope.

From there.

And things are better.

So start small.

Don't, don't take on 50 investors for your first deal.

Don't do a $30 million deal.

Do a half million dollar deal.

Right.

Just get comfortable with having one or two investors communicate with them.

Find out where their insecurities are, their challenges.

Maybe you're not communicating with them often enough, maybe you're communicating with them too often.

But iron out those kinks with a small subset first.

I love that so much, Ash.

And it echoes something that we say a lot here on the show, which is risk is a muscle.

And it's the risk of doing deals on your own.

As a new real estate investor, you're buying a single family home, you maybe graduate up to a duplex, triplex, fourplex, maybe you move into a commercial building, things like that.

You're exercising that risk muscle.

But it also applies to you're.

Now you start to graduate to taking others people money.

Don't jump right into taking money from your 30 closest friends and family.

Find 1 or 2, 3 and communicate to them very clearly, listen, I've done this before, but we could lose money.

Don't risk money you're not willing to lose and exercise that risk muscle with other people's money and then start to grow that from there.

And I, I love it.

Well, listen, this has been a fantastic conversation.

We could go a lot longer, but we all do have actually day jobs, so we can't just sit around talking about real estate.

But we always want to finish off with a question that we always ask all of our guests, which is, is there a book or resource other than something that you produced that you find yourself recommending to friends and family more often than others?

Yeah, there's a book.

There's two.

One is Tribe of Millionaires that's self explanatory.

But the one that changed my life the most was rocket fuel.

It's, you know, my entire life, I thought it was a flaw that I couldn't ever focus on things.

I couldn't follow through on things.

My wife would say, dude, I just wish you would follow up on something.

Turns out it's a superpower.

So if you feel like you're the person that can't ever just focus and follow through, read this book.

It'll change your life.

Dude, that just cut through the noise and spoke to me, like in my soul.

If you haven't read it, I, I have read it.

But, you know, sometimes different books hit you at different times in your life when you really need to hear it.

And There's a list of books that I have that I try to reread every year.

Listen to.

I do audiobooks.

And it's like I've listened to this book five times before, and I just heard something that I swear I have never heard before, even though I know I have.

Sometimes those hang.

Things hit differently, and I'm dealing with the same thing.

Noise and distractions and keeping the main thing right.

Husband first, father second.

Everything else falls in line behind that, and it just.

It all has to fall somewhere in the hierarchy.

And the busier you get, the harder that get.

And there's more noise in the world than there ever has been right now.

And.

But I also believe there's more opportunity than there ever has been.

And you have to build a filter as to how you filter that out.

And I tell Neil this all the time.

I feel like.

Like I've got.

I live on an island, and I have enough lumber that I can see the mainland and I can build a bridge there and I can get off of this deserted island.

And what do I do?

I build it 15ft in this direction, and then I change my mind and I build it 10ft over here and 10ft over here.

Next thing you know, I'm out of wood.

And I haven't gone anywhere.

I literally.

At dinner last night, I told my wife, I said, I feel like most cavemen probably got warm by starting a fire and sitting around and feeding it and getting warm.

And I feel like I'm getting warm by running around with flint and steel, starting 15 different fires, and just setting the woods on fire everywhere.

I was like, and it's time to put out some fires and focus on what I'm good at.

So going to read that book right away.

So to clarify, Tribe of Millionaires, is that the Tim Ferriss book?

No, it is the guys that started Gobundance.

I'm not in Gobundance, but Pat Hyben, and it's a fun read.

Gotcha.

I don't know that I got a lot out of it.

It's just one that I recommend to a lot of people.

It's a fun, good book.

But Rocket Fuel is one that changed my life.

That's awesome.

Great recommendation.

That's.

That's also Gino Wickman, right?

Yes.

Yeah.

So Gino Wickman wrote Traction, which is a book that we.

We operate off of with the entrepreneurial operating system here.

So that's right in line.

So glad you brought that up.

Thank you very much.

And besides that, Ash, thank you for everything.

Your time here.

Your, your willingness to share with us.

You've always been so generous within your time when we have had a chance to see you in person, which we got to do that more often.

But thank you for that.

Thank you for your time today.

If any of our listeners want to hear more about what you're up to, invest beyond multifamily and the other projects that you have going on, what would be the best way for them to connect with you and do that?

I'm easy to find on LinkedIn, Facebook.

My email is just ash ashvestbeyondmultifamily and this is not a plug.

But anybody that wants to explore Office we had an office deal that's long closed, but we have a webinar still up on our website of one where we were teaching our investors about office because again, a lot of these guys and girls came in like why would I invest in office?

And this, I think it's a 30 minute webinar that we did and it was a deal that we were raising money for.

But again, we've since closed that deal.

But it's just, it's a cool way to see what types of office deals are out there.

It's on our website.

Invest me on multifamily.

But my advice to your audience, man, don't be afraid to pivot.

Right.

Multifamily has had its rise and not doing so great.

There's self storage, there's a lot of other asset classes.

So educate yourself and look at other opportunities.

Beautiful.

Well, thank you so much.

Appreciate your time and look forward to connecting again soon.

Thanks man.

You guys were a lot of fun.

Thank you.

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