Real Estate Millionaires Share where the Real Money is - Building the Business with Caleb Hommel

You lose cash flow, you lose the deal. If you lose the deal, you start back where you started.

You made those mistakes. I've made those mistakes. That is why you don't go out and do everything blind.

Hello and welcome back to The Owner Meeting. We're doing another episode as owners. We talk a heck of a lot about real estate, and Caleb was certainly not new to this podcast. I've partnered with him on many adventures, but today we're going to be talking about one of his companies. We're going to be talking about managing employees, hiring, firing. We're going to actually get to the business side of our business as opposed to the real estate side, which you talk about all the time.

Just a little bit.

Just a little bit. By the way, trying some new stuff at the studio, so enjoy the new method. We're actually gonna try facing each other for once and with mic stands that don't fall over as we speak. We're growing up.

Feels a little foreign.

We're growing up in the world. Previously, this was known as Multifamily Strategy Podcast. We are officially rebranded to The Owner Meeting because we really did build our whole business on The Owner Meeting. We can talk a lot of real estate, but real estate is a business that we have run very well, and it's arguably our most lucrative business. It's also not the most cash flow heavy business that we got into. If you're trying to build financial freedom, you want to find people who are doing the things that you want to do. Got to attend the owner meeting. If you're not going to do your own, I'll do them for you here on the owner meeting. Caleb Hommel, give us a brief rundown of the companies at 21 years old. What do you own today? Go portfolio and companies. They're all individual. They're all individual LLCs.

So you could say 79 multifamily units in real estate that's made up of 5 different properties spread around the state of Texas between 2 10 units, an 8 unit, a 25 unit, 26 unit, buying a 44 unit as we speak. Also own Diego Sales With You, which is a sales/marketing company that is not located in the state of Texas. It's actually located everywhere, you could say. And then also have a property management company which is based in Stephenville, Texas.

There we go. Okay. And we do more than just, more than just Stephenville, by the way. We're based there, but looks like we'll be picking up some business in Waco and Hillsboro. We're expanding throughout the greater DFW area as far south as Waco.

Yep. Possibly Temple and Belton in the future. But that is—

Yeah, they're here and we're working our way down the 35. Okay. So you have a pretty good collection of companies. One of the things that I talk about all the time, like to scale a business— business, agree or disagree, business is relatively simple.

Yes.

Okay. Business is super easy.

No.

Okay, good. We're on the same page then.

I wish.

Uh, business is gonna be really hard if you wanna do anything in a relatively short amount of time. Like, if no one goes into business wanting to start a small company, and I think a lot of people go like, yeah, I just wanna make my first million dollars. And what happens is you end up building a company that makes a million dollars, and that's where you cap. You cannot build a $100 million company trying to build a million dollar company. Uh, so one of the things, and I talked about this on previous episodes, but this is so important, especially, you know, guys like Caleb. Caleb, when you're starting, I'm going to use two companies in particular. We have a sales and marketing company that is, I think, doing some amazing things. We have a property management company that we want to get to an absolutely massive scale. What are the visions for those two companies? Like, where do you want those to go?

Are we talking the first benchmark or when it's all said and done?

Let's say overall, all said and done, what is the, what is the point of the company? Are we, are we building a company that is going to be a million a year company, a $10 million a year company, because they all have different strategies on how you're going to attack them. What is the vision? Let's start with the sales and marketing company. How does that company work? Where do we want that to go?

For sure. For the sales and marketing company, it's called Dago Sales LLC. For that one, I think it's kind of infinite cap, to be honest. The first vision is obviously get it to about multimillion a month, I think is where we're trending right now, what I'd like to get it to. And then when it's all said and done, I mean, There's really, it's infinitely scalable, which is cool. So as far as putting an end number on the, I don't know, like into the 8 figures a month would be ideal. At least I just don't really see a cap to that. When you're a sales and marketing company, you look at some of the titans of the game, it's like, that is how you get to that next level. So I would say somewhere in the 8 figures a month range.

So this is interesting. The, uh, infinitely scalable. What makes a company infinitely scalable?

I mean, for example, with a day-to-day sales company like that, it's— there's never— the things you always need are sales and marketing, no matter what you're in, whether you're in a storefront business with dry cleaning, whether you're in online mentorship, whether you're ticket sales. Yeah, you need sales and marketing for absolutely everything you do. That's kind of when I see it's infinitely scalable. Everything is a sale. Everything is marketed, whether it's the clothes we're wearing, whether it's the chairs we're sitting in, all of the above. There's a finite amount of property management business we can scale to. You could argue it's nationwide, so it's infinitely scalable., but there's a certain amount of property owners that need third-party management. Like, just had a meeting with a guy today. He does everything in-house and he's not interested in third party whatsoever. So I think that is less scalable and there's more bottlenecks to scaling a PM company versus the sales and marketing company. You just need people who need marketing and sales, which is everyone. And it's like, okay, let's go sell and market. Yeah.

And so one of the things that I think makes a company really valuable is it has to be simple. If you're, if you want to get it to infinitely scalable, I want money to be boring. There's a lot of things in life that are fun, and there's some businesses that I'm really passionate about, but I don't do business because it's fun. I do business because it's something that we can get in and compete in. It's something that we can grow into, something that we can scale. I, I think money is for growth and provision. Absolutely. In a sales and marketing company, I agree with you. There, there's no lack of utility in having that. And I, I also don't recommend people start in sales and marketing.

