Long Game: Real Estate Provides Understanding of Wealth Creation

In a recent REsimpli Podcast episode, CEO Sharad Mehta of the firm had a lucid conversation about the importance of long game playing in real estate investing with a seasoned real estate investor, Jeffery Hoist. This episode includes incisive research on how to give wealth building top priority over current income flow—a method that has let the guest have a happy life.

The visitor related his own experience of seven years without income flow under his first contract. Not everyone would suit this long-term strategy, he noted, especially those who need faster returns to satisfy current requirements. His approach stresses tenacity and a focus on long-term benefits instead of transient pleasure. Like that saying, ‘Slow and steady, wins the race’. The conversation focused on the need for every investor to evaluate their own financial condition and aspirations before using this approach because it calls for great dedication and a big financial buffer.

A master of the art and trade has probably failed more than the student has even tried. He counseled individuals to see the learning process as valuable even if it calls for errors. Engaging with seasoned professionals might provide new investors with the credentials and reputation required for success. Learn from people around you and listen to people who are where you want to be. Sharad and the visitor agreed that many would-be investors fall into the trap of “analysis paralysis,” in which too much preparation limits significant progress; the presentation represented this idea of action versus inaction.

Driven in seeing people attain their highest potential, the guest offered remarks on how a proactive and positive attitude may produce remarkable results. Attitude turned out to be one clearly defining factor of the conversation. Motivated thoughts and forceful action might greatly affect the success and expansion of an investment. He underlined the need for always pushing oneself with fresh experiences, learning from mistakes, and seizing possibilities. You got to do what you got to do. Some opportunities don’t appear repetitively, and thus the way to get ahead is just to have some faith and get started.

Jeffrey underlined the need for a good strategy for financial policies, capital buffers, and cash flow. Sharad Mehta’s REsimpli system provides a suite of tools and services to assist and improve investing operations for individuals eager to delve further into real estate investment.

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Transcript:

Sharad Mehta  0:38  

Ehsan rishat. Hey, Jeffrey,

Jeffrey Holst  0:42  

Hey, how are you?

Sharad Mehta  0:44  

I’m good. How are you

Jeffrey Holst  0:45  

really? Well, actually, thanks, awesome,

Sharad Mehta  0:47  

awesome, cool. Any questions you have about the podcast?

Jeffrey Holst  0:52  

No, I’ve done a lot of podcasts. I’m sure we’ll figure it out. Yeah,

Sharad Mehta  0:56  

perfect, yeah. I usually just basically go based on the questions, I mean, the answers that you’re giving, and then kind of just go for it should be no more than 30 Max, 45 in it.

Jeffrey Holst  1:11  

Perfect.

Sharad Mehta  1:12  

And Jeffrey Holst. Holst, yeah. HOST, okay, perfect. All right, it’s recording. All right. Let’s go and you can hear me good, right? Yeah, you’re great. Perfect. 123, hey guys. This is Sharad with REsimpli, host of the REsimpli podcast, bringing you a very special guest on this podcast, Jeffrey. HOST. Jeffrey, how are you doing today?

Jeffrey Holst  1:42  

I’m doing great. Thanks for having me.

Sharad Mehta  1:43  

Absolutely. Thank you so much for being a guest on the podcast. Tell us a little bit about yourself. Where do you live, and what kind of real estate investing or other cool things you do related to real estate?

Jeffrey Holst  1:55  

Sure, yeah, that’s that’s a broad question, because even though where do you live? Question is hard for me because I travel a lot. Sometimes I don’t even remember where I live. But I have an apartment in Chattanooga, Tennessee, and I’m another one in San Juan, Puerto Rico, and I split my time mostly between those two, about 40% in Puerto Rico, maybe 50% in Chattanooga, and the rest just traveling wherever. And I fund that with real estate investing. So, I mean, I, I go to Puerto Rico because I love it. So it’s like my vacation home, slash, hang out and do cool things. Place I do, mainly mid sized multi family so like 10 to 50 unit buildings. That’s, that’s where I like to hang out. But I have 100,000 square foot of industrial, 50,000 of office, 30,000 of retail, and then about 350 apartment units. Perfect,

Sharad Mehta  2:49  

perfect. That’s awesome. Like, it seems like you’re doing lots of really cool thing. How did you get

Jeffrey Holst  2:55  

started? Same way everyone does. You know, I bought my first deal. But I actually, you know, I’ll take you back a little bit before that. So I’m a lawyer by trade. I grew up in Michigan. I became a bankruptcy attorney in 2007 so that was, like, really good timing. The economy started to crash in 2008 and we were, we’re filing a lot of bankruptcies, unfortunately, maybe about, well, it was like August or September of 2008 I ended up feeling a little sick, and I went to the hospital and ended up finding out I had leukemia and sorry to hit ultimately caused me not to be able to work for a long period of time. I built up a ton of debt and ended up filing personal bankruptcy myself. It was just too early in my career to have that income drop off at that point, I said, well, I need to do something different. So I took a corporate job in Tennessee. That’s how I ended up down here. And I started saving up my bonuses, and I bought my first deal. It was a $30,000 condo in the middle of the Great Recession. It had been 100,000 Bank owned foreclosure, but we bought it from the bank for 30,000 and I did that with a partner, 5050, and we paid cash 15,000 each to buy it. Okay,

Sharad Mehta  4:09  

so you, you did that, you bought a condo. And then what happened after that? You’re like, oh, this is good. I mean, I’m assuming you bought it with the intention of renting it out. Yeah, yeah.

