320: Merging Realty, Development, and Management with Ryan Cadwell

Welcome to Zen and the Art of Real Estate Investing, one of the fastest growing real estate investing podcasts in the world. What if you could learn from experienced real estate investors, find out what got them to where they are now, get insight into their daily habits, and take these insights to inspire your own growth? Each episode, Jonathan Green shares an in-depth look at the mindful approach to real estate investing. Jonathan is a lifelong real estate investor and the founder of Streamline, a data-driven, investor-friendly, independent real real estate brokerage located in Madison, New Jersey. Whether you're looking to start from scratch, get to the next level, or just for a straightforward and honest approach to real estate investing, this is the free mentorship program you can take with you anywhere. Now, here's Jonathan.

Welcome back to another episode of Zen and the Art of Real Estate Investing. My guest today is Ryan Cadwell of Resolute Realty Development and Management. Their mission is to catalyze positive change in the real estate services industry, and that's why they merged all of these. They create opportunities, develop thriving communities, and enhance the lives of those they serve. Let's get to it. This is episode 320 of Zen and the Art of Real Estate Investing with my guest Ryan Cadwell. Ryan is a partner at Resolute RDM, which stands for Realty Development Management. They are an Indianapolis-based real estate firm specializing in commercial investment and property management. Ryan's been in it over 17 years. Welcome to the show, Ryan.

Thanks, Jonathan. Happy to be here.

Yeah, I'm looking forward to talking to you, and I want to start with something that I read in the pre-stuff that I send out. Why do you think dumb money's making it harder for us, you know, longtime investors to get in there? There are a lot of people messing it up, and I agree with it, but what do you think the dumb money is? And what impact is it having on other investors?

So dumb money, dumb money's good and bad. It's good when you're selling and you're making a lot of money. Yeah.

I like a dumb money appraisal across the street, right? I mean, a comp.

Yeah. It's bad when you're trying to reposition the same capital and not make the same mistake that the other person did. I mean, a lot of it just comes just from the natural cycle of COVID a bunch of free money enters the market, lending rates dip to unreasonable numbers. I mean, I know why they did it, and then it just turns into exponential, everything just gets multiplied out. And so, and I think, I mean, there's some people that I've even followed during those times on, they were doing some investing and then to listen to them then and then listen to them now and they're talking about the new ways that they're underwriting. And I think it just has a lot more to do with just staying disciplined to know who you are, know what you want.

I think it, I think to me there's also dumb money is also inexperienced money. So like you said, they have some capital to throw around. Maybe they think real estate's easier than it is, especially when rates are low. I mean, it is pretty hard to miss when you're getting it at a 3%, a 3% rate. But now, you know, if you have to reposition that loan and you can only get a 7.5%, You're in trouble.

Yeah. And when you don't pressure test it and, you know, one of the things I figured out before this cycle, I used, I used banks as kind of like a backstop for me to not make mistakes. And several, several of my lenders are great. Like this story doesn't necessarily apply, but I was asking them. Why are some of the lenders doing these deals? Like they've been in it long enough to know that the cap rates are just going to go up. Like they're not going to stay at the floor and that's just going to have a major problem. That's going to create a major problem. And they just described to me basically that a lot of banks that are publicly traded, they don't necessarily— they're worried about their valuation on the stock exchange. Yeah. Like, so doing, like doing loans that are dumb, like it's a calculated risk. They know some of these are gonna fail. More of these are gonna fail than some of the other better underwritten ones. But it's, they're, they're looking at 3 to 6 months out and our valuation has to be X. Yeah. And once I heard that, I realized, okay, I can't really use lenders as a backstop.

Different priorities.

Yeah. I mean, and, and their priority really is to get me to take the loan and, and, you know, and then they do the deal where it's 30% or, you know, sometimes it was 20 and 25. I've seen some people get 20 and 25 down and to them, they've pressure tested their numbers and they know that when the market shifts, ultimately what gets wiped out is is the investor's equity.

Yeah.

Not their loan.

Yeah. And they're, yeah, they're more of a machine. They can withstand it and they're a volume-based business. So more volume, the better. And like you said, they're just calculating some runoffs in there. It must be interesting though, because you're in Indianapolis, right?

Yeah.

Yeah. Indianapolis is always like, you know, in the top 5 markets to invest in. So you probably get a lot of out-of-state people interested in, but I wonder if they really understand the market. Of course, that's part of, your job to help them, but maybe they, you know, want to do less due diligence just because it's always on a top 5 list. And honestly, it is a great market. I know a lot of people who have investments from single families all the way up to large-scale multifamily. But how does it work out for you when you get those non-local people coming in? Because I'm sure there's a little bit more advisory going on there.

That's our goal, is to have a little bit more advisory. Where it turns into Uh, where it turns into different forms of friction is if they bring us in just for the management after they've acquired it and the broker they worked with wasn't really— a lot of brokers can advise, but the advice they're giving is usually transactional-based. It's usually them saying the market says this, as opposed to Okay, what's your investment criteria? Why? Like, what are you really planning on doing with this?