No, it's hard. It's simple, but it's hard.

It's simple, but it's hard. And also there's utility to having sales and marketing because we have products that require sales and marketing. It takes sales and marketing to grow a property management company. So we have utility there. I run Multifamily Strategy, which you actually went through for part of your real estate. It takes a lot of effort to get great outreach and get great people who are going to be consistently successful. Because I, if you're running a community, you certainly don't want to market to people who are going to fail. Because then you're just— then it's just a money grab, right? It's like, let's just cycle humans through this and grab money. That's a scam. That's where you get these online gurus. What you want is people who are qualified, who are gonna contribute to your community. So you're marketing not just for sales. You're marketing for the right people in the right group the correct way to land the right sale to get the right product to the right person. And then you have to go, of the qualified sales, how do we convert? Exactly. And if you can do that, The bottleneck for me in a company like that. So let's talk about passion versus utility, passion versus infinitely scalable. Okay. Multifamily strategy. I believe it is the best place online to learn creative finance.

I mean, I'll second that, right? Like, I went through it at 18 years old, essentially broke as a joke, $300, never having worked a job. It's like, so as far as testimonials go in your business, it's obviously you've been a very strong one for me.

Pretty good. Thank you for doing the thing. A lot of people have. That's, that's what the community does. There is a bottleneck in that community. I am the one who teaches it. I think there's a problem online where people do not learn from the operator. So the problem that I'm solving is I'm teaching people how to do something that I've done. The company is going to be limited at some point by me. I cannot teach simultaneously 1,000 people to the same level I can teach 100. There are going to be problems in scaling a business where there's going to be a point— we're not even close to there yet, but there's going to be a point where you're going to sacrifice some of the excellence that the company was founded on, the way it's structured. Now scale back to a sales and marketing company with the mission statement, which ties right into this podcast, by the way, the owner meeting to get actual owners and operation in front of people instead of online marketers. That is what our company is designed to do. Exactly. We can help people get in front of other people and monetize, but we are not the main character. And you can take experts in any field, anything that is interesting to other people, and you can get a brand out there. And so we have a company where there's not really a cap on the amount of clients you can have. There's thousands and thousands and thousands and thousands of clients. Some of them are really good, some of them are not good. You have to suss them out.

And we've worked with the best and the worst and everything in between.

We haven't worked with the worst yet. I have some ideas of who the worst ones would be, and we won't name names. We won't name names. But, you know, they may, they may be the people with the, the yachts and the cars and the the people who you don't see actually doing the thing.

Caveat to that, I think there's some people actually have yachts and cars that actually do the thing.

Oh, there's tons of them.

I don't— but yes, the people who flaunt this stuff without doing the stuff are the worst.

Here's what I want to— here's what I want to rid the world of on this podcast and in our companies. I want to rid the world of people who go out, buy a bunch of fake followers, buy a Lamborghini, buy a boat, and then use all of those to go like, man, I really want this stuff. So I'm going to get other people to pay me to learn how I did this. But what they did was never real in the first place. And that is, I think I could safely say, probably 50% or greater of what is out there.

That's what I would say.

Greater YouTube and Instagram. And it is this fake it till you make it. But the thing that you're selling, you're trying to— you hop on these calls and you're like, you got to get the mindset right. It's about massive, massive action. Like they say empty things that had nothing to do with how they made their money.

And there are a lot of people out there. And if we're talking about faking it till you make it, I definitely think there's something to be said for imposter syndrome. I think I'll people that actually work on the side of things actually feel like that as well, where it's like you've made it, but you still don't feel like you have. But I think we're talking about more of the people, like, for the audience, like the people who are like, I'm going to figure out how to market to an online audience. I've never bought a piece of real estate, but I'm going to market as I'm a real estate investor. And then I give you the most basic spreadsheets ever that you could make with your 4-year-old at home.

You have a lot of real estate. You have several companies. How do your companies interlock? We see a lot of people tell— say, oh, entrepreneurs have 7 or more income streams. And I think cat's out of the bag on that. You don't start with 7 income streams. I wish. You build one big one, then you add pieces in. You're fairly young with several different dynamic pieces to your universe. How do the companies interlock, or do they interlock in a way where you're actually vertically integrating your company? What's the strategy of having Sales and marketing, having the property management, having the real estate.

So I'll start off with the two obvious to being a real estate investor and having a property management company. Pretty symbiotic, to say the very least. I buy properties, I manage my own properties with my company. That way I, one, have control, two, have oversight, and three, can run two companies profitably instead of paying somebody else. I pay myself essentially to manage my own businesses.

And if you do a great job managing the people's businesses around you and third-party management, you can subsidize the cost of keeping the great employees that you want in your business.

And another one, when you are managing all the properties in your area, who's the first person to hear that when your owners are selling, which I've—

okay, so I've heard this before. I've actually seller financed my first property management company. As you know, we have another property management company. We run that one together. Kayla and I do a lot of business together. If you can— I have never had anyone— well, actually, no, until last week, and it was a property I don't want to buy. But until last week, I have never had any owner reach out to me to buy their property because I did a good job managing their property. Or I've never had anyone reach out to me and say, because of your management company, I want to sell you a property. Until last week, I've had one. It was a 14-unit and it is absolutely not something I'm interested in.

