REIA 210 Josh Cantwell: Traits of Elite Real Estate Investors

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now here is your host, Dr. Allen Lomax.

Hello, enlightened investors. So happy to be back with you again today as we take a look at the traits of elite Real estate investors as we visit with the Josh Cantwell, who manages over $40 million in private money, which is developed into— which is deployed into multifamily real estate and apartments. He currently holds a portfolio of over 3,000+ cash-flowing apartments, and he is the founder and CEO of a variety of successful businesses, Including Freeland. Josh, share with us a memorable experience that helped you to be who you are today.

Sure. Thanks for having me on. I've been looking forward to this for a while. A memorable experience. So back in 2011, I was married, 2 kids. My wife was 8 months pregnant with our third, just about to pop. And I came home from work. I was playing with my 2 little girls on the ground. And I looked, remember looking up at the ceiling and looking up at the ceiling fan, crossing my hands across my stomach and feeling a giant lump on the left side of my stomach. Fast forward, you know, kind of talk with my wife for a minute, realize like this is kind of in a weird spot. You know, my buddy across the street is a good friend of mine, was an orthopedic surgeon for the Cleveland Browns actually. He came and looked at it, said, you know, it's kind of in a weird spot. It's not a hernia, but my wife was 8 months pregnant, so we decided to put it off. And then when my son was born, about 2 weeks after he was born, I finally went to the doctor to get this giant lump looked at, and I was quickly diagnosed with pancreatic cancer. Pancreatic cancer has just a 7 or 8% survival rate. And so 100 people that are diagnosed with that disease, out of that, 92, 93 are gone after 5 years. I am now 10 years cancer-free. And so I'm one of the lucky 7 or 8 that make it. I mean, it's completely changed the way I operate everything. And that's actually what we're going to talk about today. One of the traits of elite entrepreneurs, actually the number one trait is that they invest for cash flow now. And the reason why that's number one on my list we're going to talk about is because when I was diagnosed with cancer, I was very transactional, Alan. I was, I made the mistake of being very transactional, wholesaling, a lot of flipping. I owned a brokerage, but everything depended on the next deal, the next transaction, the next commission. And when you are diagnosed with, you know, 35, and you think you're healthy, and all of a sudden you're ripped away from your business for 9 months, that creates a major cash flow problem. So, you know, that lesson 10 years ago, and I've been so blessed to be able to tell that story to, you know, many, many, many audiences, and, and it's been a huge impact in my life. But it leads me to some of these traits that I've experienced and I've observed other people experience. And that experience of cancer absolutely changed my investing strategy. It changed my outlook on people and life. It completely changed the way I operate. So that was my big moment.

Josh, I'd say that's more than a big moment. That's a big wake-up call moment. And like you say, when we're transactional, whether we're working a W-2 job that we love and are fulfilled in, Or whether we're in our own business or whatever it is, if it's transactional, it can be taken out from under us in lightning flash. And that's just life. That's the way life is.

But just folding your hands across your stomach, literally that fast.

Yeah.

Yeah. That fast. Did it come on that fast or you just had been unaware?

I actually, I actually felt pain in my lower back for about 3 years. I was misdiagnosed 3 years in a row. I went to see various doctors that said it was arthritis and it was, you know, this and that. So I had been going to the doctor since I was 30 I was diagnosed at 35, tremendous amount of back pain when I was sleeping and working out, those kinds of things. But my surgeon, who was a guy named Dr. Matthew Walsh at the Cleveland Clinic, is the guy that, you know, performed the surgery. And, you know, one of the wildest— I could tell you amazing, wild things. Like, they took out my stomach, my gallbladder, my spleen, most of my pancreas, most of my liver. I have no stomach right now. They had to reconnect my esophagus right to my small intestine. But probably the craziest thing, Alan, during the surgery, 10-hour surgery, is that they put in— 21 units of blood into my body on the operating table. To put that into perspective, as we record this and all of our audience members, you each have 7 units of blood in your entire body. So I have 21 was pumped through my body that day in 10 hours. So I have everybody else's blood in my body except my own. So it's wild to think about that experience because literally without other people, without other people donating blood, without the surgeon, I just wouldn't be here at all. So, you know, I would like to take some credit for surviving, but I really can't. It had nothing to do with me. God's grace and the surgeon and other people's, you know, donating blood, the nurses, is the only reason why I made it.