Right. It matters if they're going to turn and sell in 3 years, if they're looking for a lifetime hold. I mean, I own my own brokerage and I've said a million times, like, most realtors know nothing about investing. I think only maybe 1% can really counsel investors well. And that does put you in a hard spot because they've set them up with a property that they said Oh, looks good. You know, and then you have holdover tenants that are leased for an extra year and a half, you know, at way under market value. And, and, or they don't calculate the CapEx, which is, you know, the classic, because realtor, you know, frankly, they, they just didn't know that both furnaces were old and were going to come due right away.

Yeah. And I mean, that even just turns into like the gray hair that we have. I mean, that, that some of that is, is just straight up experience. And it doesn't have to be. I, I, I think that's, that's probably the most common misconception that we run into with clients is, um, so many brokers and I don't think any of it's intentional. I think it's just, they don't know what they don't know. Yeah. And I was one. I mean, I'm, I've been a broker 18 years and early on I was ignorant too. Um, but investing's just a whole nother animal. And, you know, helping me, helping me buy a property is not helping me invest. That's helping me spend money.

Yeah. And it doesn't, it doesn't serve the, like, I always, I always tell people, you know, I'm focused on the asset. You can get as emotional as you want, even if it's an investment, but I'm still going to vet the asset. And I've always found, and I'm sure you as well, you know, when you tell people, no, this isn't a good deal, the good ones will respect you more. And the other ones were just waiting for a yes from the next person. So let them just tell the next person. That's fine. I don't want that on my conscience anyway.

100%. And that's, and a lot of that has even been how I've tried to kind of change our value proposition to clients is. You know, hire, hire me for the money I've lost. Like, let me, let me teach you, you know, at least let me look through, look at this property through the lens of my mistakes and, or other mistakes I've seen and had to help people out of. I mean, coming out of, we, we started right at the beginning of the first recession, so we had 4 or 5 years of just cleaning up other people's messes. Yeah. Um, so yeah, I mean, it, it's one of those things where you just wish that people, yeah, I, I mean, it's, it's human nature thing. It just slow down, like slow, slow down. And I'm guilty of not slowing down. Like I'm not gonna sit here and throw stones.

Um, yeah, we've all done it, but I think people are, you know, they're watching 30-second clips of everything. Everything looks so good. Like it seems like think things should move fast. But yeah, I really agree with you. I don't think people are taking the time and advisory's a better thing. They need people to tell them the truth. I've always said also, now of course we're at episode 320, look, over 320 episodes, every person who I've had as a guest on the podcast has told a screw-up. Why would somebody want to go and do that exact same thing again in that market when we're all here to tell you, These are the things that definitely work based on our real life experience. And instead they might want to buy a guru course or just watch a video and say, ooh, Section 8 sounds great. Let me get into that. That's what scares me. And that's hopefully who, you know, we're both here to help. Whether they listen or not, there's not really much we can do about that.

No, there's not. There's not. And it's, it's whether they want to hear you.

I mean, yeah, yeah, I agree.

And the timing. I mean, you know, we never step in the same river twice and we should have— well, you hope. Yeah. Yeah. You hope not. At least build yourself a bridge. Yeah.

I mean, but like we were saying, there's always a person who's going to call up, you know, 6 different brokers and just wait for someone to say, yeah, it's a good deal. At some point someone will find it to be a good deal. That doesn't make it a good deal just because you want it to be a good deal. You know, and also I think people think real estate is, I don't find real estate personally risky at all, but I have a very high risk tolerance and a long history. And if you wait long enough, it's really generally not risky. But I don't think they appreciate the risk, especially obviously if you're looking at it from property management lens. You know, a lot of stuff comes due that you don't expect. You can do all the inspections you want, stuff's just going to break. Things are old, houses are old, apartment buildings are old. There's things that come up that you would never have thought of. It just happens. Yeah.

And the only thing that, the only thing you can do right there is know that expect the unexpected and know stuff's going to break. Like if you go into this, if you go into this thinking and you're surprised by that, that's the mistake. Yeah.

Yeah. I just, I hate when people do only the best case scenario, because if you factor the worst case scenario, you're kind of always winning, you know, and then you feel like, oh, you're pumping yourself. And also it's reserves. If you, you know, you close anything and you don't have reserves, you're basically telling yourself nothing's gonna go wrong.

Yeah.

That's asking for it.

Oh yeah. And going through the, you know, after the recession, there was a few years and then that led into the, for us in Indianapolis, that, that led into the whole turnkey phase where everybody was, you had a bunch of investors buying stuff, putting lipstick on pigs and and moving the product. And we had a mixed bag, you know, we had partnered with somebody that was doing that. And there was, there was, there were people that loved it. They got great deals, you know, the properties didn't have any problems. We had people that hated it. They got a lemon. Whether or not, you know, something was overlooked, I don't, I don't necessarily know. I wasn't always a part of, I was never a part of the first transaction.

Yeah.