Well, I mean, you want to talk about the 26-unit we just bought in March?

Okay.

That literally— I drove by the building in Steamboat, looks like a barn. Yeah. And I saw the property management sign out front. I literally texted the property—

I want to buy that property, by the way.

We will, probably next year. I text the property manager's number on the sign. Yeah, drove by blank's name building on this street. Is he open to selling? No, but I have a 26-unit that would. And that's how that transaction kicked off. It took a few months because I was going for creative finance instead of just low-balling unconventional, which is what they wanted, which almost never happens. But that came from a property manager who knew her client was selling. So while it's not always going to happen, you're going to have bigger relationships, obviously, as you scale your companies bigger and work more intimately with bigger owners. I think you'll get first shot at their deals if you build the relationship with them. But obviously it's not a very quick thing, especially when we're going through, what is that? The most, one of the most rapid periods of interest rate growth in America's history from 2020 to 2023, which is when you had your PM company.

I'm going to add one thing and it's negligible. I paid myself, I paid myself $3,000 a month from another PM company. I did sell it for a quarter million dollars. So I got paid more than I was paying myself. But you know, over the course of it, it'd take 4 years for me to pay myself what I actually sold it for. But when I was in it, it is nice having a little teeny income stream, having a little way to monetize. Like, I profitably ran my business and hand-selected my employees and controlled my screening process and got to see the backend and helped increase and influence market rent in my market. I had the top pick of tenants for my clients, for myself. There were efficiencies in running that company. I will also say this, real estate traditionally is a high equity, low margin business. You don't cash, you absolutely can cash flow real estate. People tell you that you can't online, they're lying to you. But, but it is not a cash flow heavy business.

Absolutely not.

The margins are, you know, you're talking like, oh yeah, I'm finding deals that cash flow like 10%. Cash on cash return. Businesses, you know, where some of our businesses are cash flowing like multiple hundreds of percents of what we have put into them. Business is an easy way because you're earning money and then you get systems and you go from being a solopreneur to a company. Businesses yield more cash flow. PM is a low cash flow business. Real estate is a low cash flow business. You can cash flow them. They'll build some crazy wealth for you over time. It didn't take me that long. I essentially sold my job for a quarter million dollars and that was like an ancillary piece of my real estate portfolio. You can make money doing this. This is what I like about the sales and marketing company. It is something that feeds the entire engine, right? Sales and marketing's in every piece of every business. You get great people. There's actual margin in there where you can do a great job and for the work you can be directly compensated with cash. There's less equity. There's not like it's holding a bunch of liquidity. I'm not appreciating over time because the market's going up. I'm not getting any tax benefits. Dear Lord, we're not getting any tax breaks. Unfortunately not. But it is actual just earned income. Like, you can have a business that makes money.

And I think that's the biggest change. And I want to go back a little bit. We were touching on property management, and I brought up that point briefly that you had your management company in one of the most rapid interest rate growth periods ever.

We changed topics too soon.

Yeah. Do you think if we were in, let's say, 2016 to 2020 when we had interest rates dropping, do you think you would have had more opportunity to buy if you had the same rack of clients? Yeah. 4 years earlier, interest rates at 3%. Do you think it would have been a different story or do you think it would have been the same thing? If I had the same clients earlier, interest rates more favorable, people are selling more inventories. Not shrinking 70% in 12 months?

I actually think it'd be pretty similar. This is why I chose a strategy that's fairly market agnostic. We started with seller financing when interest rates were in the 3s. We were buying at 5, 6% interest. When interest rates were in the 8s, we were buying at 3 and 4% interest. The prices, you know, prices went up, the interest rates went down, the interest rates went up, the prices went down. You win on price or terms. I buy the same way in every market. The only thing that would've happened if I bought earlier is I would've made more money. We would've had more time value. We would've appreciated more. We would've hit that rent growth when rents were— You would've gotten at the bottom of it and then— But everyone always wishes they invested earlier. Here's the magic of real estate in general. This is why I like starting with real estate, by the way. A lot of people say start with cash flow. I have a lot of people who join the podcast who are in different businesses that are like, I didn't do real estate because I wanted higher cash flow sooner. And I understand that the one thing is real estate does appreciate in a very unique way, and it appreciates in a very tax beneficial way. When you do these deals, when you are 19 years old, Caleb, and you buy a 10-plex, you buy another 10-plex, you buy an 8-plex, you buy a 25-plex, you buy 20— you're 21 years old, uh, before you turn 22, we're closing on 44 units, over 100 units. You have, assuming you live to like 80, you have like 60 years for those to appreciate. If you did the game the other way and you started with the cash flow and you set up your life and that's much more comfortable, a lot easier, and you bought all the real estate in your 40s and 50s, you don't have that same time to appreciate. If you can buy on the cash flow, lock in the real estate early. Like, the younger you can buy real estate, do it. Absolutely. And then still follow the rules. Long-term cash flow officially, buy deals with cash flow, get paid, but then build the companies that are cash flow heavy. And then you can up the lifestyle and you can do whatever the things that you, you could do all of these things. But oh my gosh, if you start with real estate, you can offset your taxes from the active stuff. You can, I believe it is the best way. If you're going to add appreciation into your strategy, you're going to add equity into your strategy. Buy the real estate first, buy it where it cash flows. And when the real estate sustains, you go off on all the other ventures, which is what you did. You bought a lot of real estate and you saw like, wow, it's really good until I have a big renovation project and then I don't have as much money and have to wait for capital events. It's not as fluid as I would like it to be. And then you added some systems to the real estate. It's like, oh, okay, now I got some additional cash flows and PM and then Hey, I have another business because real estate's not necessarily a full-time thing. Like, once you get the hang of it, it's 15 minutes a day.

