Part 2 ft. Ryan Cadwell - Exit Strategy First: Why Most Investors Build Backwards: Exit Strategy First: Why Most Investors Build Backwards

Welcome to Cash Flow Positive. I'm your host Kenny Budwell, founder of STR Insights, one of the leading data platforms in the industry. Through using data and analytics, I've been able to replace my W-2 with cash flow from my successful short-term rentals, and my goal is to help you achieve the same freedom and success. Whether you're a seasoned investor or just a novice looking to make your mark, Cash Flow Positive is your go-to resource for unlocking the full potential of your property portfolio. Welcome everybody to another episode of Cashflow Positive. I'm your host, Kenny Bedwell, and this week we're doing a part 1, part 2 episode. This is the part 2 where we're talking about understanding your exit strategy before you actually invest and why most investors should be doing this today. So I wanted to bring in a special guest who has a tremendous amount of experience. This guest is a real estate broker. Investor, have been investing in real estate since I think 2004, 2006, around that time. So they've gone through the Great Recession, they've seen COVID, they've seen all the different cycles over the last 2.5 decades. So tremendous experience. And he, and his name's Ryan Cadwell, and he's going to come in and talk about why we need to be thinking about the exit in mind first and how we can strategize. I see a lot of investors today. Before I bring him in, I want to talk about this real quick because I think I see a lot of investors today. They know what their cash flow, cash on cash goals, they know what they're looking for in a property and all those good, you know, things about the benefits of buying a short-term rental property. But they don't understand what the end goal is besides just the returns. They don't understand when they should be looking to sell or why they should sell in that timeline and those cycles. And so That's what I wanted to talk about in this episode today, and that's what we're going to hear from. So without further ado, Ryan, tell us more about yourself.

Thanks, Kenny. Thanks for having me. Ryan Cadwell, been a broker, been a broker for 18 years. Before that, I grew up in a family that had rental properties since I was 4 years old. So just been around it pretty much my entire life, working life. I mean, I wasn't around it when I was 4, but You know, I started working at the apartments in my dad's shop when I was about 12, 13, where I just wanted to make some money and doing some, you know, mowing grass, doing general landscape stuff. And then just kind of got deeper into it in '06, got more into the investing side, perfectly timed for the recession and all that. And then that was actually an excellent learning experience coming up through the Great Recession. Walking a bunch of people that had made, even for this show's topic, walking a bunch of people between 2010 and 2012. I was walking a bunch of clients back then out of decisions that they'd made prior, and now they weren't panning out. You had, you know, you had massive foreclosures, you had all that stuff happening. So that was an amazing learning experience of, of kind of I mean, it was probably foundational as to why I'm so picky about when we get into deals. Now I've made a decent amount of mistakes too, but just seeing like when you're overly optimistic and, you know, what happens when major things happen. And then the next thing that happened was COVID, but that's what got us into it. Been into it for 18 years. Followed kind of a natural track from property management brokerage and ownership into Flipping, when flipping was real popular in our market between '14 and '18, that was when it had a major push for STR, not short-term rentals, but single-family rentals. So SFR is what I should have said, but there was a big push in our market from, you know, the coasts. They all came in and we did a bunch of redevelopment. We started doing that. That moved us.

At one point we get into some of those flips and I got tired of all the surprises in the flip world.

So started doing ground-up development, started pulling stuff out of the ground there. And then I've done short-term rentals. We've managed short-term rentals as well. But I mean, it's all investing at the end of the day. It's just a matter of understanding the dynamics you're in, the market you're in, that kind of thing.

Yeah, for sure.

So what's your portfolio look like today?