Yeah. Yeah. But I mean, just in watching so much of that go through and even, you know, I'm 18 years in and one of the things that I have to get better at is knowing what I want when I'm buying a property. Like if I don't know what I want and I don't know how, what's the definition of success is. Then I'm— then why? When— why am I doing it? I—

but that's you after 18 years. So we have to respect the newer people who are really clueless. But, you know, again, we're just trying to help you. I agree because I still do the same thing. Like, I'm trying to get back into short-term rentals, but I keep not pulling— like, I made a couple offers, but it's just my— I think a tighter buy box is better. But a lot of times when people start, they're just like, You know, like they'll call it, you know, just anything like in Indianapolis. And you're like, well, it's a little bit bigger than you think. You know, it's not like 7 blocks, you know, to choose from. And then I don't, as a broker or any type of advisor, I don't want to make the decisions for them. And that's where it's like, you know, do you go through this kind of, you know, push, but pushing the ball back to them? It's like, you have, you have to make the decisions. I'm here to help you. I can't make the decision. I can't tell you which neighborhood is better. That's up to you. You know, and something like you said, what you want, because turnkey can work if you're looking for, you know, modest cash flow, light appreciation. But I think people get into it with the wrong idea and some companies don't do a good job. Some are very transparent and you can look at them and you're like, I'll take the cash flow, but also they're selling for $150,000 and usually in an area where all those other houses are still $90,000 because they're the first one to go up. So your real I don't know how they appraise, but I look at it and then I never pull the trigger on that as well because it's just like, I'm an asset hunter. I'm looking at the value and the value doesn't match up for me.

Yeah. Yeah. And that's always the interesting thing is value and the different forms of value.

Yeah. Well, because people think cash flow is really the value, right? I mean, it's why people, you know, a lot of people will go to the Midwest for cash flow, but they don't look at the value and what's surrounding it. And is this area going up or they don't seek the expertise because you can get 1% rule, doesn't make it a great property because when the furnace breaks, you're not getting that 1% rule for like 4 years. I mean, right?

Yeah. And I mean, and 1% rule should probably be like your minimum standard. Like, no, that's not— if you hit 1% rule, the— oh, then we're good. Like that's just where you're starting. You're filtering them off from there.

Yeah.

I mean, I— every time I hear 1% rule, I end up going, ah, it probably should be 1.2%.

Yeah. I mean, and also market dependent because here in New Jersey you can't even sniff the 1% rule, but you're going to get a huge scale on appreciation year over year still. So we have to explain that to people. It's like, hey, You know, which bag do you want to choose from? And, you know, maybe you can break even here and still be, you know, still go up, but it just, it depends what you want. Maybe you need the cash flow.

Yeah. And, and, and understand that real estate is not, you do not want to own real estate and not have cash to service it.

Yeah.

Because now, because now you're somebody else's deal. Yeah. Yeah.

So how did you get started? I know your, your dad was the first one to kind of tip you off to it. What was your first kind of look at real estate?

It was growing up around those apartments, man. It was mowing the grass. It was, um, getting into the, you know, watching, well, at, at first it was watching him deal with the tenants and have those conversations. I mean, so he operated an auto repair shop. On the property. And then he had, uh, I think it was like 12 or 15 units around it.

Oh, cool property. Yeah. Yeah.

And so he was doing, he was running that business and then he also would have, you know, tenants walk in. So I'd see those interactions and, um, I mean, I, he bought that when I was 4 and then I, I think I started mowing grass when I was like 12. I was something like that, 12 or 13, trying to make money. Um, and then that just got me in that world. And, um, I like cars, just didn't really want to keep working on them. Uh, and, and then this was, that was the other thing I knew how to do. And, um, and, and, and we started at the wrong time and we started in '08, but, um, I mean, a friend of mine, a friend of mine that was a close friend of mine, he had been in real estate for a while. He goes, actually, this is one of the best times to get in real estate because what you're going to learn stuff that most people never learn.

That's a good point. Do you feel like because I grew up the same way, my dad was dragging me to investment properties, talking to tenants from like the time I was a kid all the way up. And then I started collecting the rents. Do you feel like you saw the landlord-tenant relationship more like kind of humanly than other people see it. I feel like there's a lot of new investors who get in and think it's very transactional, but there's really a human aspect to landlording, especially when you watch it. You know, my dad, like, he would let people go 6, 7 months without paying. He just felt bad. You know, that's, that's not really my bag, but I don't like being a landlord, you know? Right. I, I know that now, but I did get to watch him negotiate all the time, collect the rent, and then I could see for myself, ooh, okay. They're handing him money for this that he owns. So even as a kid, I kind of had a better idea. Did it work that way for you that you just kind of through osmosis knew more as you got older?

Yeah, I, that was so like when in '08 when we, we had started kind of looking at doing more investing in '07, which obviously had turned out to be the wrong time. Yeah. When we were doing it, I had planned on not being a property manager and now I'm a certified property manager. But so, I mean, we had just started interviewing some people and what I realized is the amount of experience I had, there was so much that they didn't know to ask that I was asking them. And this was also, you know, property management hadn't really taken off. And really fine-tuned and got better to like what it is today. Back then, it was still kind of the Wild West. So yes, I mean, the direct answer to your question is yes. I mean, there's just stuff you figure out and it's always a lesson, Marie. And there's a lot of even stoic principles that I have picked up on and ways to maintain a human element and still have a direct conversation.