Yeah, people are like, oh my gosh, I'm spending so much time on real estate. I'm like, how?

I have to leave my job. Yeah, I was like, okay, well then you're doing it absolutely wrong.

Like, I have 79 units today. I, it is not a full-time job.

No.

If I was managing every little property myself, you know, maybe.

And there might be a period where like when you're in the learning phase, you're, it's more intense and you join Multifamily Strategy, you have 3 hours a week that you're spending training and then then you add the 15 minutes a day, it's like, okay, that, that adds up. That's a part-time job while you learn it. But then you have the skill, you built the muscle, and now it's just a thing that you do. I spend— honestly, this last week, uh, I found a TV show I really like. I don't watch a lot of TV. I probably spent more time on Netflix than I did on real estate acquisitions, and we're closing a big deal, and we got a lot of work done for that deal.

Quite a bit.

I found Penguin on HBO. Very good. Highly recommend.

I like Cannibal on Amazon Prime.

To each their own. There we go. The point being, you could take the time the average person watches TV, plays a video game, goes on, you know, you can play pickleball one less time a week and move forward massively financially. Absolutely. I put those words in the wrong order, but you know what I'm saying? Massively financially forward with a little bit of time. Once you build the muscle in real estate and you see a deal, you know it's a deal when you can underwrite and negotiate. You buy deals, you move forward, and it's just part of your rhythm. And you will become unbelievably wealthy if you just keep buying deals that cash flow. Absolutely.

And then making sure you raise a reserve for capital events.

Okay, let's talk about this. This is okay in real estate and in business, raising the reserve. So you started with no money. I started with no money. You had no college. I had a college degree.

I had a 10th grade education.

It didn't— I'll say this, the college degree took me more time than it was worth. There's not no utility to college. I actually have some thoughts on— I hire college people. They're really, really well-rounded. They can do a lot of things. I hire non-college people. They tend to be really good at a few things and not good at other things. Well, and it's consistent with— it's just something that I found to be consistently true in hiring. There's utility to any decision that you make. People get different skills from different environments. My point is we have completely different backgrounds. We both started without money. You can do this only if you buy cash flow, but you can't get wiped out by liquidity. Yeah, I talk often about the three arms of capital. You got liquidity, you got cash flow, you got equity. Equity is the one that's going to get you rich, which is like, dear Lord, start that one early.

I mean, I did, right? Like, I haven't hit the 17 years, but I'm very close.

10 years before me. Unbelievable. Oh, I'm— I I'm not $10 million yet, but I'm closer to $10 than I am to $1.

You're closer to $10 than you are to me.

Let's say. Yeah. You have a decade to do what I did in 4 years, and you're buying faster and smarter than I was at your age. Like, you will— well, not even at your age. Like, you're buying faster than I did at 29.

You were in Pullman when you were 21.

I was. Yeah, exactly. What does the reserve allow you to do?

For one, sleep more at night. We can start there. The utility of the reserve itself is one, less stress. Two, it adds flexibility. The biggest learning lesson I've had from real estate is everything's gonna cost 3 times as much and take 3 times as long, and anybody tells you otherwise is lying to you unless they have an exact science and a crystal ball on what's going to go wrong with your property. Everything's going to cost more, and that reserve allows you One, the grace when things take 3 times as long, and two, to cover them when they take 3 times as much. We're going through a renovation on the property we own in Houston right now, and it's like it has taken longer to complete exterior renovations and it's taken longer to get the interior renovation started than I would like in a day. And it just takes longer. And that's going to— the bids came back higher than expected. And it's like, okay, we raised extra for that property, particularly because this was going to happen. It is going to happen on every deal. And a lot— it goes back to the sleep at night and allows you to perform at a higher level when you aren't bogged down stressing out about this little bit of cash when you can be making a whole lot more over here. Yeah.

And how does one raise? So this is something I think most people get stuck on. You start without money. If you raise this correctly, you can start with cash flow and liquidity while buying equity. You can't— you can do this. You've heard online that this doesn't work is because people are buying wrong and then trying to monetize the story online.

And there's nothing wrong with monetizing the story. No. The thing that I get caught up on, like, like the thing that frustrates me when people get caught up on is, oh, I don't want to raise the reserve. I'm already asking for such a big down payment. You're already asking for half a million dollars. Ask for another $150,000 more. If you're working with the right people— caveat here for investors— you're not working with people who are giving you their last dollar. That is not who we are working with for investors. We are working for affluent people who've already made wealth. When you're working with wealthy people, if you ask somebody for 5— 3 people give you $500,000, you're like, hey, we need $650,000. You go back to each person, you ask for another $100,000 or another $50,000 each. For people that are sitting on millions of dollars, that is not a deal breaker. No, it is this thing in your head that tells you you can't do it. It's too much. You're asking for too much. That is what's holding you back.