Portfolio today, we're building a bunch of build-to-rent, build-to-sell. We got 242 units under construction right now. I liquidated some of my assets in Indianapolis, repositioning that cash, looking for the next opportunity in Indianapolis. I'm looking at a couple different development deals. That's really kind of where, where I land. I work in commercial real estate doing some business advising, and then I've got, I've got some like consulting clients where we manage multiple pieces of their portfolio. So some of them have, you know, they might have a single-family rental and they got a commercial building and they got this. So then we put kind of like, okay, your investment package is this, this is what you're really shooting for. Um, that's what I spend most of my time doing. I'm selling off some of our ground. I did some spec ground acquisitions, got a closing this week, actually selling off some of those things that after the market shifted, it's easier just to make a little bit of money on, on the appreciation there, as opposed to, as opposed to pulling that one out of the ground with construction cost changes. So.

Sure.

Yeah.

Okay. First question I have for you is you've experienced, you know, different cycles in the last, you know, 2 and a half decades. So what, what are you seeing right now in the market today, just in the general real estate market today? What's going on?

I think, I think one of the most telling things that I've been watching and paying attention to is BlackRock repositioned themselves, especially in the single-family market, and they started selling off a decent amount of portfolio, at least through the news media last year. And when they were doing that, I was like, okay, why are they doing that? What are they prepping for? What do they see? And then what, you know, where was their investment cycle? And I think the majority of what their investment cycle, and I'm using them as an example, their investment cycle, they're getting in and with the way that they paid massive amounts for these properties, it drove up a lot of values, especially on the mom-and-pop investors. And it drove that up. They kind of rode that wave. It's been about, I mean, and then they got, you know, they got the COVID appreciation, which is an incredible time to have been in real estate prior to. They rode that up and I don't think that they saw into the future as much growth and the type of growth that they needed to do. Also, it depends on the funds and, you know, some other bigger picture items that apply pressure to their use of capital. But they started to get out and then most recently what they've started doing is some of the overvalued commercial, they're not even necessarily buying the properties, they're buying the notes. And then they're going to, basically they're eliminating equity partners by buying notes on distressed commercial assets. So understanding that that's part of the game that the big sharks play is something that I bring it up in a lot of our consult conversations because you need to understand that even though you have a loan on your property, you know, a distressed position, if somebody comes in and buys that note and you can't make the payments, they may be doing it as a strategy of acquiring your asset and just getting rid of you. I mean, and that's part of what's— that is part of what's happening right now. Anytime you get these massive inflation or appreciation bubbles where, I mean, people are spec— you know, they're speculating out and it's even what some of the gurus, like some of the gurus after COVID, Like they come out and they're talking about essentially easy money. It's disguised as not easy money, but a lot of that was fairly easy money. You can make mistakes you don't know you're making. And even when you sell, if you sell for a profit, you don't, to you, you didn't make a mistake because you made money, but you took a massive risk that you may not have realized until you see somebody else who stayed in too long. Market resets, your property reevaluates, and then you could be upside down. And that happens. I think the, you know, one of the key things that I see a lot is the, it happens when things get popular and when people, when people don't realize you don't want everybody talking about what you're doing. If everybody's talking about what you're doing, you're running out of market to sell to. Where's the market right now? It's, I mean, it, it's in, it's in reset. You got a bunch of people sitting on the sidelines with their cash, not sure what to do. Now you got the war going on. You got all these, you know, interest rates taken off. Most of the interest rates are taken off because people are pulling cash back in, going into bonds and how the bond rate affects everything in the background. But yeah, I mean, that's what's going on overall in the, in the general picture. It's using, using that a little bit more of a specific example.

Okay, awesome. That's really interesting. So with that in mind, you know, the topic of the show is understanding your exit strategy. So basically why you should build backwards. So let's, let's kind of dive into that topic and start with like, where are you seeing investors or maybe gurus or people on social media or influencers being overly optimistic today in how they're buying? You kind of alluded to that at the very beginning and we could probably start there as a good place.

Where are they being overly optimistic?