Well, obviously you give credit to a lot of entities and individuals, and yet at the same time you say that no one is coming to your rescue and that we have to be accountable for ourselves. Well, how do you reconcile those two? Sure. Contrasting points of view.

Sure. Yeah. So point number 1, right, the traits of elite entrepreneurs. The first point is invest for cash flow. Now, we talked about that. And I don't think there's ever a time, Alan, that you can't or shouldn't invest for cash flow. Now, it doesn't matter if the market's great, like the last 5 or 7 years, doesn't matter if it's 2008, '09, and '10. It doesn't matter if we're in a high, you know, interest rate, there's always cash flow to be captured. And that's going to allow you to have this financial freedom that everybody The second trait of elite entrepreneurs is that ultimately, you have to take 100% responsibility for your own life and be accountable to yourself. So when I was diagnosed with cancer, I didn't blame somebody else. I didn't blame God. I wasn't upset with the world. I looked at my diet. I was accountable and responsible to myself. And even though I was about 6% body fat, I had a six-pack, I was actually Eating a tremendous amount of animal protein. I had a very acidic diet. I probably drank a little too much alcohol and not enough vegetables and not enough fruit. And so I looked at that and said, you know what, like, I'm really sick right now. And it's my own fault, right? Nobody's coming to your rescue. And so I took responsibility for that. I said, okay, what can I do differently? Now, I got lucky in that situation, Alan, to be even a candidate for surgery. Right? That was out of my control. You know, the fact that I was young, the cancer— I had the same exact diagnosis as Steve Jobs, right, from Apple Computer, and he elected not to have surgery. It eventually metastasized all over his body and he died. I got very lucky that it didn't metastasize, but I knew it was my own fault. Like, I blamed myself. And then I thought, if I'm fortunate enough to make it through this, I'm going to redesign and rebuild my own life. With a little bit more intention, being a little bit more, you know, understanding, but I knew it was my fault. And I also knew the recovery, if I was fortunate to make it through the surgery, I knew the recovery was going to be on me, right? The diet, the exercise, the research, how that was going to go. And this is the same with elite entrepreneurs and investors. You're responsible for your own life. So when people got wiped out in 2007, '08, '09, and '10, they could have said, oh, it's the market's fault. Well, not really. You didn't protect yourself with cash flow. You didn't— you overbought at the wrong time at the wrong It's your fault. Now going forward, we're in this high interest rate environment, or it's going to go up. At the end of that, some people might have balloon payments and commercial mortgages that come due, and then they can't refinance. That's their own fault. Nobody's coming to your rescue. So how do you plan for that? Now, how do you get into deals with lower debt, a lower loan-to-value, with more private money, with more investors to keep the equity position big and keep the debt low, right? Because a lot of people are going to come in 3 years from now, if interest rates continue to go up and if the market softens and say, oh, I got caught by the market. No, you didn't get caught by the market. You got caught by yourself for lack of planning, for lack of foresight. So elite entrepreneurs that I've met myself, and I've coached thousands of people, I've spoken on stages with Kevin O'Leary, Barbara Corcoran, Donald Trump Jr. I've read amazing books, as you've all, you know, we've all heard, like from Jack Canfield. This is the one thing that's kind of permeated through all of those talks. is that elite operators feel 100% responsible for their actions. They never blame anybody else.

Josh, excellent points there. Talk to us about time management skills.