We print money like crazy. Yeah, you want to— there is more money than deals. Everyone can look and find a rich person. We all have, we all have people.

I called that one guy for property management this week, ends up owning one of the biggest barbecue chains in Dallas.

We have all run into people who have money. Not everyone runs into real estate deals everywhere.

Hardly anybody.

And I look at a lot of deals. I look at so many deals and to find a truly good deal, they're few and far between. And when you have one, the money will come. And I'm not saying that it's magic. I'm not saying, oh, just, just haphazardly go into real estate. I'm saying if you have a truly good opportunity, it is so easy to tailor cash to an opportunity. It is so hard to tailor an opportunity to the cash you have. Start with the freaking opportunity. Once you do that though, make sure that there's room to raise for actual reserve.

If your deal doesn't work raising for reserve, it's not a deal. And I've— and you've made those mistakes. I've made those mistakes. That is why you don't go out and do everything blind.

That's where you see the lack of liquidity ends up killing the cash flow. And you lose cash flow, you lose the deal. If you lose the deal, you start back where you started. Now, I've never lost a piece of real estate. I have signed over a piece of real estate that flooded to another investor, but I did so profitably. I have yet to lose money in real estate. I have lost a lot of potential revenue by not raising enough reserve to get through my project. So while I deal with cash flow, I'll have units left vacant, ready to renovate. It's still a deal that worked, but I'm losing all of this potential momentum and revenue and ability to move capital because I didn't raise enough money on the front end. And I knew I didn't. I raised enough to close the deal and I was like, the cash flow will carry us. And while it did, the 38-plex, I— there's another million in upside and a deal that we've already reached 2 million in upside. We're 3 years in and had we raised the amount of money we need. We probably need another $600,000. We raised $3 million. We should have raised $9 million. We would have found an extra million 2 or 3 years earlier.

That is—

I understand we made a lot of money, but that is a loss. That is 7 figures that was not reached in a reasonable time because we tried to do it out of cash flow.

That is wrong. That is something people I don't think truly grasp, and I'm not grasping it till now. I've grasped it once before, and that's the opportunity cost of a deal. What the opportunity cost of your time, the opportunity cost of 2 to 3 years, you're going to make that money on the 38, but that opportunity cost of not making it sooner is there. For me, that's the whole reason I went into business as early as I did. I dropped out of college, quit playing baseball. I looked at— we talk about the chessboard. I looked at my chessboard and I saw I could go play college baseball for another 4 years, or I could get a head start in business even sooner. I could have the same level of success, but the opportunity cost of continuing here hurts this opportunity here to start in business. And it's the same thing with any opportunity in business. For you, raising $600,000 for that third— $600,000 additional in reserve is hurting you because if you would raise it sooner, you already had that extra million dollars and you missed out on the opportunity of having that extra million already.

Never asked you this before. You said something really intelligent here though. Unbelievably intelligent for your age. You were 18 or 19 when you made the decision for business over baseball. What, 18 or 19?

18 still.

Okay. You're 18 years old. I have found most humans, and this is true for pretty much just entrepreneurs do this. Most people don't do this. They run around unaware of everything all the time. It's mind-numbingly obnoxious when you are actually putting together a business plan or you're weighing things like, do I do what I want to do? Do I do what I— what moves me forward? How much time do you find as an entrepreneur you set aside per day to think about your business? Not do, not grind. Those are all important. What do you spend time thinking?

That's a great question. And I've gotten in a season recently where I'm trying to think more. I I'm a big guy. When I see a checklist, I want to hit every task on that checklist before I set aside time to think. And I don't count in my head. I won't count that as work sometimes. And I've made a very big point lately to dedicate as much time as possible that I have available to thinking about things. For me, a big one is driving, like from where we are right now to get back to where I live, it's anywhere from 35 minutes to an hour and 15 minutes. Obeying the law and not texting and driving gives me time to think. When I'm on the road, it gives me time to think. When I'm laying in bed, I have time to think. When I'm in the shower, I have time to think. When I'm getting ready, I have time to think. So for me, when I'm not working, every other second of that day is spent thinking how to get to the next level. And then there are certain things. What are you weighing, right? When we're talking about opportunity cost, what are the big things you look at there for you? Like for me, I know it's one, mental well-being and profitability are two very big ones. Or do you have anything you'd add to that or you kind of stick with those two?

I mean, the biggest thing that I, and I think this is adjusted becoming a father, and the biggest thing for me comes down more than it ever has. Profitability matters because it's the ability that I've had over the last several years of business to be like, the only thing that we're risking is my house. Now, while that's unpalatable for a lot of people, I'm like, if I lost everything, I already know I know how to buy a house. I've bought, I've bought my own house. I've bought, I've bought 225 rental properties. I've bought, my first condo, I bought other people's house. I bought 3 houses. There's one thing that I'm willing to risk. Yeah, I know how to buy real estate. So losing— if I went all the way out, the consequence is so small. I started with no money. I wasn't happier with no money. I'll tell you, I prefer being rich.