Jeffrey Holst  4:20  

So we, we bought it for 30,000 we put about 5000 into renovating it, rented it out back then for $600 a month or something. So it was a good return. I mean, it was like a 2% rule, but, you know, we still own it today, and thing rents for about 1200 a month now, and so it’s been pretty good. It’s probably worth 150,000 something like that, wow, and yeah. So we bought that with cash, and then maybe two or three months later, another unit in the same building came up for sale a similar price point. We knew it worked, so we figured out how to buy that. One ended up borrowing a little bit of money. But I didn’t have any credit. This is 2011 and I’d filed bankruptcy in 2010 but I was able to borrow it from a friend to pay for my half of that one. And so we just started out with that kind of, you know, sort of friends and family lending kind of deal, but we still own both of those, and they both do really well. And from there, we just, we just kept finding deals and doing a lot of hard money stuff and a lot of private money stuff back in, 2012 2013 stuff like that.

Sharad Mehta  5:29  

So you’re noticing you’re buying these super inexpensive properties. I started around the same time period, like 2000 August. 2010 is when I bought my first property. It was like ridiculous numbers back then. So you bought these properties, the cash flowing good, and then, like, wow, this is a really good opportunity, you know, I should look more into it and invest into other properties. Like, how did you kind of transition from that?

Jeffrey Holst  5:56  

Yeah, so, I mean, once we bought those first two condos, I was completely out of money, but we found this duplex. And this is, by the way, this is all in Metro Detroit. So I was living in Tennessee, but I was investing in Detroit, Detroit. Okay, yeah. And so we were able to buy houses in 2012 2013 for like, $5,000 for a house. I mean, it was crazy, right? And they’d run out for six, $700 a month. So we bought a lot of houses in Detroit, and what we would do is we’d fix them up and rent them out, typically to a section eight tenant, and then sell them off to like turnkey style, to to another investor from out of the state or out of the country, and we would flip two or three, and we would use the money we made from those to buy one for ourselves in a slightly better neighborhood that we would keep in cash. So we just kept doing that. And between 2012 and 2016 when I quit my corporate job, we ended up purchasing about 56 units, all free and clear, just myself and one other partner. Wow, that’s amazing. Yeah, we never put any more money in after that first, like, $30,000 or whatever. So, but it was, you know, doing a lot of work, flipping a lot of properties and then reinvesting all the rents. Both of us had reasonable other incomes at that point, so we didn’t pull anything out of the business for seven years. We

Sharad Mehta  7:15  

just kept putting all the savings back into the business, kept buying property. So you you left your job in 2016

Jeffrey Holst  7:22  

Yeah. So I went from bankrupt in 2010 to, like, retired, I guess, in 2016 Wow. That lasted, like, yeah. It only lasted like, two weeks, and I got bored and started doing more real estate stuff. But, but, yeah, I haven’t never had a corporate job since then, and I’ve never had any kind of job since then. I’ve just done the real estate investing. It’s amazing.

Sharad Mehta  7:41  

That’s amazing. Such an inspiring story. I’ve been like to go bankrupt in 2010 and then retire financially free. Yeah, well, I mean,

Jeffrey Holst  7:51  

I was literally on my deathbed in 2008 and then seven and a half years later, I was thriving, right? So, I mean, I went from a bankrupt, bankruptcy attorney who is dying of leukemia to, you know, independent wealth and being able to, like, hang out on the beach for the rest of my life if I wanted, it turns out that’s really boring. So you can only do that, yeah,

Sharad Mehta  8:10  

so you did it for two weeks, and then you’re like, Okay, I can’t, I can’t just, yeah, I actually anything.

Jeffrey Holst  8:16  

Yeah. After two weeks, I thought I gotta find something to do. So I ended up doing this burr deal, and I bought a duplex in Chattanooga as the first property I ever bought in Chattanooga. Everything else was in Michigan. Up till that point, I bought a duplex, fixed it up, renovated it, pulled the money back out, and then I thought, This is too slow. I should buy apartment buildings. I’d been listening to a lot of podcasts and stuff like that as I was getting ready to quit my job, and I had heard all about, you know how, how the different way they value commercial property versus traditional residential so that five unit and up stuff. So I started looking at B and C class, 10 to 15 unit buildings, and I found a 12 unit building. I didn’t have quite enough cash to buy it myself, so I split it with my dad. We paid 635 for this 12 unit. Ended up selling it two and a half years later for 1,000,002 because of the value add strategy that we implemented there and and once I saw that happen, it was like, I’m buying these all the time. So we bought and

Sharad Mehta  9:16  

you’re just buying them straight from MLS. I mean, not, yeah, I mean, I guess loop Ned, loop Ned,

Jeffrey Holst  9:22  

or commercial MLS, or sometimes brokers just call us now. And I mean, we’ve done this in Michigan and Chattanooga, and I’ve done a, you know, I’ve done some small syndications too. So we bought a 56 unit building, I don’t know, two years ago. Now, the last two years, it’s been a little bit harder to find deals that pencil out for that. But