Yeah.

Being kindly honest. Now, I haven't been great at that, but as my, I've learned a lot more from my wife about that, but the, to be able to have a direct conversation and do it in a kind way, it maintains their humanity and their dignity. But at the same time, you, you're not doing them the disservice of lying to them.

Yeah. And that's a really good point. Women are better at that though, in general than men. It does take some learning on our behalf to kind of, you know, sometimes you feel like, oh, I just have to be tougher, but you're going to get way more by doing it like you said. And I liked the way that you phrased it, you know, kindly honest is like you said, yeah, you're, you're not going to make up a story. I'm going to hit you with the truth. I'm just not going to hit you with it. You know, we're just going to have a conversation about it. I think it adds a lot more trust to the relationship, no matter whether it's business to business, you know, landlord to tenant as well.

Well, and I mean, along that line, you either get trust in a better relationship or you expose the tenant is just manipulating you. Yeah. Like, yeah, I mean, if, if the tenant, you know, if the tenant respects you and they're, and they're working with you and they, and, and they in return are honest with you, That's a good tenant. Even if they're behind, work it out. You know, you, you may earn some loyalty points on renewals and stuff like that. And at the same time, if the reaction is negative, that, I mean, just be okay listening to that. Like, yeah.

And then make a decision afterwards. Doesn't have to be right then, you know?

Mm-hmm.

Yeah, that's a good point.

And the writing's usually on the wall with those people that are negative or having a negative reaction. I mean, typically they're not going to— they could be one of those, I call them professional renters.

I was just about to bring it up.

They can pass all your due diligence with flying colors and they get in there and they morph into who they really are.

Well, they're just doing the same script they've done at other places. Oh, there's an asbestos issue. I might have to sue. Like, I've heard that one before. You know, we've all heard them all at this point. You know, oh, do you know what? The second they bring up constructive eviction after they've been there one month because of noise, you're now like, oh, I see you've done this before.

Yes. Yes. But that— oh, by the way.

Yeah, go ahead.

I was going to say, oh, and by the way, please tell me what you think constructive eviction is.

Yeah.

Stereo on 7.

I don't think that's going to cut it. But I mean, look, that's a great— it's a great point for property management because the thing that I don't like about being a landlord is everything, but I really don't like that awkward— I'm going to avoid the conversation that— sorry, like that you need to have. I could be kindly honest, but I just prefer to avoid it because I'm not a people person and that will put my property in jeopardy. My dad always had the conversation and as long as the people were honest, he let them go and, you know, we would fix it later. But we never had like a walkaway tenant. You know, we lost some money here and there, but most of them caught up because he was nice. But it's tough and that shines a light on why property management is important as a buffer because, you know, when it comes down to it and you've never been a landlord and you have to, you know, someone, you know, there's like suicide or something bad happens in the property, like you're going to have to deal with it., but you'd rather avoid it. I, I know I would. Is, is that kind of part of when you're, when you're talking to people about large scale, what they like about management, it, it's removing the thing that they don't want to do anyway. Hey, it's Jonathan. I hope you're enjoying this episode with Ryan Cadwell. And if you're in the Indianapolis area and you need help with property management or you're looking to do some deals with development, get in touch with Ryan at resolutrdm.com. It's pretty simple. Once you get there, there's a phone number in the top, an email, and then obviously if you're already a customer, you got your login. Go check it out. Let's get back to the show.

The place where a lot of people get caught is they, they they evaluate that rental just on the spreadsheet. Yeah. They don't want to include, they don't want to include the PM fee because they think, oh my God, I can't pay that much per month. And, and, and well, the answer is, okay, well I'll charge you less if you own 40 doors or, you know, 100,000 square feet that we can manage for you. If you don't have economies of scale, then we've gotta do something else. But What you don't realize you're trading is you're trying to say, I'm going to save that money. And then you're going to take on the job of knowing how to artfully deal with people, legal regulations, federal regulations. You're mixing all that into a bowl. And if you actually thought of that and then said, oh, that's all I have to pay for that. Like, that's really, I mean, and I'm more of an investor. On the outside, I would rather pay someone to do that because like what you pay versus like if the manager knows what they're doing and they're, and they have the people skills, they know not how not to react. They know how to, they, they know how to, I mean, like our systems are built to where as much information as we can, we, we try to keep a recording of it so that. The communication, like there's accountability. Like if the tenant says, oh, you said this. Okay. When do we say that? We look it up. If we're wrong, we own it.

Yeah.

Most of the time we don't. Most of the time it wasn't said.

Yeah.

But yeah, I mean, it, that's the art of the business. And, and, and we've, you know, we've just kind of had to migrate away from caring about owner who just price shops. Like, if you're price shopping and you're not interviewing us for value, like, yeah, terrible client.

I mean, they'll be the worst.

Yeah, you're right on.

They'll be, they'll be back the next month saying, you know, oh, Bob down the road said they could do it for $11 less or 1% less. And it's like, okay, go, go do that.