But I agree.

But not that much. It doesn't make that big of a difference.

I think the analogy you could use is it's like are you eating a $20 combo bowl or are we eating a $300 steak? You obviously prefer the $300 steak, but having the cheaper option is not the end of the world.

I do care. I will say this. I do care about having time with my son. When I started this, this whole journey, a big piece of it was I wanted to spend time with my son in a way that my father was not able to spend with me. Single fam, like single income family, lower middle class. I got to live the life I did because my dad worked, but he— his commute was almost 3 hours away. So about 5, 6 hours on the road every day. Every day. And then he worked long hours. There's a lot of times where he would just sleep under his desk in the office. He ran an environmental division of a large company, environmental remediation. He provided for us, but he was only really able to be there on most weekends. Awesome dad. I got to know him so much better after he retired. I wanted to be able to be there for my son and my future kids where I had the time that I didn't get with my dad, but I still provided for my family like my dad did. That, that's the thing that motivates me. I think about the profitability of stuff differently having a kid now. Profitability. So, so to answer your question, no, it's, it's pretty much it, it's profitability, but it's not, I want more money. I want to know, hey, I'm not going to have to get the amount of time that I put into the businesses. I want to know like, hey, I'm not going to have extended multi-year periods of time like this again where I am unavailable to everything. I put in enough work on the front end where I can invest time in watching my kids grow up while running businesses that are profitable to a level where we don't have to worry about money. That is the, that is the thing that motivates me in business.

And I think it's a different perspective, right? Being 21 years old, obviously horribly far away from kids, like not even on the roadmap for me.

What motivates— or 9 months away, you never know.

Yeah, let's not talk about it. Let's not even bring that up. Um, yeah, I just think for me it's a lot differently. It's— I look at profitability, I look at how big things can grow. I'm, as you know, a very competitive person, especially when it comes to pickleball. I don't like being second place. I like being the best. So if I'm going to do something and there's an opportunity, I want to be the best at said opportunity. For me, it's like, how scalable is this? We go back to the sales company, infinitely scalable, and we can go out and compete. And there's a lot of people who suck in that field. And for me, I'm looking at, okay, we could go make a killing on this and I like doing it for me. So it's different for where you— it's like we come from a similar place growing up in the sense of neither of my parents are around a ton. Was raised a lot by a grandma. And it's like I come from a different place, but it's the same goal. I want to spend time with my kids eventually that my parents didn't necessarily have to spend with me. I'm just 11 years behind you in those footsteps. So I look at things a little bit differently than you do now as a 32-year-old.

Yeah.

And—

Hey, Jay, I just lost you there. Here's what I do know is true. Regardless of what your goals are, pretty much everything comes at some cost. And if you take the time to think— so I'm going to go back to the thinking thing. I happen to have built a huge custom shower because that's— I love doing my thinking in the shower. When you take time to think about your business, intentionally spend time, where are the bottlenecks? Where are the inefficiencies? Is everyone— does everyone on my team have the things that they would need to succeed? Do the people who have everything that they need to succeed consistently show me that they can be successful when provided everything that they need? These sort of things that you're asking yourself all the time are, where are we headed? Why are we headed there? These thoughts that you really do need to take time to think about, that's going to limit, one, the direction that you actually end up going, how fast you can get there, how efficiently that you operate. But if you don't know where you're headed, you're definitely not going to get there. That's like trying to get to, like, for example, If I was to try to drive to— where have I never been before? Alaska. I've never been to— well, I have been to Alaska. I've never been to Maine, though. I live in Texas now. If I'm trying to get to Maine, I'm like, sure, I would go east and then I'd go north at some point. And eventually, you know, I don't even know where Maine is. My understanding is it's like the tippy tip of the north.

I get Maine and Illinois mixed up with my 10th grade education.

Okay, so If I was trying to find it, I know roughly kind of where it is.

You got an idea.

Without a GPS, I would take days longer to find it. I— you need to have a map of where you're going. The time that you spend on getting clarity on where you are headed is everything. Part of that function is like, okay, if I'm headed towards— I want to provide for my family, and I want to own enough of my time to spend time with my family. What does that actually cost on a monthly basis? And then you— that's the profitability that you need to make and protect and always keep in motion. You can't sacrifice that for growth. You can't— once you hit that, protect that thing and then continue to grow with that protected.

And I think you hit it on the head is we're playing defense after we played offense. A lot of people, when they're getting started in business—

this guy took my course—

worry about playing defense before they play offense.

How do you win if you never score?

Perfect example. I went home to San Diego a few weeks ago. The Padres were playing the Dodgers. Padres didn't score for 25 straight innings and we choked. If you don't score a run, you can't win the damn game.

You, the best you can do is tie. And if I was in, if I was in competitive sports to tie every game, that would be, I'd hate my life. That would be miserable. You do need to score. I think a lot of people don't actually go out and build anything or they don't risk anything. Even when they have nothing to lose. And if that is you, this is the thing you need to think about tonight in the shower or on your drive to wherever.

Or on your walk. Yeah.