Sharad Mehta  9:43  

how was the transition from going from condo, single family to unit to buying this? Was that the 12 unit? Building? 12 unit? Yeah, 12 unit. Well, how was the transition like? Like? Is that like? Did you need a mindset shift? Did you need to. Have, you know, more experience working with someone just,

Jeffrey Holst  10:03  

I think the biggest thing for me was just wrapping my head around the debt. Because, you know, we had 56 units. They were free and clear, except for a little bit of private money debt. You know, none of it was personally guaranteed. And to go buy that $635,000 deal, putting $150,000 down, we had, you know, nearly a half a million dollars in debt that I had to sign a personal guarantee for. So I had to say, Am I okay with this? Like, do I do I believe in it enough to sign on the dotted line, and once I wrap my head around that man, I I’ve gone full full circle on that. I don’t have hardly anything free and clear anymore. I have conservative debt positions, you know, 60% loan to value, 50% loan to value. But I really like the acceleration of wealth that comes from those amortization gains,

Sharad Mehta  10:49  

right? And then how much I’m curious see Barfield 635, how much money did you put into it to sell for 1.22 and a half years? Oh,

Jeffrey Holst  10:56  

um, hardly anything we what we did is we implemented strategic rent increases. And we use the money that we were getting from the extra cash flow to renovate units. I mean, it’s only 12 units. So like, we were putting maybe eight or 10,000 a unit in when we when we would turn them over, and they all turned over in a two and a half year period. And then we had, and we did, we did a little extra, you know, I put granted in and and hard surface floors. Took out the the nasty carpet, and I moved the rents from 600 to 1200 and that that’s why the value doubled, because the rents went and part of that was the market, right? This is 2016 rents went up a lot between 2016 and 2019 so so we were benefiting from the market and also from the value add strategy.

Sharad Mehta  11:41  

So once you did that, that was a 12 unit. And right now you said you’re investing your suites on 10 to 50 units, five zero,

Jeffrey Holst  11:49  

yeah, the biggest is 56 units that I have. Okay, got it? Got

Sharad Mehta  11:53  

it. I’m curious. Like, why not? You know, look at 100, 200 unit complexes.

Jeffrey Holst  11:58  

I you know the I do look at them, they’re a bit more expensive. There’s more competition in that market. A lot of the big syndicators, they just don’t want to compete for a 20 unit building, so that it’s a little bit easier to get deals that make sense. And there’s a lot more Mom and Pop operators. And that’s really what I buy from. I buy from someone who’s owned it for a long time. They maybe haven’t kept up with the building, so it’s a little tired, but it’s in a decent area. That’s the strategy I take. I think in the next market cycle, whenever that occurs, we’ll move to buying bigger deals. But the ones that we’ve looked at in the last few years just they haven’t penciled out for what our model looks like. And then

Sharad Mehta  12:40  

the ones that you’re buying, are you buying them for long term passive income, or is the goal is to buy them? Yeah, add value and then maybe flip them to another. Yeah,

Jeffrey Holst  12:49  

it’s a combination. I mean, we’ve sold, I think, five apartment buildings, you know, mostly in that 15 to 20 range per unit, or 15 to 20 unit range in the last five years. So it’s not like, but we bought two or three every year. So we’ve been accumulating more than we’ve been selling. And a lot of times what we’ll do like, like, when I sold that 12 unit, I ended up 1030 wanting that into buying a 30,000 square foot shopping center, you know? And it was a diversification play at that point, because I bought a couple 100 units of apartments between when I bought that and when we went and sold it. And I thought, tried to do something different. And I like to do that with my you know, when it’s just my dad and I, or it’s just me, or just me and one partner, I like to play with some different markets to see what works for the syndication thing, because if I’m going to raise money, I want to make sure I understand that market. So like retail, I don’t think I’ll be syndicating retail anytime soon. It’s a It’s, there’s, there’s advantages to it, but it’s a bit more challenging in some ways.

Sharad Mehta  13:53  

It’s especially, do you feel like the current, you know, market cycle that we’re in, the retail, the commercial sector? It’s something that you would stay away from you.

Jeffrey Holst  14:04  

Yeah, I would be careful with it. It depends, right? So you have a couple of, you know, macro trends that you have to think about. Like, one people are buying stuff online more than they used to. Like, you wouldn’t want bookstores, right? But if you have, you know, Family Dollar, or if you have a karate studio. I picked those as examples because that’s what I have in my building, right? I have, I have, I have a local grocery store and I have a karate studio, and I, you know, those places aren’t going anywhere, like people aren’t going to go get their karate lessons on Amazon. They need to go see that dojo. And so, yeah. So it depends on the mix of tenants that you have in there, so like, kind of that neighborhood community center, those aren’t going away anytime soon, but, but if you’re big box stores, I’d be real careful. I’m not buying shopping malls. Got

Sharad Mehta  14:57  

it, and are you buying them all in the tenants? Heat market, or, if you like, yeah.