One of the things I talk a lot about is if you're emotionally, if you're really emotionally invested in it, in a deal, you really need to check yourself. You need to double-check your math. You need to check your assumptions. Being emotionally invested, your goal is to be emotionally neutral. I don't, whether I get this deal or I don't get this deal, it doesn't change any part of my life. It just is or it isn't part of my investment strategy. The overoptimism I think comes from the same place most of the time, and it's usually lack of personal honesty with their own investment strategy. I mean, I'm a part of some mastermind, commercial mastermind investment groups, and I mean, some of the things we even talk about in there with very seasoned people with multimillion-dollar portfolios, And it's what is your investment criteria and when was the last time you actually chose to step out of it? And if you have set criteria, I'm going to invest in this type of product, these type of return metrics, and this is what, this is the only thing I'm going to do. It's whenever you start thinking about, well, maybe I should consider, but you're stepping away from what you said. You know, what you've already calculated and what you know is going on. It's any of that type of, and, and actually I was even thinking today, cause, cause we're a couple of the things I just mentioned that we're working on development-wise, the thought went through my head of, am I being too overly critical? Am I being, and then you have to check that thought with, okay, where's that thought coming from? Is it coming from because I'm looking at a lot of deals and I'm not able to pull the trigger because they don't pencil? Yes. I mean, that's going on. But for the most part, the over-optimism to me is where are you getting your data from? Even this podcast, like what's the goal of having the podcast in your ear? And is it to confirm what you think? Is it just to gather information? Try to remain as neutral as possible through all of that. So that you can be objective and you can say no. You need to say no 98, 99% of the time to so much stuff. Because like, as a broker, for instance, what is our job? Our job is to constantly market things to any buyer.

It doesn't matter to us if we're representing the seller, whether the buyer gets a good deal. Just always keep that in the forefront of your mind.

And anybody who says win-win, they really want to win for their side.

They want you to feel like you won. They want the positive. And there are ways for both sides to win. I don't, I don't want to sound overly negative. There are ways for both sides to win. Just understand the motive, their motivation, and then understand yours. And when those two things align, it's great. The deal works out, the seller gets what they want. You, you, if you're the buyer, you get what you want. But not keeping in mind that broker's job and feeding his family depends on transactions. And sometimes, I mean, there's brokers that I've seen where they don't care if they sell you a bad deal. And sometimes they even think, if I sell you a bad deal, it's not going to work out. I'm going to get another sale in a year and a half when it falls apart. Like there are brokers that think that way. Not on our team. That's just not something that, that we do. And what, you know, one of the things within that I ran into with a client, especially along this line of, of, of being overly optimistic.

I was sitting with a client, we were going through and I always ask him just two main questions. What do you want? We start there and then I use why, and I try to ask it like, Maybe between 5 and 7 times. So, yeah, why do you want it? And then they tell you, usually the first 2 or 3 are ego-driven. It feels good to them. It's something that they heard their friend doing. And then if you ask it enough times, you're going to, you're going to discover what they really want.

And so many of us, and I mean, I'm as much of a hypocrite in this as, as anybody else, but So many times we don't stay true to what we want and we start listening to whatever the hype is. When was the last time you heard a broker or you even read real estate news that was just overtly negative? Yeah, it's never— it's always a good time to buy. How is it possibly always a good time to buy? It can't be, right?

That's a good point.

That's a really good point. Yeah, just fundamentally, it can't always— you have to like the buy cycles if you're going to buy value or You know, how are you going to make money? I think a lot of times people see the optimism, they hear the optimism, they read a book, they listen to a podcast, they assume the blanket assumption that they, that they accept is real estate always appreciates.

Okay, well, if it appreciates every year at half a percentage point, is that really where you want your money? Is that really where you want your headaches? Just because over a 30-year period it always, you know, it always appreciated 3%. That's a very stable approach for somebody who has money in all these different places. But it, but if it's one of your main 2 or 3 investments, is that really where you want your money? Like, and people just assume because you have, you know, the confirmation bias, the spent cost fallacy that I spent money on it, I have to be right. So then you start going and looking for people that are going to tell you you're right.

That's one of the biggest things that is, that I see in the marketplace when we're over the 18 years, when I ask them, like, how'd you get into this? Especially somebody who's upside down, they're struggling. You know, I've done short sales workouts with banks, all those kinds of things. And when I ask them, how'd you get into this? They just blow past so much of. They don't really know how to like write in risk premium. They don't necessarily know how the other parts of the economy affect, could affect like their rental property.