Are you listening to this podcast today on a drive? Like, this is the thing to think about. Am I at the thing that I want to protect? And if not, what is holding me back from taking some amount of risk? I'm not saying be stupid with money, but I'm saying like, go out and buy a piece of real estate. Start a business, even better, buy a business, no to low money down, easier way to go about operations, in my opinion, way easier than starting from the ground up. Yeah, buy then build is a true thing. But as you're going through this, like, take the freaking risk. I talked to so many people who are like, I don't know, I mean, I have, I have $4,000 of credit card debt, I don't think I can, I can learn how to buy real estate. I'm like, you get paid more than $4,000 to buy a piece of real estate. What? How? If you spend 5 seconds thinking about your business, what are you trying to solve? I have a tiny bit of debt and I would like to own real estate. I talk to people and their solution is, well, I want to wholesale real estate or I want to become a real estate agent. I'm going to do like 10 transactions. I'm going to use that to buy myself a new car and pay off my credit card debt. I'm like, what is your goal? I want to buy and own real estate. I can think of 3 off the top of my head immediately without any thought, but like ways to get liquid upon close of a real estate transaction while still owning the deal. It's not that hard. There are so many. Right after the deal, you can also sell some of your equity. You have equity in an LLC with partners. They can buy up the thing. You can wholesale the deal to yourself. You can charge a straight-up acquisition fee. There are so many ways, so many ways. To make money at the close of a sale that would solve their problem. And people go like, well, I can't spend money learning how to do this correctly. And what ends up happening, and even if it's not a lot of money, I mean, we're talking like, you know, let's take multifamily strategy up to $6,000.

You know what's hilarious too?

I think I ended up to solve like a $10,000 problem. Like your problem would be done if you knew how to do the thing and you've seen people do the thing. You've seen Caleb do things. You need to do things. You know, all the people. And you're like, boy, I just don't think I can. I can't understand what happens with that defense mechanism. Like, who can't take the risk? I'm like, risk what? You're at negative 4000.

And at the same time, I think something that's really important is identifying your thoughts and taking them captive is not something a lot of people talk about, which I mean, biblically we've talked about that before, but it's the whole neurological process, right? When you're driving down a dirt road for the first time, Your tire tracks, you can see them on the road.

We're Texans now.

If you drive down that road 1,000 times, yes, you're stuck in those tracks. It's the same thing. We're thinking thoughts. So if you're thinking like, oh my gosh, I only— I have $4,000 credit card debt, I'm going to suffer, I'm going to suffer, I'm going to suffer, I'm going to suffer. If you think that enough times, yeah, you're going to keep yourself in that hole. Yeah. If you look at that and you're like, why am I stressing out about that? And you question things and you identify them when they come up, that's not your reality. You can— you don't have to suffer in credit card debt your whole life. What is a way to get out of those tracks? Okay, you think differently about a problem, and when that problem comes up, you make sure you understand that and you identify it, and you know, no, I'm on track, I'm on my goal, I'm on the straight and narrow, I'm not suffocating and spiraling. And so many people get mixed up in that, and me included. I've gotten—

I—

it happens to me, it happens to Christian, it happens to everybody. But being consciously aware of where you're headed and what you're thinking while you're headed there is going to solve a lot of your problems just like that.

Yeah. Consciousness is very important. I think most people, and maybe, maybe, maybe we're waking up a little bit. I had some encouragement with— I don't, I don't give a rip who you voted for. It doesn't affect my real estate, doesn't affect my businesses either. But here's what was interesting about this election. And before you guys all jump all over me, just listen to what I have to say. More people came out to vote than ever before. I don't care what side you voted for. People actually came out and made a freaking decision, which gave me some encouragement. Now, the outcome is, you know, some people are excited, some people are not excited.

Neither here nor there.

It doesn't matter. The fact is, we saw for the first time people actually seem to be somewhat aware of their surroundings, generated some decision of what they wanted to do, and then actually did something. I don't usually see that. So I'm like, huh, did, did the events of 2020 to 2022 just wake people up? Do people have time to sit at home and think without all the noise and go like, huh, wait a second, my decisions have consequences? I don't know. But it's the first time in a long time I've been actually encouraged by humans trying to actively think about things.

And that kind of leads me to a point we were talking about yesterday on the phone. It's, it's incredibly ignorant to think you're not going to have problems in what you do. You're going to have problems in any avenue you go down, but picking your problems and owning the repercussions and events what occur from those problems— you have to wake up and accept your reality. It's— you can't—

I'm—

oh my gosh, I'm just gonna work a 9 to 5 and everything's gonna go smoothly. It's not real.

Work is hard. Business is hard. Life is hard. Retirement's hard for people. Choose your hard. What do you want to do? I believe, and this would have happened, by the way, with either— going back to the political— either candidate. What we saw in the past presidency and then the most recent presidency, both printed a ton of money, both increased the deficit. We print money. I believe that we will continue to devalue money. I do think we have some good things coming economically, but also They're going to keep printing. You don't have control over everything. I don't think that you can just sit and wait and have inaction and be okay the way that money works. I think you have to— because we print money this way, the poor side and the rich side, regardless— again, regardless of your politics, both sides, it's for the most part the same people. Rich side and poor side are getting farther apart. The mission is to as quickly and efficiently as possible get from the poor side to the rich side.

Like, I don't think anybody wants to be stuck on the poor side.