Jeffrey Holst  15:01  

So most of what I have is either in Michigan, because I have a partner up there that has a property management company, or it’s Chattanooga, and 50 miles from Chattanooga, so that could be North Georgia, it could be Alabama, but it’s just a general area around Chattanooga. Lately I’ve started, uh, analyzing deals in Puerto Rico also, and this is, by the way, it’s not all that strategic. It’s like, I look at deals wherever I’m familiar with because I think that a big part of real estate investing is having hyper local knowledge of the market. Because you can have, even in Chattanooga, there’s one street where, you know, if you bought a duplex there, you could do really well, but two blocks over, if you bought a duplex, it’s like a war zone, and you don’t want to, you don’t want to buy there, right, right? And it’s true everywhere. So I feel like you really need to understand the area that you’re buying in before you start buying and so I buy in chattanoogan around here, because I know this area. I’ve lived here since 2010 and and I feel the same way about Michigan. Like, I mean, I lived in Michigan till I was 30, so I grew up there. I have a pretty good idea of that market. And now, the last three years, I’ve spent about half my time in Puerto Rico, so I’m starting to get comfortable with the idea of buying there. I’m starting to understand what areas I like and what ones I don’t, and stuff like that. Got it,

Sharad Mehta  16:18  

got it, and then, so you have a lot of experience in, you know, different verticals within real estate, like commercial, you know, retail and small, multi family, you know, given where the interest rate is, right now, I’m very curious, like, where do you see the market going from here? If there was someone, you know, I just bought my first 11 unit property, like, three, four months ago. So we’re in the process of rehabbing it, finishing it, getting it rent out, and then start the refi possible. Where do you see the market going from here? Well, I

Jeffrey Holst  16:50  

mean, it’s going to depend a lot on what interest rates do, because, you know, the return, you know the cap rate is really a function of two things, right? So the cap rates are the risk free rate of return, plus a risk premium. That’s just general economic theory, right? So the risk in the market is going to vary from from market to market, from time to time, but the risk free rate of return is pretty similar everywhere in the US, at least it’s based on the, you know, overnight borrowing rates. So the risk free rate of return might be based on the 10 year treasury or something, or the three month treasury. I don’t really know exactly, but it’s based on a static metric. So if those rates go down, cap rates should go down, which means value should go up, right? Because the risk doesn’t change substantially based on interest rates. So if interest rates go down, which they are trending down, like we just got quoted almost a full point less than what it was three months ago on commercial debt. So, you know, you see the 10 year treasuries drop pretty precipitously, like almost a point as well during the last 60 days. So I mean, based on that, especially with the Fed, you know, finally saying they’re probably going to lower rates in September. Yeah. I mean, I think if those things happen then, then the market will stay pretty stable. Now, one thing to keep in mind is a lot of the value on the larger commercial properties have already it’s already eroded. 100 200 300 unit buildings are down 20% maybe 30% in some markets over the last two years. The smaller deals, like your 11 unit, it’s so dependent on net operating income, and you have so much flexibility in that when you’re renovating and doing a value add, it might not matter. You can make money on that in a down market. You can make money on that in almost any market, which is why I love that size. If you buy it right, and you have a good strategy, you’re going to be fine. It’ll cash flow, and you just wait it out. The market will get stronger at some points. It’ll get weaker at other points.

Sharad Mehta  18:52  

What sort of interest rate are you getting right now? I’m just curious. Well, so

Jeffrey Holst  18:56  

the Fannie and Freddie rates are below six now. They’re like mid fives, which is way better than they were a year ago. Are you getting Yeah, so I saw they quoted us 561, on a 30 year Freddie product the other day. But that’s a non recourse. You know, it has to be north of a million dollars, probably even a little bit more than that for the loan value before they’ll even talk to you. And there’s a lot of costs associated with that, and prepayment penalties, yield maintenance, all that kind of stuff. But I mean, the local banks are likewise, come down a lot, you know, where they were quoting us stuff in the low sevens. Now they’re in the low sixes.

Sharad Mehta  19:33  

Interesting. And then the investors that are, you know, investing with? Are you paying them monthly? Paying them quarterly? How do you

Jeffrey Holst  19:42  

most of it’s set up as quarterly, but it depends on the deal, right? So we had some deals where we did, like apartment conversion, where we bought an apartment building converted to condos. Those just got paid as they sold off, right? So every time we would sell a unit, people got paid. It might not be paid every, every. It maybe that we sold two in the same month. We pay them one time. But, I mean, it was like, sort of periodic payments, like that. Well, not periodic, that’s the wrong word. But like, you know, they were just randomized payments whenever we sold something, as opposed to, like, quarterly or monthly payments. Now we have one industrial building that’s a triple net deal, and it’s very predictable. And so those are monthly payments. We don’t, we don’t, there’s really nothing else to do. We just collect the money and pay the money out, right? But other ones are mainly quarterly. But again, it some, some of our deals, they might when it’s a value add deal, like, if you bought a, we bought this, some 20 unit building in Chattanooga, couple years ago now, and but it was a heavy lift. Rents were like $400 and now we’re at $1,200 in rent. Wow, a huge difference, but we had to do a lot of work. It was, it was in a good area, but it was a very, very poorly maintained property. That thing, because of all of the inflation that happened, we were way over budget on renovation. It just never cash flowed until very, very recently. So, you know, two and a half, three years of no cash flow. But we know, we explained the process. We told them at the beginning, it’d probably be at least a year before there’s any cash flow. Took longer than we thought. But flip side, you know, we bought it for a million too, and it’s worth close to 3 million now. So it’s fine, you know, just it’s a different strategy than buying just a pure cash flow. And I

Sharad Mehta  21:30  

think it also comes down to, like, playing the long game, right? If you’re just so focused on investing and investing, if you’re like, hey, if I don’t make this cash flow next quarter or in six months, then I’m going to be out of the business. Then you probably shouldn’t look at that. Yeah, you know,