Sure. Yeah, look, I went from owning no apartment buildings 6 years ago to owning 4,300 units and a $250 million portfolio in the last 6 years. And we sold off about 1,300 units last year. So we're sitting today as we record this at about 3,000. Elite The entrepreneurs that I have observed that have built amazing companies and amazing portfolios have elite time management skills. They have the ability to kind of post and prioritize not only their day, but the day and what we call the meeting cadence and the work cadence of their entire organization. So they don't let people be haphazard. They structure up their whole office, whether it's a property management team, whether it's a capital improvement team, whether it's the team that's raising capital. And what we've broken this down to was on Mondays and Wednesdays is when we have what we call our buffer days. These are the days where we have, you know, they're important things in business, but they're not necessarily revenue producing. So Monday would typically come off a weekend, there's a lot of leasing activity, there's a lot of things that happen in our apartments on Monday. So we kind of got to take a breath and take inventory of what the hell just happened over the weekend. And so we have some meetings on Monday afternoon, we have some more meetings on Wednesday afternoon. Those are days for regrouping and figuring out what's going on. That's called a buffer day. On Tuesday, Thursday, Friday, and sometimes Saturday morning, that's what we call a focus day or a revenue-producing activity day. My whole team and myself know that we are absolutely going to focus on driving revenue, building the business, construction, leasing, marketing, Things that make money on Tuesday, Thursday, Friday, and Saturday morning. Then buffer days, or I'm sorry, free days are days where we just completely get away from the business. And you would think with, you know, a $200 million portfolio that I have no free time. The truth is I have more free time than most W-2 employees. I probably work about 25 to 30 hours a week, and I take a lot of free time with my family. We go to our campsite. And so elite entrepreneurs know How to not only create time management for themselves, but they know and feel the cadence of their office and structure everybody up in such a way that everybody's kind of working in the same rhythm. It's very, very important. Now, the one silver bullet to that, Alan, is on Sunday nights is usually, especially during football season, I like to watch the Sunday night football game and journal and take notes. That's when I take inventory of what's going on. I post and prioritize not only for myself, but my entire team for that week, that month, and really for the next 2 quarters. We're always 2 quarters out or at least 6 months out on what we're going to do. And so all the other elite entrepreneurs that I've met, none of them are winging it. They all have super time management skills.

Critical for the success of anything or any individual for sure. Josh, we live in an environment where it is so easy for so much of our time to be sucked up by these screens that sit in front of us. How do you refuse to get sucked into this and become locked into an OCD loop of screen watching?

Sure. Yeah, elite entrepreneurs that I've met don't waste time on screens, computer screens, TV screens, phone screens. So, one thing I discovered, I call it the screen-sucking OCD loop. Right? Where we get up in the morning, we check our email, then we check Facebook, then we check LinkedIn, then kids are checking on Instagram and Snapchat and now TikTok. And then all of a sudden, they go back to their email that they checked. And it's all of a sudden 3 hours later. And they're like, what the hell did I just do for the last 3 hours? The answer is nothing. And not only that, but most of the stuff and most of the content they're consuming is negative. It's toxic. It's, it's leeches just leeching their time. So elite entrepreneurs understand how to refuse to do that. So, a couple things. One, I think, is elite entrepreneurs and investors that I know, they take care of themselves physically. And so, when they take care of themselves physically, they're listening, not screen sucking, but listening to amazing podcasts, to talks, to seminars, and to really positive content. So, they start their day in the gym or for a run or for a walk, and they consume something positive. That's number one. Number 2, if you go back to the super time management skills from before, you realize then that you have no time to just jump into all these social media platforms. And I would also add that those people that are really elite entrepreneurs, they do consume some social media, but with a purpose, right? They're watching certain videos, maybe it's how to invest in multifamily apartments, maybe it's how to raise capital, maybe it's how to have, you know, be a lifestyle investor. They're consuming this with a purpose, not just consuming it in this OCD loop of just garbage. And the other thing I would say is that a lot of elite entrepreneurs that I know, including myself, we don't keep all those apps on our phones. The easiest way to get stuck in the loop is to have a TikTok app, a Facebook app, a LinkedIn app, you know, an Instagram app, Yahoo News, Apple News, all on your phone, because it's just too accessible. So what I've done is delete all of that from my phone. So it forces me to redownload it if I want to use it. And then after I'm done using it, I delete it back off of my phone. If I really want to use it, I can log in on the computer with a purpose instead of just mindlessly sifting through apps on my phone. So people don't waste— elite entrepreneurs don't waste time. So between the time management skills, number 3, and the OCD loop, number 4, those go hand in hand.