Well, how much does that, how much is that 1% gonna cost you in the, in the long run?

Exactly. I mean, I always say, you know, it, if you want a discount, you're gonna end up with discount service. I think that pretty much goes across And we're not talking about little discounts like, hey, you have 40 units. Yeah, I'll give you a break on that. That's just a smart business decision. I've found, and I want to get your take on this, I've found that a lot of people, you know, they get into landlording knowing that it's a business, but thinking that it's more kind of like a passive investment. And maybe it is if they have management, but still they're not managing the manager. But I don't think that the actual DIY landlords realize that now they just signed up for a second 9 to 5. You know, you have your 9 to 5, now you have a 5 to 10 and a weekend job and your family hates you. And that's why you probably get a lot of those. But also, they also don't want to pay. It's like, do you realize how much more time you can have with your family if you're not unclogging a toilet? Which, yes, you're not good at. You're not a plumber. That's why you keep going back.

Well, and to that, to that end, they only do that because, A, they think it's a 9 to 5. Or a 10 to, it's actually a 24/7, 365. Right.

Yeah.

And then you have, I mean, you're at least on call for all that time. And then, but then you all usually, you know, gotta give 'em props cuz they want to work hard. And, and, and I never, you know, I'd never knock that, but they, they're usually not valuing their time properly. So we're like, if you weren't dealing with that, what would you be doing? If you— Yeah.

Yeah. How are you going to get to time freedom, which is what everyone's really after if you have your 9 to 5 and your 10 to 6 on weekends. And again, if you have a family or a partner or even friends, like you're going to be the one who's in the middle of a kid's recital and you have to leave because if there's an overflowing something and you don't have things put in place, it's you. I mean, and that, that's where even for me, 50 years in, some days I'm like, I don't want to own. I mean, I don't own that as much as I used to because it, it is a hassle. And what I do own, or, you know, I invest in syndications now because that's a better move for me now. But I think a lot of, a lot of younger people who have disposable money may look to things like that instead of direct. Because wouldn't you agree that even if you have a, if you have properties and you have a good property manager, you still need to, you know, have that daily dialogue, weekly dialogue with your property manager because the bad ones are, you're going to find out, you know, later that a lot of problems are there because as you said, the industry has grown. There's a lot of better providers, but still, still there's, there's a lot that aren't.

Yeah. And I mean, that's even a catch-22 because you want it to be a point of the skills that we really want clients to have are more of an asset manager role. Like understand your money, understand why you're putting it there, understand the returns you need to be getting. And let's work that because at the end of the day, saving a few hundred bucks or a thousand bucks here or there. It, yes, it matters, but it really doesn't matter when, if you're worried about the right things. And, and, and, and that's the hard part because property management and whether it's painting buildings or, you know, resurfacing, you know, whether it's making those decisions, like everybody thinks that, That's the easy stuff. Like, oh yeah, that means I'm involved. But the harder stuff is really understanding your financial situation and knowing what you want and making sure that this is still part of that plan.

Yeah, I think people hold properties too long. If you don't like the property, just get rid of it. Like if you bring me an investor who has 5 properties, I know they hate one and they're just like, oh man, I don't want to sell them. Like, why wouldn't you just, they're all, cause I'm at break even. Who cares? You don't like it. You'll get the, you'll get the deposit money back and the appreciation. Like just sell it.

Who cares?

Yeah. You know, they get like tied up in it. I like as if, because that, that's what they saw as their path to financial freedom. But if you have 5 and one's a dud, why don't you just trade it for something better?

Well, and, and I mean, you just mentioned it. What is it that they really want it?

They want freedom. Exactly. And they're holding themselves back by, like you said, by not being an asset manager. You're right. I really like that because if they can manage their assets and they find a good property manager, that is going to be passive-ish, like pretty close to passive, especially if you have a good relationship. And then you can just, again, every year you should be sitting down. Here's my assets. I always tell people, rank all of the properties that you own from 1 to 10 and how much you like them. Then rank them in how much money they make you. Now look at both of those lists. If you hate one and it's 10 and it makes you the least money, sell it. I mean, it's a no-brainer, but it is hard to get people to wrap their head around because they think that's, well, it's going to pop one day, you know, 7 days in, 7 years in, and it's still the same value.

Well, and it, it, that falls into like the ego category for me and And do you like to talk about, I have 10 rentals at a party? Like, is that part of why you own them?

Doors culture is very high. I mean, if you go on BiggerPockets, that's, I mean, not as much anymore, but in the old days, all people talked about was how many doors they own. People still do it to me and I'm like, I've never known how many doors I own. I just know it's a lot less now. But when I had a lot, you could ask me, I don't know. Because how, why do you count a door? You know, if you own 10 doors but you own 20%, that's 2 doors to me, not 10. You know what I mean? Like, I can do math and I do think, I do think it's a vanity metric, just like followers on social media. Like half of those are fake, you know?

Yeah.