Jeffrey Holst  21:45  

and I’m, I’ve been super comfortable with that, like I told you, with our first deals for seven years, we didn’t take any cash flow, right? Like, but that wasn’t raising investor money. That was just me and one other partner, but, but we had just decided that our goal was to grow wealth, not to worry about cash flow. We would live off of our jobs, and we would, we would increase our wealth by doing that, and, and, and because I’m comfortable with that, as long as I explain that to my investors, somebody who needs cash flow right now, this is not a good deal for you. You should invest in this one instead. And that’s what we do. We let them make their decision, what their what are their goals? Have

Sharad Mehta  22:22  

you still kept all the initial condos, duplexes that you bought, or have you sold them off? Um,

Jeffrey Holst  22:28  

well, we sold, yeah. I sold some. We do 1031, some into apartment buildings, but those first two condos, I still own both of those. Yeah, so,

Sharad Mehta  22:38  

and I’m curious, like, what’s been your best source of finding deals is that has everything come from either brokers or listed on the market. Are you doing any of your direct to seller marketing? Also? Yeah,

Jeffrey Holst  22:50  

I’ve never really done a lot of direct to seller stuff, but I have, you know, I go to a lot of real estate meetups, and I hear about a lot of deals, and people know me as a guy who buys a certain, you know, size deal. And a lot of times people will find those deals like these wholesalers will have, like, a, you know, they’re looking for single families to send out to their wholesale list. And then they’ll call me and be like, Hey, I just got this 10 unit. I don’t know what to do with it. And, you know, so sometimes I get that kind of deal, it’s off market, but, right? But it wasn’t through my own efforts. It was through the relationship I am, got

Sharad Mehta  23:21  

it for someone who’s starting out, you know, a newer real estate investor, maybe they haven’t done a deal, or they’ve done some deals, and then really want to get into that, you know, the 10 to 2030, unit apartment, not maybe initially, to buy it for themselves, if they don’t have the cash, but to work with someone like you. What’s the best way for them to do that. Like, how would you, you know, yeah. I

Jeffrey Holst  23:42  

mean, someone gets, yeah. So, I mean, the the starting point is, like, you know, even if they want, even if they had the deal and they had the money for the down payment, they may not be able to get the loan right, because you don’t have the experience, and the bank’s going to underwrite you and the deal and your capital right? So they want to see that it’s going to work. So, so the starting point would be to partner with someone who’s already doing it. And if you find a deal, and you have someone who does those kinds of deals, and they look at and say, Yeah, that’s a good deal, probably you can cut a deal with them to take a piece of it, even if it’s like 10% or, you know, 15% of the deal, because you found it. That’s a really great way to get started and get that experience. And once you have a couple of those deals under your belt, it becomes a lot easier to do them on your own,

Sharad Mehta  24:28  

right? And then so 10 to 15% like, if I came to you and say, Hey, Jeffrey, I have this deal I found I don’t have any money, but I have it under contract. So you would like, you would put all the money and I just get, like, 10% 15, yeah. I

Jeffrey Holst  24:42  

mean, obviously, that’s a great I mean, obviously depends on the deal and, you know, and where I am financially at that point. Because, you know, the thing about real estate investors, sometimes we’re loaded with cash and sometimes we’re broke, right, right? Like, because you just put all your money into the last deal and you’re like, Oh, crap, I don’t have any cash left. Um. But, yeah, I mean, you know, find I would probably have the conversation with people ahead of time. I wouldn’t say, like, just show up and be like, Hey, Jeff, I got this deal. I’ve got it under contract because, you know, once you put stuff under contract, you might have hard, earnest money down and stuff. So you want to have some conversations with people in advance. I’ve coached some people through this process, and one that was the most one of the more successful ones, I just said to him, like, just talk to everyone you know and tell them you’re interested in learning about apartments and find as many people as you can buying apartment buildings, and then ask them what they’re looking for. And then, that way, when you see something, you can go to them and be like, Hey, I have this potential deal. Here’s the general idea. Do you think we can work out a deal on it? Even if you don’t have it under contract already? If you, you know you can, you can usually work that stuff out. Because the thing is, it’s not like a wholesale deal, where you can just easily transfer the contract, right? Like, it’s hard to it’s not possible, but it’s hard to wholesale apartments because there’s so much due diligence involved. So you pay, yeah, it’s not like just buying a single family house where you can be like, Oh, I know what the comps are like. I need to know what my expenses are going to be. I need to know what my income is going to be. I’ve got a and if you’re doing it enough, you get a pretty good feel for it. You know, you can have these rule of thumbs. I think it’s worth X dollars per unit, or whatever, when it’s renovated, but at the end of the day, it’s, it’s so much, it’s, it’s so much has to do with Noi that you really have to know those numbers. Yeah,

Sharad Mehta  26:27  

and you mentioned that you’ve coached other investors, like, what’s the one thing that you notice that the biggest difference between the students that you work with or investors that you work with, the ones that are successful and go on to, you know, get deals, versus the ones that actually, you know, don’t ever, you know, get a deal, or, you know, they don’t get to their Yeah.