And, and then how, why location, location, location is such a big deal. So the basis of all that I always say is if you feel really, really good about a deal, you should be worried more than excited. You should be worried about what your blind spots. If I love this deal so much, if this thing looks like it makes total sense, prove that it doesn't. Like, take a step back and find a mentor, or, you know, call Kenny Bedwell and his company and have the consultants help you. Like, it just gets somebody else to look at it and put objective eyes on it as opposed to whatever your attachments are.

Yeah. Yeah. So definitely, yeah, I love that. I'm a big numbers guy too, and I see a lot of people Today we're short-term rentals, right? So everyone has this idea of like buying that sweet vacation home that you can, you know, that pays for itself. Like guests pay for, you know, the rentals and then you can go and vacation there and enjoy it and it's free and all this great stuff. And unfortunately that a lot of those times, those places, you know, pick a, I don't know what, wherever your family vacations to, a lot of those markets, they're just not, they're not viable anymore. They don't, they don't pencil out anymore, especially when you use it as a personal, you know, vacation home. It really eats into the potential income. But people have that emotional drawn to it, that it gets really challenging for them to wrap their head around it, like not that they're going to actually have to pay out of pocket for other people to stay at their dream property. And the, you know, brokers or agents there, a lot of times agents, they're not selling, they're selling them on this, you know, like, oh yeah, it's your, the perfect place you want to be. And, you know, they're not telling them about insurance rates have, you know, have gone up over 3 times. And, you know, I'm picking on some beach markets I'm thinking of at the top of my head, or, or, you know, taxes or all these other things. Like it's all left off to the side, you know? So yeah, focusing on management costs. Yep, exactly.

Or management cost, like not writing in, not writing in realistic expenses to operate that business. Yeah.

Yeah. I see a lot of that, you know, kind of, you know, don't, don't look at the man behind the curtain stuff, you know?

Yeah.

The wizardry of the expenses. So yeah. Yeah. Now, all right. With the topic of, you know, exit strategy first, how are you seeing most investors build backwards or the investors who are doing it right build backwards?

So one of the things that I've dug into more recently has been like, okay, there's a lot of people that know way more than me in real estate. I need to go learn from them. And over the last 5 years, I've been able to do some of that. And what it really comes down to is why are you buying it?

What is your required return? How long are you going to be in it?

If you don't know solid, specific answers to those 3 things, you're not ready to buy anything. Because the basic measurements are how much cash is going out and when is it going out? How much cash is coming back and when is it coming back? And then if I didn't use my cash there in this particular deal, what other opportunity would I have it in? And what would that return be? All of those things create the measure for yourself as to whether or not this is right for you. So if you understand your cash flows, okay, you got to put this much up and then you're expected to get this much in NOI. And back every single month or year, you know, in, in short-term rentals, you probably want to do it more based on the year, but I mean, that would be your, your department. That's what I would do.

Sure.

As opposed to, yep. I mean, I guess if you know the seasons, but if you know those three big fundamental pieces, you can more easily underwrite whether, whether the deal works and there's, It doesn't matter if you're looking at the deal with your terms, there is a price point where that deal will work. It's whether or not the seller will sell it to you for that number.

Right.

That's the, that's the key. Yeah.

The only asterisk to that, that can bite you is an environmental issue where you have unknown environmental cleanup costs. That's the only asterisk that would actually truly just kill a deal.

Right.

But every deal has a price. I mean, sometimes if it has an environmental issue, the price is, well, you gotta gimme a million dollars to clean up the property and then I'll take it from you. Like it might be that kind of a deal. Or, you know, now what changes the market value or the value they might be able to get into the market is some other buyer's return metrics are different than yours. So you have to know what differentiates you in the marketplace to somebody else. And if you don't, the only way to know that is, is knowing your exit. Because you have to be able to measure, I'm going to make this amount of money over this amount of time to determine whether or not the deal pencils from the start. Now, how do you come up with those assumptions? There's two main ways. You don't want to go too far into the future.