And but a lot of people decide to stay there by taking no action.

And it's understanding that what they're doing with money is kicking the can down the road. There is not a solution to that deficit. That can is being extended and kicked and the deficit is going to grow. If our government, our politicians made consistently good policy, I might not buy real estate like I do. And it's understanding what their incentives are, what their goals are, that is going to influence your actions.

I do want to be very clear for those curious. The reason that I buy as much real estate as I do is because I am actively leveraging a vote against the government making good monetary policy on either side ever. It hasn't happened. It hasn't happened. Um, it really doesn't happen since we are separate from the gold standard.

'71, right?

The temptation, and it would be there for me too, the temptation to say, I have an agenda, I have a legacy, I only have 4 years to enact this. All I have to do is just hit the print button and I can do it. The temptation is too great the way that our system is set up. I do not see a sustained period of time where the US will ever opt, or most countries will ever opt to not hit the print button because it solves your future problem, like right now, you're like, I don't have to wait, we can get it now. It's the same way that America has the credit card debt that it does. The government does the same thing. They will always do the same thing. I do not believe it will ever change for any reason. Therefore, we take leverage bets backed in real estate that you will devalue my debt and I will get paid to buy cash flowing debt. My income will go up and my debt will decrease and my assets will increase. Because of bad government policy and overspending. And I do not believe it will ever change, not in this administration, not in the last administration, not in a future administration.

Shout out Discover creating the credit card.

I think that was the '70s. Yeah, we actively vote— or not vote, we actively bet against them making good decisions. I don't believe it will happen in our lifetime. We will find out if I'm right or wrong, but so far we have made a lot of cheddar. Doing the bet against the government, making it easy. If you want to make a bet for the government being responsible with money, I would adopt the Dave Ramsey method. I would save, save, save. I would get your 9 to 5. I would get your low-interest savings account.

I would—

hating your life all the while. I would hoard your cash like the dragon Smaug. But, but since they're not going to do that, I think we do need to utilize leverage until you get to the rich side, then eliminate as much risk as possible. I would like to go debt-free. I would like to pay off the mortgage of this house. I had a small loan to buy out a partner in a multifamily strategy back in the past. It's already half paid off. I'd like to pay off the other half of that. I don't need to have more debt. I got tens of millions of dollars of debt.

Calculated risks.

Calculated risk. Exactly. But all this to say, go score first. For the last 3.5 years, I scored $35 million of real estate with about $20 million of debt. Now I have some capital partners in there. I did not build $15 million of net worth in real estate, but about 6. Then I have other companies and then we have cash on hand. I have my house. You can extrapolate what you want out of that, but it's like, we're not on the rich side yet, but I'm certainly no longer on the poor side.

Exactly.

And it's, and now we can defend it. It's worth defending. It's enough where I have the freedom that I originally wanted. And if I overextend, I can lose that freedom again.

So now we get to play defense and only now it's 3-0 in the sixth inning where you're at. You could say it's, and it doesn't matter if it's, you lose 7-0, you lose 1-0. If your pitching was lights out and you played great defense, you still lost 1-0. If you lose 7-3, you played some offense, your defense wasn't perfect. It's, it just comes down to you have to take action. You have to get some points on the board or nothing matters.

And also don't lose. Oh, I, I, yeah, no, no, at all costs don't lose. Um, get your points and that's the nice thing, right? In business you're not, I mean, sure you're competing with other people, but generally speaking, there's not that many people who are actively just trying to destroy your business, destroy your business. Like people aren't out to beat you. It's more or less an individual sport. People beat themselves. They over-lever, they get too greedy, they make bad decisions, they don't do the underwriting. Sometimes unforeseen things just happen. Generally speaking, get some points on the board, make good decisions. You typically don't lose it all. Just saying. It's almost always people like, I did, I got greedy, or I got shiny object syndrome. And I was at the same thing. Just make good decisions. Play a good conservative game. Get out there aggressively, move from the poor side to the rich side, and then just stay over here. It's more comfortable. It's been my experience. That'll be my 2 cents going from nothing to multimillions. And within the next few years, tens of millions, I'm quite confident it's not going to make that much of a difference. From what I've heard from people who are a lot wealthier than me, nothing makes a huge difference beyond $20 million. I'm not there yet, so I'll let you know when I get there. But that's what I've heard. I heard $20 million is kind of the threshold right now in today's dollars where people are like, yeah, uh, $20 million didn't feel different than $100 million. Uh, I had what I needed at $20. That, that seems to be the benchmark, but amen. We'll keep scaling, uh, there and beyond. Sounds like a plan, everyone. This was another episode of Multifamily Strategy. If you guys want to join Multifamily Strategy, by the way, or you just want to learn more, check out the YouTube channel, shoot me a message on Instagram. Just ask me if you want to be a part of this community, get plugged in. I actually just put a phone number on my Instagram tag. You can literally shoot a text to me, and me personally and my team can reach out. Uh, Caleb will even occasionally text in on that number. Like, we have a phone that you can reach out to with questions about program about real estate, about your deal. If you want to learn more, uh, you are invited to do that. I'm Christian Osgood on Instagram. This is The Owner Meeting hosted by Multifamily Strategy. Caleb, Christian signing off. We'll see you on the next episode.