Jeffrey Holst  26:46  

So, I mean, I spend a lot of time on this, so, like, my, my, my main passion is not real estate. Real Estate’s great because it creates freedom. But my main passion is about living the best version of your life. And I think the rules the rule is the same for everything. There’s a quote from Richard Branson that I really like. It’s think about it for a second. Basically, what he said was, the difference between successful people and people who never succeed is that successful people take action without all of the possible information. So if I want to unpack that, what he’s not he’s not saying without any information. He’s saying without all the possible information. So I think that means you have to do your research study, get the coaching, go to the meetups, whatever it might be. But then you also have to take the right actions. And you take the right actions by asking, what, where, when, why, questions, getting the information. But then at some point, just jumping off the cliff, because if you want to be a real estate investor, you have to buy real estate. I think everyone listening, or most people listening, is interested in real estate. And a lot of people who are interested in real estate go to real estate meetups, and they get business cards, and they get hats with their company name on it, and they get a website, and they just keep doing that for 3456, years, and they just never buy anything. And that’s not the right action. The right action is underwrite deals, buy deals, make offers, close on deals. You can’t be a real estate investor if you don’t buy real estate. Yeah,

Sharad Mehta  28:16  

I’ve been, I’ve been guilty of that. You know, in the beginning I would focus so much on my logo, my company name, you know, what colors, what design does it need to look like? And now, when I look back, nobody cares about that. No one can

Jeffrey Holst  28:33  

we all do that, but at some point you just got to jump off, yeah, and it’s scary, and it’s what separates people who are successful Right? Like, if you don’t take the right action, you’re never going to be successful. You can only, you can only make money in real estate by doing real estate deals.

Sharad Mehta  28:49  

Absolutely. And one thing that I 100% agree with you, that you said, in order to be a real estate investor, you have to have done some real estate deals. There are, like, way too many people. I don’t go to RIAs often now, but when I used to, back in the day, you would have these 80, 90% of the people show up and introduce themselves as real estate investors, and never done a deal. Oh, yeah, it’s just been

Jeffrey Holst  29:14  

which I mean, the same people two, three years later, introducing themselves as real estate investors, exactly.

Sharad Mehta  29:20  

And then they would always have, oh, you know, I’m still looking at it. I’m just, like you said, always trying to get that one additional piece of information that, like that is the missing piece of information for them. And then you look at some other people that just come in and with in the same market, with the same resources available, and sometimes less resources available to them versus these other investors, so called investors, and they would just like, absolutely come in and, you know, yeah. And, I

Jeffrey Holst  29:49  

mean, I see people that make me look slow, right? Like I bought a lot of deals. I mean, we’ve lived hundreds of houses, and I bought a ton of property in the first few years that I was investing. But I see. People come in and they’re like, they’re in apartments at six months after being in real estate, and I’m like, it took me seven years. What was I thinking? But the reality is, it’s if one person can do it, any person can do it, right, like, you just gotta go do it, and if we repeat the same actions, we show up as a person who’s doing those things, then we’re gonna be that person. And so I spend most of my time coach, when I do coaching, and now I have a little mastermind when we do those things, it’s mostly around mindset. It’s more about, you know, how do you get your mind right? How do you know what what things to do, and then how do you get the accountability you need to go do those things? Yeah,

Sharad Mehta  30:35  

I think that’s the most amount thing at the end of the day. If you have the right mindset, then you can go out and achieve anything that you want exactly, but if not, then you’re always going to be on the sideline, always going to be, you know, doing analysis paralysis. Some point you just got to go take action, right? You don’t want to, you don’t want to live a life of regret. Like, I really love that you said that. You know you want to live a full life. You know your purpose is to live a full life. You know, have a purpose or meaning behind it, like you don’t want to have. Like for me, how I decided to jump into real estate, full time, hours, I looked at my life, you know, like 2010, 1520, years down the road, and I didn’t want to have the regret of not taking action. Yeah, I was okay, especially at the age that I was starting, you know, no kids, no real obligation. It’s like, you know, what’s the worst that’s going to happen? I lose everything I have, which is not a lot, but I can always go get a job. I can always get a fresh start in life. But, my God, I never want to, you know, live a life of looking back and 1520, years down the road, I’m like, Oh, shoot. I wish I had done that, you know, when I had the opportunity. So that’s such an important thing. And then the only way to know if you can do it and not do it or not is by taking action. That’s the only way. That’s the only way to find out.

Jeffrey Holst  31:48  

Well, and you learn so much, like, even if you make a bad deal, oh, yeah, what you learn from that deal is so, so valuable. And, yeah, just, I mean, that’s exactly it. I mean, if I could summarize everything in life. If you want to be successful, just take action. Take action. You got to be doing something like another thing I think about a lot is I have this metaphor that I wrote in my book where I talked about a rocket ship taking off, and you know, like 90% of the effort is getting into orbit, like if you’re aiming for the International Space Station, and you miss by half of the world away, right? You’re 12,000 miles away. If you burned up 90% of your fuel getting there. It doesn’t matter, because once you’re in orbit, it’s just these little tiny adjustments to get there. So with real estate investing, it’s the same thing that the big effort is getting started. If you make a little mistake here or there, it’s probably not going to kill you. Like, get started, get that momentum, and then you can make the adjustments to, you know, tweak your returns and things like that, absolutely,

Sharad Mehta  32:48  

yeah. I mean, like people, I’ve seen far too many people, they would think, Oh, they want to make 30, 40,000 on their first flip. Like, man, even if you make five, even if you break even, that’s amazing. Like, imagine the experience that you would have going and taking action and then knowing exactly what you need to fix on the next one. You would be so far ahead of like 80, 90% of the people out there. Yeah.