Like you go 10 years in the future, you're really pushing, pushing it.

Typical is 5 to 7 years. Now that all depends. If there are deals that are 10 to 15 years out, but there are things that apply to those that, that are more fixed. Now the way you get to your exit is you look backwards. Typically what you need to be careful of right now is when you look backwards 5 years from now, you're right in the middle of COVID You're right in the middle of how all that all that stuff was messing with assumptions. You can't use those. You really can't use those years. And if you, for Indianapolis, for example, let's use COVID in Indianapolis and sure.

I did a measurement for Indianapolis because like we had some rental increases that were like 10 and 15% better than the year before. And I was like, holy shit.

Like how did that go up? So, so yeah, I mean like that's a major moneymaker.. But then I was like, okay, what was the average over 15 years? And I spread it out over 15 years. It was still 3%.

So you gotta go back far enough to say, what are the true market averages? What are, and then what are my assumptions that I'm putting into my formulas based on? So know where it's coming from. If you're using cap rates, understand the cap rate's limitations. So you're not applying a cap rate where it shouldn't be applied. Brokers do that all the time too. Brokers don't— brokers will use cap rates. For instance, like a cap rate in the 5s or 6s to me is, unless I have institutional money that doesn't require very much return, you're squeezing your return down so low you almost don't have anywhere else to go. So the back end of that deal just has to pencil. But when you're trying to just figure out your exit, You've got to, you just have to understand the core fundamentals you're putting into it. What is your growth rate or your appreciation rate? Okay. You're assuming that based on maybe you read something, you got an email from one of the gurus or one of the, one of the marketplaces and double check it. Now that we have AI, I mean, you can, you can put stuff into AI and then you, you still have to double check AI.

That's very true too. Yeah.

But yeah. Yeah. But then ask AI for its source and then go to the source, read a little bit of the article, make sure you understand how they came to their data too. Does your property even apply to that data assumption? I mean, you're a data guy. You, you get all that. I mean, I can prove a lot of things using data, but it doesn't make my, my proof really applicable in the situation.

The simple part of the exit strategy is, is know when you're getting off the ride. Just know when you're planning on getting off the ride. I had one client that he was looking to sell during the, during the upswing in like '23, '24. And it was a good time to sell, but I asked him, I was like, why do you want to sell? And he's like, well, I want to pay for my kid's education. I was like, okay, that's a good reason. Good time to get out. When's your kid graduate? And he was like, oh, he's only 12.

And I was like, okay, what are you doing with the money when you pull it out? Like, that's not going— like, are you throwing it into a 529? Like, are you doing something with it that was planned? And he really wasn't planned. It was kind of like this general idea that he had that— at least that was my perspective of what he was doing. I don't know what he did with the money when he moved on, but it was just more of a, okay, that's, that's the story he's telling himself. It doesn't really apply now. He didn't really have an exit, but we kind of, you know, our company kind of helps with that. Like we at least put out and say, okay, this is what the market's doing. If I know when you bought it, you make, you know, does it fit within your model?

Because not everybody wants to go through our process. Not everybody wants to be, yeah, to really fine-tune, micromanage, to constantly, you know, maintain the asset side of it. That's the piece that that I try to encourage a lot more people in is figure out a way to offload the PM duties, the property management duties, and focus on your asset management duties. That, just because it requires a lot of time, it requires some mental fortitude and research and that kind of stuff. And that, and that way, you know, whether you're in the right market, where you're timing it, are you a little bit behind on your projections? What's coming in the marketplace, like have a few of those conversations with brokers, that kind of thing. So when you're establishing your exit, what do you want? What do you have to have? Why do you need it? Those questions are going to start to reveal what your exit really is. I mean, just by asking them.