Josh, I know our viewers and listeners would love to get in touch with you. How do they do it? What do you have to offer?

Sure. Yeah, absolutely. Go to our website, freelandventures.com. There, your audience can learn more about some of our investment opportunities, some of our multifamily apartments that they could invest in. You could also learn about our mastermind programs, our free YouTube channel, our free podcast. All that stuff is available at freelandventures.com.

Well, I certainly know all about time-wasting apps. And I, like you, I have none of them on my phone. If I want to get to them, I go to my laptop. Good advice there, because I follow it.

Thank you.

Yeah.

And it works.

It does. Yes, it— well, it helps. Yes, it can still suck you in if you're not intentional about it. But technology can be good. How do we use technology as a weapon?

Yeah, that's number 5. Elite entrepreneurs that I've met use technology as a way to scale, as a weapon. For example, we have 4,300 units of apartments, each building, we've done 18 apartment syndications. Each apartment has its own life. It's like its own living thing. I don't want text messages from all my team. I don't want emails from all my my team about this or that. So we've adopted software, we basically say, if it's not in the software, it didn't happen. It's not in the software, it didn't happen. So don't send me an email, because an email means it didn't happen. If it's not in the software, meaning we use some programs like Infusionsoft for marketing or BuilderTrend for our capital improvement team, AppFolio, we use Basecamp for special projects. That way, there's a running log Of what's happened, a chronological log of what happened. There's documents that are uploaded. I don't need someone to send me an email and wait for me to respond. I also have Basecamp and these different apps on my phone because they're productivity, they drive production. This is not the screen-sucking OCD loop. This is business-related. So I'm also swapping in the toxic apps for the good scale, the good technology that can be a weapon. Now I can communicate with my team anytime from anywhere. From any office, from any beach, from any phone, from any bus, you know, from any baseball game or basketball game or volleyball game that I might be at, I can look at what's happening in my business because it's all in the software. And the rest of my team can check KPIs, notes, documents, because it's in the software, right? If it's just sitting in email, if, Alan, if you sent me an email, now you've ping-ponged the ball to me and it's sitting only in my email account. Nobody else can see it. But if you upload that same note to a software with whatever documents and you've attached that everybody can see, everybody now can collaborate. It's a very small but very powerful change, adopting that software and using it as a weapon, because now everybody can use it to scale the business. I could have 5, 6, 8 people collaborating on a project versus just sitting in my email inbox or my text messages. So every elite entrepreneur that I know and every elite real estate investor forces their team to adopt software. If it's not in the software, it didn't happen.

I like that. If it's just in an email, it didn't happen. I have had guests who tried to email me their pre-interview information and I'm going, that ain't gonna work. You've gotta put it in the software because if it's an email, it didn't happen. I'll have to— I haven't said that, but I'm gonna have to adopt that. There you go. Because it works. Because it doesn't happen. Because what do I do with my email? Every day I'm deleting emails. So—

That's right.

It doesn't happen. Like that expression there. Josh, tell us about setting goals with Acer exercise.

Yeah. So, number 6. So, I've used this exercise for 15 years, actually. And elite entrepreneurs and investors know exactly what the end result is that they're trying to achieve. They know the house that they want to buy, how big it is, what color it is. They know the cars that they want to drive, the land that they want to own, the business and the team that they want to have. How much passive income they want to drive, and they look at it every day. So Acer, A C E R, stands for absolute clarity of the end result. A C E R, end result. And so elite entrepreneurs that I've been around, that I've coached, you know, and I'll throw myself in there as well. I know exactly what I'm fighting for every day, and I don't have the shiny object syndrome that most investors and entrepreneurs have, that they ping pong around from this project to that project. Because everything looks good. I'm really good at saying no to projects and opportunities if they don't fit the end result that I'm chasing. If I know what I want at the end, it's easy to say no and not have this ping pong, this, this, this silver, you know, silver, you know, shiny object syndrome that so many people, because everything looks good to them because they don't know what they really want, right? If you don't know what you really want, everything's going to look good because people are really freaking good, Alan, at marketing. And people who are really good at marketing are really good at convincing people who don't know what the hell they're doing that what they have to offer is better. So when you guys know guys that know how to use NLP, neuro-linguistic programming, and are really good copywriters, those guys are convincing people to buy their products, their services, whatever it is, because the receiver of that message doesn't really know what they want, right? And if I know what I really want, and I'm receiving marketing messages, and I know something's going to fit my business plan or fit into what I'm— then I'm a hyper buyer. I buy it because it serves my end result. But so many people are just buying this program and that program and this strategy and that strategy. And this technology, they're just ping ponging around because they don't know what they really want. It's very important to know and look at and have, you know, people call it a vision board or whatever. I don't really have one of those. But I have it written down of what I want. One of the things I have in my office right over here as we record this is buy another 950 units, because that 950 units represents another $600,000 of net net free cash flow that I'm going to add to my business. So I only do things and buy things that will serve that purpose. The end result is so important.