Jeffrey Holst  33:12  

I mean, that’s the thing there. There are, like, one point some, I think 1.6 million real estate investors in the US, the average number of units that those 1.6 million real estate investors have is, like, 1.1 right? Like 1.11 point had something really low. Like,

Unknown Speaker  33:33  

yeah, no, but I killed the idea. So someone who

Jeffrey Holst  33:35  

bought a duplex is already in like the top, you know, third of real estate investors in the country, because so so many people have, like, one unit. And the reason they have one unit, the majority of those, I think I read somewhere, like 75% of real estate investors are really just accidental landlords, right? They had a house they couldn’t sell, or they inherited the house like they didn’t actually take action. So the number of people that actually do this is so small relative to the total population, and that makes it really easy. Like, real estate is an inefficient market where you can gain advantages over the rest of the market. You can know things about a neighborhood that the institutional investors don’t know just by buying next if you buy the house next door to you, like, literally, that’s the only thing you did your whole life, is you just bought your neighbor’s house and rented it out, and 30 years later it was paid off. Now you have your house paid off and that one paid off your retirement set, and it’s almost that easy, like you just have to do it, and you just have to build a strategy around recognizing that long term real estate investments are probably going to work out, and then it’s just like, how do I make sure that I have adequate cash flow, capital reserves and long term financing in place to make it work?

Sharad Mehta  34:49  

Yeah? What’s the what’s the best mindset? CO mindset tip you give your coaching students who help them get over that house?

Jeffrey Holst  34:57  

Yeah. So I spent a lot of time thinking. About self identifying statements and and recognizing that how we show up is who we are. So, like, it’s really easy to have these ideas like, well, I can’t do that, or I don’t have enough money to do that. Or, you know, you have all these limiting statements that you think in your head, but what you have to do is you have to figure out who you are and then show up fully as that person. It’s about being super authentic in yourself. And I know that sounds kind of, you know, woowoo or something, but like it’s the reality, like it’s a reality. Yeah, yeah. People talk about the law of attraction all the time, right? And I used to be very resistant to that, because I’m like, that doesn’t make any sense. But the reality is, I think we open ourselves up to ideas. So if I were to really super summarize it, I have this formula called the extraordinary life formula, and it basically is this inspired thought plus the right action equals an extraordinary life. And inspired thought is just opening yourself up to opportunity. So doing new things, asking yourself questions, like, when’s the last time I did something for the first time? Think about that. When’s the last time you did something for the first time? If you ask yourself that once a week, it’s gonna change your life. You’re gonna see opportunity that you never saw before. I love that question that’s and the first time, it could be something stupid. It could be like, going to a different Starbucks, right? It doesn’t actually matter. Like, just change the route you drive to work. You might see a new property or a new neighborhood you didn’t know was there before. I used to drive Uber to learn where the apartment complexes were. Like, I literally like driving around in my Mercedes, driving in premium fuel, losing money per mile that I drove in Uber. And people get in my car and be like, this is the nicest Uber I’ve ever been in. I’m like, Yeah, I’m just driving around looking at apartment buildings, and they’re like, what? And I’m like, Ah, tell me about your apartments. I’m like, interested in, like, you know, what? What are you paying rent? And, like, not everybody such a quick that was my goal. Like, I want to learn the neighborhoods, and I want to hear from the people that’s

Sharad Mehta  36:56  

amazing. Yeah, that’s, that’s, that’s what it’s all about just taking action. Like, everything that you need in this world is available to you. You just have to be willing to get it. I heard this quote, the pain of not taking an action has to be bigger than, like, your pain of just kind of being where you’re at. I think, I think people get comfortable with the pain that they have in their life, yeah? And then, you know, it just they don’t, they don’t take action after that. So

Jeffrey Holst  37:27  

one out of your comfort zone, yeah? But if you really, if you surround yourself by people that are doing big things, it becomes easier to do big things. It’s like that Jim Rohn quote, you’re the average of the five people most time. That is so true. But I mean, just seeing other people do big things, that’s another way to wake yourself up and to see those opportunities, right? So that’s where you get those inspired thoughts. And then the second part of the formula is just deciding what action to take. Don’t, don’t build a website, go buy real estate, you know? Yeah, the way you sort that out is you ask good questions, and you get good mentorship. You figure out what action you need to take, and then go take that action

Sharad Mehta  38:03  

absolutely Jeff, this has been absolutely incredible. Like, I love talking about the mindset stuff. I actually recently just start rereading, Think and Grow Rich, because it’s something you need to just keep reminding yourself, like the law of attraction, you know, the affirmation and then having the right mindset. That is the biggest advantage that you have. Like, if you can control the operating system that you have in your in your body, you know your mind just there’s, there’s nothing that you cannot do. Yeah, you know. And like surrounding yourselves around with people that are doing big things, like one thing when I look back, one of my biggest regret, regrets that I have is I wish I had joined a mastermind, you know, sooner. I wish I had started working with the coach, you know, because then they would have pulled me up, rather than me trying to break through the ceiling, you know, with a limited mindset, if I was working in a mastermind, you know, or working with a coach and seeing these people doing these amazing things, then you start believing, like, hey, if they can do it, why can’t I do it? You know, yeah, that’s, that’s just such a great mindset to have,