That's really good. I think a lot of people— so I'll speak for short-term rental investors because I see it a lot. They come in and there's some tremendous tax savings you get with short-term rentals. That you can't get with passive long-term rentals. There's also tremendous potential cash flow that you can get as well that you might not be able to get in other, you know, real estate asset classes. And so the problem I'm seeing is that there's a lot of investors coming in wanting to take advantage of these, you know, cash flow or tax savings or whatever. But it's very much like short-sighted in that I'm buying real estate almost to get rich quick. They're not necessarily saying that. Like, if you say that everyone's like, oh, get rich quick. That, you know, I know that's a scheme. That's not why I do this. But like their actions resemble as if they were trying to get rich quick, but they're not thinking about the exit strategy. And they're not thinking about like, I'm yes, I'm doing this to be, you know, make money. And I think everyone is, they're not doing it for fun, but they're not thinking about how you get out, you know, and when to get out and how that aligns with their lives and so on, because I'm finding that a lot of people, they sell within, like you said, the 5 to 7 year period is actually pretty common, especially in the short-term rental space. People sell and level up, they scale up, or they get out completely because it wasn't meant for them. But it is this, people are struggling to understand that exit component. And so kind of just a follow-up question to you on that topic, and maybe if you could go in a little more detail is like, When you sit down with someone, like, how do you help them map out, like, what's a good timeline for them and how, like, maybe market signals that might be like, yeah, you should probably sell then, you know, that, that aligns with some, some event going on in your life or retirement or whatever you're trying to do?

Good question. Everything with money is emotional to some degree.

Yeah.

And to, to say that it's not, it is a disservice to yourself. So there, there is emotion into it. And when, and when I talk about the what and the 7 whys, it's really to get in and to create kind of a narrative around, I'm getting in for this reason, these are my expectations. Those things are going to kind of set up the marketplace and the lens you're going to be looking at the marketplace through on this particular investment. And so even if it's just like a one-page executive summary with We're going to execute, you know, we're going to buy this property. We're going to put, if you've got to put some money into it, you got to do some marketing, get it, you know, we're going to target stabilization in year, call it 1.5, 18 months. And our projected and required returns are this. At that point, what you're doing thereon is you're managing to that standard. So if you're doing the management, you at least know the standard that you're trying to hit.

On your returns.

And then when you're looking for your exit, you're planning a 5 to 7 year because that's, that's on average a real estate cycle is going to have ups and downs in that 5 to 7 year window. That's the reason that it's 5 to 7 years. You have to look at the market, then you have to look at your narrative and apply what you're seeing and what you wanted to know when, to know when to get out. And I think It just requires market and timing discipline to where you're going to have that thing go through your head of, oh, it's appreciated this much. I'm only in year 3. Should I hold on?

I think I should hold on.

If I hold on 2 more years, like you're going to make that assumption. If I hold on 2 more years, it could appreciate that much more and totally possible. However, no matter what you watch, if you watch stocks, if you watch anything, It has peaks and it has valleys. In real estate, it takes longer to liquidate than a stock. Can't literally do it in 2 minutes. So the timing piece, now that also has market shifts to it, but like one of, one of the main ones that, that really crippled a lot of people's plans was the interest rate hikes that started happening in '23. And when interest rates went through the roof, valuations start to crash. So at that point, your choice is, are you going to sell on the down? It helps you minimize the choices. Essentially, it's, am I going to ride this out? Because I'm in year 2 and, you know, I'm good for 4 more years. That's probably, you know, if you're looking at your executive summary, you've been in it 2 years, you've ridden it up. You're already, you know, if you wrote up a peak and then it starts to come down and you're looking at it like, oh, I've only made 2 to 3%. This isn't very much, but you have more time that then you're going off of what you originally wanted. You're looking at what things are, and then you can actually interpret the real market information against what your targets are. That's why having exits, that's why having it written down is so important. Additionally, in, you know, in our world, it's important because we end up in, you know, in some of the management stuff and in those conversations where, you know, we have to make decisions on when to put capital expenses in and are they cost, doing cost segs and any of that kind of stuff. That piece also helps. So if you're doing capital improvements or you have planned capital improvements, I mean, those are things that, that we get into as well. From the, from the general exit, just knowing on one page, because it really isn't that difficult. And I think that's why so many people skip this, skip over it.