It seems so simple to know the end result, and it is so critical and so important. And we do so often get lost in that shiny object and a wealth of shiny objects that are taking us in the wrong place.

Yeah.

Price, as you say, is not everything, and that service trumps price. White glove service. What's that all about?

Yeah, sure. I mean, look, elite entrepreneurs know that you can't operate in the middle, okay? Your audience should write that down. You either want to be the cheapest, or you want to be the absolute best. Don't be both. Don't be in the middle. So, if you own and run apartment buildings like I do, and you want to have an elite product that you put out in the market, and I would rather have an elite product that I charge an elite price for. And on top of that, I want to have my residents Have a great experience. So service will always trump price. People will always be willing to pay more for a great experience. They'll always be willing to pay more for a better unit to live in. They'll be willing to pay more for faster service. They'll be willing to pay more for white glove property management, for immaculate groundskeeping, right? For immaculate dog parks for their dogs like that. You can't halfway it and then feel like you're gonna have a great product and ultimately have a business that's really successful. I've been in the middle before. It's very hard to find when you're in the middle of trying to find a strategic advantage. So I've realized that I could be the best, the most expensive, or I could be the cheapest. I want to be at one end or the other. I don't want to be in the middle. But regardless, the service that I provide to my residents, and even for me, my employees and staff, has to be top-notch. Keeping people, retaining staff, has to be the best. So I don't— I can charge more if this service is amazing. And that's what we've bought into. I don't want to be the guy that's trying to be in the middle, but my service sucks. You're never going to survive in this environment doing that.

The business of business is people. Tell us about that.

Sure. Hey, listen, this is, this is maybe the most important, especially in today's environment, where we have 5 million jobs in this country that are unfilled because we have a labor shortage. So everybody is looking around at the other opportunity, the next opportunity, and everybody realizes that because there's a labor shortage that employees can leave, they can go to other employers and they can make more money somewhere else. So elite entrepreneurs and investors realize that you want to have, again, technology as a weapon, which was number 5, but ultimately the people have to use the technology. So ultimately we're in a business, all of us are in a business of people. People are in the businesses, running the businesses. The business is not a business without the people. So if you're not treating the people with white glove service, not only your customers, but your staff, nothing's going to get done without the people working the systems. And these days, people will work really, really hard for even for less money if they feel like they're in a business Where the culture is something that they believe in, something that they want to be around. So culture cures every problem, right? Dan Gilbert, the owner of the Cleveland Cavaliers— I live in Cleveland— he once said, culture is everything. He said, if people know who we are, then they know what to do. So when I look at my businesses, I don't look at just numbers. I don't look at just statistics. I don't look at just P&Ls and balance sheets and how much money are we What I look at is, do my people feel like they're having fun? Do the people feel like they're contributing? Do they feel like they're growing? Are they getting training? Do the people feel like this is somewhere where they feel valued? Right? People is what it's all about. People run the business. They run the software. Without them, we're dead meat.

And the best entrepreneurs that I know and the best investors that I know realize how critical Enlightened investors, I know you've gotten a lot out of today's program, and I'm so delighted you were with us to experience this. Josh, what a wonderful time we've had together. Thank you for being with us.

Absolutely, Alan. Thanks for having me on.

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