What do you want to own? A dud? Would you rather say at a party, like you said, would you rather say you own 10 but 5 of them suck? Or would you just like have 5 good ones? I'll, I'll take the boring easy, you know, all day. I like the point. It's great.

Oh, 100%. And that's the hard part sometimes for me. If somebody's, yeah, I own this. Well, and I'm, my first thought is, is, well, I don't know how you bought it. So what you paid for it, what your leverage is, what your cash flow is. Yeah. Like, I don't know anything about that. So like, you could be going, you know, you, I could be talking to you in the bar because you're drowning your sorrows. Yeah.

I mean, Two, two people could buy identical properties on the same block and one could be crushing it and one could not with the same rents.

Yeah.

Just depends, like your great point, what you said, it depends on what they got in and why, you know?

Mm-hmm.

It's, it's an interesting business. So I mean, what, what's your favorite type of property for yourself? You know, is it single families, multi-apartment buildings? And then what's, what do you prefer to manage?

We're moving away from, SFR a little bit more, just more so because we're trying to help, we want to help our clients like level up, become the asset managers, put them into different deals and, and the, and commercials that there's a little bit more opportunity. Actually, there's a lot more opportunity. There's opportunities in certain versions of that where if you buy, you know, if you buy properties that aren't necessarily qualifying for the big boys, right? But you still run into some of the DIYers that just aren't operating at good levels. And as long as you get in at the right numbers, I found—

Like 18 to 30-unit apartments, that type of thing. The big guns don't want that. I mean, that's a lot of units. People usually can't manage them themselves, right? Or are you talking about other commercial assets?

That or even retail and office, neighborhood office. I mean, we've done a lot of that. We're in the works of repositioning some of those right now. I think for me, the reason some of those bigger things, some of the ones that are a little harder, the larger barrier to entry. Um, you, you just, you just can eliminate a little bit of the competition with the, with the dumb money we were talking about. That's, you know, that's willing to overpay, um, without really realizing if you overpay, the only answer to that's time. Yeah. Yeah.

And if you have it great, you know, well, if someone was coming to your MSAs, which is Indiana and Missouri, a couple parts of those. What do you think the best opportunity is now? Is it that office retail, which is very low on the price scale, but still for some people might be hard to figure out how to reposition it to make the money since, you know, we lost a lot of that during COVID and maybe not everybody's back to work. I particularly really like that option and a lot of people have been on saying it's a good one. What do you think about for the Midwest?

In our market, office is positioned right at the beginning of expansion phase. So there's going to be a lot more growth opportunity in those assets. Again, as long as you're buying them right, location matters, working with the right professionals, all of that stuff matters. The multifamily space for us, they're in hyper-supply. I mean, we've, We've overbuilt to the hilt and it's still going to take some time for everything to cycle out. I think the multifamily space, it's still waiting on wages to start to help regulate that. That's one of the things that a lot of people don't realize is rents are constricted by two things. The first one is jobs. But the second one is the wage and whether or not— if wages aren't increasing, they don't have any money to pay higher rents. So you can't just jack rents up.

Especially, yeah, when all the new inventory's new, so it's higher priced, and then all the C-class are just kind of sitting there. They'll probably do okay, but yeah, they can't reach the aspirational ones that they want.

Yeah. And then you also, like in the multifamily space, you also have a lot of delivery of Everything they deliver is A, it's A product, right? And then you're holding—

no one's building a C. Yeah, right.

So, but then you still have, I mean, you still have the market adjustment on when those are delivered and, and, you know, and in a lot of ways it's, it's just more about having the money and the positioning to, to be able to ride that wave out. I mean, if you're already in multifamily, Here again, when did you buy it? What did you pay for it? What's the plan? I mean, if you paid a lot and you had, you know, you got a loan that's going to be coming due at the end of your 5-year term, you're going to be in a different spot than a, you know, I've seen some people, some of the syndicators locally, they pushed out some really good numbers, but when you Um, I think one of them was like an IRR of 32 or something ridiculous, but they bought it in 2017.

Yeah.

So, okay, well that makes total sense because you, you literally rode the entire wave.

So yeah, right. Great job. But that doesn't mean you're getting, you know, 32 every time. You're going to get, you know, 16 next time.

Yeah. I mean, you, you, you rode that massive wave. Right when you should have, and good for you that you did it, but we're back to normal again.

Yeah. If you, if, if someone came to you and they're, they're brand new now, but they have capital to deploy and they, they know what they want, where would you guide them if they just want a guidance on kind of where to start since I, because the landscape's different. I think everybody used to want to start with single family, but I don't know anymore that that's the best option for a lot of people because it, it can be a little bit limiting. I think you can learn a lot with less risk, but what do you think?