Well, I, you know, I'll remember. Well, not necessarily. I would even put a section in, for me personally, I do a lot of different, different things on journaling. We actually even have an investment journal that we wrote for people to use, but to write down how you're feeling. How do you feel about this investment? What do you think about this investment? Put those things down as like a time capsule in time. When you look at this, this is what you thought. You're going to learn a lot from that on your investment journey. Because I don't care how old you are, investing is a, is really a lifetime journey from the time you start investing, when you start making money, hopefully, to when you die. You need money to survive. So there's an investing piece to that whole thing. And learning from yourself is only possible if you actually take some notes. It doesn't have to be long. It could just be, I love this because of where it's located. It's next to the beach and it offers this and my projected returns are this. And I, you know, I'm super excited about it. None of those things, don't judge yourself on them.

But it creates data points for you to look back on and say, okay, did I gauge this right? Did I gauge this wrong? How could I improve?

I try to make it like vanilla, like how basic can I make this to where it's like tending the garden. I'm just, I'm weeding it today.

I didn't do weeds. You know, I may not be eating the freehand.

I may not be eating the tomatoes or the peppers or whatever. I'll get those later, but I'm just.

Maintain the garden and took me 10 minutes. No big deal. Moving on.

Does that kind of answer the question?

Yeah, no, it does. It does that. I think that's, that's really helpful. How often are you encouraging people to kind of revisit and reanalyze their position, their property's position?

Once a year minimum, just reread why you have it, reread, and then make notes on, you know, You know, I reviewed it this year and this is— just make some notes. And every year minimum, just so you kind of— because if you don't keep it in your mind when stuff in the market happens, you won't know whether to respond or act. That's the only proactive thing you control. Like, we have to focus on the things we control with the investment, and then we have to That's the proactive part. I, I, I don't like reactions as much because usually reactions can create loss that's unnecessary. But if you are at least staying up with it to a degree, and you know, the war in Iran starts and then that, that creates an increase in interest rates. Naturally, the thought, if you're an investor, the thought that goes through my head It's okay, interest rates are going to go up.

How's that going to affect? And then I start going through the list in my head. If you haven't revisited them every year, you at least keep track mentally of where you're at on your timeline of execution.

And that way, to me, it just gives you more peace. Like, okay, the war in Iran is going on and, you know, interest rates went up, but It doesn't affect me because these are all locked and I don't have to worry about it until X amount of time.

Now, I mean, for instance, if you get into an interest-only situation, it may not affect you. But if you're in an ARM, if you're in anything that's variable, then those kinds of things are going to come up. And you know, and then the war in Iran then turns into how long do I think it's going to go? How long do are they planning on it going? How is the market going to respond to it? So, yeah, that's a good point. Those are my suggestions at least every year, just so you can maximize the professionals in your life and you can say, hey, I got this. This is why I got it. This is my target. Tell me what's going on. And the other thing that's going to happen is you're going to have professionals come in and out of your life. I mean, we've got people that hire us at the beginning and They change their mind. They don't necessarily like how we're doing things. Maybe we're not a good fit and they don't want to be married to us anymore. But doing it on enough of a repeat basis that you can, you're armed to make quick decisions if you have to.

No, that makes a lot of sense. And that's really good advice. And just, I think a lot of people don't, they're more reactionary, right? Oh, the market's doing this, therefore I need to pull back or sell or do, you know, whatever. And it's all very, it's not strategic. And I think that sometimes, like, once again, nobody likes that. I keep mentioning this like idea of like get rich quick, you know, and everyone's like, oh, like, like it's a vampire. Like, you know, like if you get the steak and the garlic. The problem though is like people are acting that way though, you know, and even their, their strategy, it's not really strategy. It's reactionary. To how can I chase the dollar or avoid getting burned, you know, or cut things off when— and panicking essentially is what I see. So anyway, that's really helpful. As we're kind of wrapping up here, Ryan, I appreciate all this information. It's been very, very helpful, and hopefully this helps people especially understand the exit strategy side, how to form that for themselves when they're looking to buy. Any other like kind of final thoughts on this subject on how investors can build backwards when they're looking at deals and, and, or even thinking about getting into an investment?

I think the primary thing— I want to piggyback off of even what you just said and being reactionary.

The only way to avoid reactions is to learn how to respond in a proactive way. The only way to respond in a proactive way is to make it into a math equation. If you've set your target and you've got a range that means that you've hit your target, if you're in your target and the market makes an adjustment, don't be afraid to pull the trigger. You're essentially there. Like the planning, the pre-planning, the understanding what success looks like to you ahead of time just allows you to kind of put the 2 2 4.

Okay.

That's, you know. Then it, then it allows you to avoid the, the talking, you know, the voice in your head that's like, well, if you get out now, you know, the loss aversion, if you get out now, you might miss the next big— be comfortable with, I made this decision, I hit my target, maybe I need to increase my target on the next one, but based on what I'm seeing, I'm going to make this decision, and then make it, stand by it, move on.

That would be the piece. And if you feel like you're reacting, purposefully don't make a decision. Slow down, take a step back. I mean, markets make drastic changes. Sure, overnight. Not so much real estate, takes longer. But, and then I would even say find a way to journal your feelings.

Um, because one of the things that I've had to accept for myself, and, and, and as I've kind of dove into this deeper, money is an extremely emotional thing. If you don't regulate your emotions purposefully, then your emotions are going to impact your decisions, full stop, because you have not regulated them. And that doesn't necessarily mean you have to go to therapy. I love therapy. I think it's great for you, but, but like maybe just write it down.

Like, yeah, write, write down what you're feeling. Don't like the small things, for instance. Don't make a decision at 7 PM at night when you're tired. Don't make a decision when you haven't eaten.

Like, eat, allow it to digest. When you're in a positive— more— when your body's in a more positive place, then deal with hard decisions. If you're not rested, you know, purposefully rest, get yourself into a good place, set aside some time, make decisions. Those little things are huge. And I see people that that make the, you know, the reactionary decisions. It doesn't mean that you're always going to be able to do that, but if you're regulating yourself, it makes it to where if you have to make a decision quickly, you, you're coming from a more even-keel, regulated place. So to me, it's— the discipline is not just financial discipline, it's also emotional discipline and and personal discipline. It's going to impact you. And then being honest with yourself.

That's really good. That's really helpful too. No, these were all very, very good nuggets and ways to think about how we should approach investing fundamentally. I think that's one thing that, one of my takeaways from this is how can I understand the fundamentals before I go into any deal and start trying to analyze all the numbers and all the expenses and the cap rates and, you know, DSCR ratios and all that good stuff that I need to know to know whether a deal is going to work out for me or not. But going back to the fundamentals and understanding, you know, what's my overall goal here? What, you know, looking at the exit in mind and to help me make decisions and know where that pro— and how that property is going to pace. And then I like what you said too, writing it down. That's big. That's key. So yeah, good, good stuff, man. I really appreciate it. And I appreciate you sharing. Ryan, just, just last question here for you, man. If someone's interested in learning more about your services and getting connected with you and all that you offer, how do they do that?

Sure.

LinkedIn. LinkedIn. I'm very active on LinkedIn. Send me a message. I am the one who responds, nobody else. You can email us, email me, ryan@resoluterdm.com, or just check out our website. We do have investor tools on there. They're free. Look at our resources page to get, you know, different things that may help you on your journey.

Perfect. Awesome. All right. Well, thank you so much for, for being on the show today and sharing your insights with us.

Thank you for having me, Kenny. It's been a pleasure.

And thanks everybody for listening. And I hope you enjoyed this episode of Cashflow Positive. I'll see you next time.