I like to do those meetings in person and really like listen to the things they're saying that they're maybe not like, they're not necessarily wrapping them in words, but they'll kind of indicate the things that are, you know, that they really want. I mean, I'll give an example of some client friends of of, of mine, when we sat down to kind of go through stuff, they thought they wanted to get vacation rentals and that was the next thing. And the more we dug into it, I was, you know, and, and they were even okay with doing the risk, you know, the taking on risk of like other country vacation rental, man. Okay. And I was like, and, and I just kind of took, yeah. And I just kind of took 'em through. I was like, well, Just don't assume that they have American laws because they don't. So like it, I, you know, I don't, I can't even advise on that because I don't know what risk you're actually looking at if you bought one of those. Yeah. But the more we got into it, the more, the more it was a discovery session about, you know, the assets they did have. We could reposition those, make them some more money, and then they'd go on vacations anywhere in the world they wanted. Yeah. And you know, so it, a lot of times it's, you know, the fun part for us isn't just about helping people buy and operate. It's letting them kind of discover where they want to put their money and then how it's going to work because you get the same, the same benefits apply across real estate. It just depends on what you actually like. It's kind of like one of the things I learned early on in investing was if you're going to buy stocks, buy stocks and stuff that you like. Yeah. Because you already kind of know how it works. For me, it was Apple. I understood Apple. I knew when they did their launches, I, and then I just started watching the ticker and I'm like, oh, okay. I can clearly see that they roll everything out. In September, they start selling it in October, they hit their major in December. Like, but it was all just because I liked it. And so some of it's, you know, some of it's okay, you got the money, that's great. What do you like? And what do you, you know, because this isn't just going to be a short-term thing. You're going to buy it and you're going to hold it for a while. And, you know, it, Could be like a marriage. You're going to have good stuff, you're going to have bad stuff.

And yeah, yeah, I agree with that. I was the same with stocks. I mean, I've almost never lost on a stock because I just bought stuff that I liked and I just waited, you know, I made because sometimes I'll buy low, but I can look at things and be like, I mean, I'm buying this. The avatar is like going to still buy this and I still invest in, you know, I invest in a lot of index funds to just lay it off the table, but I still have my own play account. I mean, that's what's fun. But I think the same with real estate. I think if you have an asset that you don't like, you're going to inherently pay less attention to it or pay less attention to the issues that come up. Property manager will tell you, hey, you need a new furnace. Well, let's just wait till it breaks. Then it breaks in winter and you pay the dummy tax on top of the furnace. So I mean, it just makes sense. But I think we talked a little bit about Stoic philosophy and I think that Patience is really, really important when you're doing this advisory role because like you said, they started out, someone else could have said, yeah, it's a great idea. Just invest in any country. That's a disaster. They have to figure out what they like through questioning and patience because sometimes you just have to let them, give them some resources, see if they're even doing the work. And if they're not doing the work, again, it will go on us as advisors. Like it will eventually be our fault if we press the foot. You know, for them. Do you agree with that?

100%. 100%. Yeah. And it's, that's actually the fun part for us is you get in the discovery set. I mean, you get beyond the transaction. Like I'm just not that transactional. Me too.

We're very similar.

Yeah.

I'm the worst salesperson ever.

Yeah.

And I do a lot of business, but I just don't, I just don't care about the sale because that's not important. It's like, is this a good asset for them? Are they happy about it? You know what's worse as an agent or broker or anyone involved in the transaction to go to closing with your buyer, client, investor, and they're not even happy, right? You're plunking down $800,000, you know, and you're just, you're not even in a good mood. Like this is a great asset. We should all be excited.

It's just, yeah.

You know, it's, it's, you're betting on your future and you're just like, hey, what, what are we gonna get for lunch?

It's like, okay, all right.

I like lunch too, but I hope it's a celebration, not a, oh, you know, that property sucks, but it cash flows. 'Cause that's never gonna be a great one.

Well, and, and, you know, and hopefully they're having, you know, they're, they're applying their stoic indifference and they're not getting, they're not getting too, too high on the highs. And, and that will also, reciprocate where they don't get too low on the lows either.

Yeah. Yeah. I mean, I think it's important. You can always go too far, which I've gone too indifferent in my life.

Yeah.

You know, you get, you get, you can't just get too stoic because then you're immovable. But yeah, I mean, I think it's important, but that it's really a good point because, you know, the research that I did on you is like, you really like to be that guide for people. And I like that too. I think that's part of the fun because there, You always see this part with a real estate investor when you're mentoring them or talking to them where like the light bulb goes off and they just get it. And then you're like, we found, you know, we found the thing for you. You now like that. You know, I'm sure you've seen that. Then it feels good. And now all of a sudden your due diligence and your excitement, it just motivates them and they're going to, they're really going to get into it as opposed to like, doing a week long of research on Section 8, multifamily, short-term rentals, just kind of kicking every tire in the bin.

Yeah. And I mean, if you do something you love, you never work a day in your life and you can apply that into real estate and then fine-tune it down into specific types. And there's so many ways, like you can invest in notes and buy mortgages and like there's so much stuff that you can buy if especially if you're just honest, like, I don't want to buy this, but I need to put X amount of dollars into real estate somehow. Yeah, yeah, yeah.

I think there's way more vehicles than people think. I mean, I've had industrial people on and just the amount of classes inside industrial would blow everybody's mind because they think of it as like, oh, there's just one. It's just like that building. No. There's like 30 different kinds of industrial, all different ways. It's like business buying. There's a lot of different ways you can make business. And I think that's the, it's the exciting part of real estate. And I like knowing my own market, you know, and I like for people to want to know the markets that they're investing in, even if it's not local. Because like I said in the beginning, it's hard for someone to, you know, they live in New York City and they're like, oh, I heard the deals are really good in Indianapolis, but they just don't want to learn enough about the submarkets to know whether they're going in the right direction. We've seen that in, in cities around here where, you know, you could go one way and be down $20 grand in a year and you can go the other, you might be up $35 grand, but it's just two blocks.

Yeah, I was, I was going to say, I was going to say, yeah, that's street to street downtown Indianapolis.

Yeah. Yeah. That's Philadelphia too, which I'm very familiar with that. It's, it's exactly the same. And you, you can watch when you go there, you can see the neighborhood break. When you're driving. And it may change, but like, these are things that visually, again, I grew up with a dad who was dragging me to yard sales. You know, you grew up mowing the lawn. We're looking at the property and seeing what happens, how it deteriorates, what really happens. And I think that that's a, you know, again, we're just trying to deliver these memories of ours for other people. Like real estate's awesome. It's sitting under all these buildings, but the buildings just don't upkeep themselves.

Right. And, and the, and once again, you gotta come back to like, what was the point to begin with? It's usually freedom of your time.

Yeah.

Like, you don't, you don't, um, and sometimes you, I mean, I, I watch documentaries and, and you'll see some of these people that end up being landlords until the day they die. They're like in their 80s and they're still landlords. Yeah. And I'm like, I don't— that looks miserable.

Yeah, I stopped a long— I stopped a while ago. And yeah, it's, uh, I got— it's just because it's not— they don't even like it.

If it was—

if we saw the doc and it was like somebody who loved— he was great with the tenants, they were all his friends, and like that was like a collective thing, more power to you. Even if your rents are, you know, of course undervalued, which they always are for those old-timers, for those people.

Yeah, yeah.

But they, but they, I mean, that's very common in self-storage. They're undervalued, but they're running a business that they like. They'll eventually sell it at not for not as much and they'll be fine with that, you know, and someone else will upgrade it. But yeah, I mean, I think if you, if you take like a screenshot of our entire conversation, it's really about just, you know, can you, can you for, for a consumer, like, can, are you open to being advised? You know?

Yeah.

Are you open to getting help? Instead of, you know, an echo chamber where whatever you saw is now ratified. Because I find that to be more dangerous for the new investor because there's just, you know, when I grew up, there was no content. The content was my dad talking to me in the car, you know, it wasn't on TikTok or Instagram, you know. And then again, the algorithm plays into what you like. So if you're looking at multifamily, you're going to get jammed with multifamily. So of course now you're going to think it's the greatest. And then they'll slip into self-storage. Then you click that button, now you're down a self-storage rabbit hole. It's very hard to get out of the algorithmic pressure of what you're looking at unless you know people who can actually advise you face to face.

And the people that are going to advise you, are they, you know, are they going to have an uninvested interest in what they're telling you? Like—

Exactly.

Yeah. You know, they don't necessarily need you to buy into what they've invested in You know, it, there's also dangers in that, like, um, and, and just not, not seeing it for what it is. And, and that's part of the journey. I mean, you can't, you can't miss every bump on the trail, but yeah.

So at, at Resolute, who's your ideal client? Who do you want to contact you for assistance?

Investors that are looking, looking to level up, you know, it, maybe they've had bad experiences. They want to learn more about investing or they've already leveled up. They're, they're fairly clear on their asset management. You need, you need people to execute systems at a high level. Those are probably the two ends of the spectrum. And then anything between that, if, you know, the ones that, the ones that don't work are usually the early ones that are convinced that, that it's their way for right now. And that's fine.

That's the same. I let them. Yeah. You can do that with somebody else. Doesn't, doesn't work for me. Cause what's the point of me giving all of my, you know, pearls of wisdom to someone who's not going to listen. It's just, Yeah. Unfun. Is the best place for people to find you at resolutrdm.com? Yep.

Or LinkedIn.

Yeah.

I mean, Facebook, Facebook, Instagram, we're on all that too.

Yeah. I, I, when I was booking it, I kept reading it as Resolute or just in my head and then I had to look at it and I was like, okay, yeah, Resolute RDM when I saw it, but like I just looking at it like that and then it clarified too. Awesome, man. I really appreciate it. It's been a pleasure having you on the show and I look forward to staying in touch.

Yeah, thanks, Jonathan. Appreciate the time.

Absolutely. That was Ryan Cadwell. He is a partner at Resolute RDM, and that's Realty Development Management. You can find them at resoluterdm.com. I'm Jonathan Green. We'll see you next episode. Thanks for sticking around to the end so you can get a preview of who's coming up on episode 321 of Zen and the Art of Real Estate Investing. And it's Aubrey Linville of Linville Team Partners, built for investors who want in but don't know where to start. They kept hearing the same thing from clients. They wanted to invest, but they didn't know how, didn't know who to trust, and didn't know where to start. So this is where you come in. You can start now. We'll see you next episode with Aubrey.