Jeffrey Holst  39:11  

yeah. And, you know, he doesn’t, even if you don’t have the resources, necessarily, to join an expensive mastermind or work with a coach that might cost a few $1,000 a month, or something, right? Like, even if you don’t have those resources, you could just read autobiographies. Like, yeah, well, I spent a lot of time reading, like, I gave that Richard Branson quote earlier, but, you know, look see what Richard Branson is. He was a high school dropout, and now he’s a billionaire, and he built spaceships and, like, owns an island in the Caribbean, right? And all he did was get his mindset, right? He just kept doing stuff. And, I mean, he wrote this entire book, screw it. Let’s do it where the whole premise of the book is, like, I’d have an idea and, like, I would ask some good questions, and then after that, I would just be like, Okay, let’s do it, right, yeah. Like, like, let’s just go do it and surround yourself by good people and go figure out how to do it. And I. Um, you know, everyone can do it. If Richard Branson can do it, then, then I can, you

Sharad Mehta  40:04  

can do it absolutely, Jeff. Thank you so much. This has been absolutely incredible. I got a couple of last questions to ask you. You travel a lot, right? I do? What do you do? What do you do for fun? What’s the most, absolutely, the most funnest place you’ve ever been to, most memorable place,

Jeffrey Holst  40:21  

uh, probably Antarctica. It was really, really, all right, um, yeah.

Sharad Mehta  40:26  

Go from like, Chile, yeah.

Jeffrey Holst  40:29  

I went from Argentina, from Argentina, yeah, okay. And I did that in 2021, so it was, like, in the middle of the pandemic, almost. So nobody down there. It was,

Sharad Mehta  40:40  

you don’t have to worry about the social distancing, yeah, well, that’s right, there’s, like,

Jeffrey Holst  40:43  

nobody in Antarctica, so it’s actually really easy. So it’s January of 21 so, I mean, it really was pretty early in the might have been january 22 I don’t know. It doesn’t matter. It was a couple years ago, and it was really, really great. But my personal, like, favorite travel stuff, involves going to places where the culture is significantly different, and meeting the locals. So, like, I’ve made friends in Cairo, you know, and people that that run Safari lodges in Tanzania, like those people, I really, I really like meeting those and seeing that, seeing what they’re doing and and becoming friends and going back to the same place over and over, like, I’ve been to Egypt five times, Tanzania three times, you know? And that kind of stuff is really, that’s really where it’s at for me. I mean, I like those big experiences, like Antarctica, or when I climbed mountain Kilimanjaro, you know, that was awesome. But that’s like a one off, you know, I’m not doing these things very often,

Sharad Mehta  41:38  

right, right? Have you been to all seven continents?

Jeffrey Holst  41:41  

I have, yeah, America was my seventh that was a big goal of mine. So have a school. I’m in a big fan of writing your goals down, but also simplifying them to things that you can remember, kind of like a mental hashtag. I have a goal. It’s called 5050 57 and it was 50 countries, 50 states, seven continents, before I turned 50, and I’m 46 I got 41 countries, seven continents, in all 50 states. So I’ve got nine more countries to go on the next

Sharad Mehta  42:07  

floor. That’s amazing. I love that. You’re that’s such an inspiring story. Yeah. I mean, I’ve, I’ve been to five continent, Australia and tatiga, the two that I left. So

Jeffrey Holst  42:16  

Australia is great. You should go. Yeah, I was there, uh, last year. I love it was the second time I went there. I love Australia.

Sharad Mehta  42:22  

We’re planning for this year December, but then we’re actually going to Costa Rica. So maybe next year,

Jeffrey Holst  42:27  

Costa Rica is also really nice. So I can’t, can’t fault you there. Australia is really on sale right now relative to the US dollar. So that’s something to consider when you’re budgeting. You know the when I went to Australia in 2013 the Australian dollar was $1.30 us for one Australian dollar, and now it’s like 70 cents for one Australian dollar. So there’s like 50% cheaper now than it was then. Absolutely.

Sharad Mehta  42:53  

Yeah, I used to work a lot of Australian investors back in 2011 through 1415, when the Australian dollar was very strong against the US dollar, because they were buying so much real estate. But then it kind of flipped. Now, yeah, yeah, right, yeah, Jeff, what’s the the most? Go ahead. Well, I was

Jeffrey Holst  43:10  

just gonna say yeah. I mean, that’s our experience too. We had a lot of Australian investors back then, and now it doesn’t work for them.

Sharad Mehta  43:16  

Yeah. What’s the most influential book you’ve read in your life? It could be a business book, personal book, or one of each, okay,

Jeffrey Holst  43:23  

that’s hard, because there’s so many great books. So the book that probably had the biggest impact on my life period is Michael Crichton’s autobiography. So Michael Crichton is the science fiction writer who wrote Jurassic Park and okay, and stuff like that. He’s a fascinating guy. Actually, just finished a book of his last night. He died in 28 2008 but his widow teamed up with James Patterson, and they released a book a few months ago, and I just finished reading that, and I was it was like a throwback to my youth, when I used to read everything Crichton wrote, so that was really fun. But his autobiography, he talks about a lot of weird New Age stuff that I’m not super into, like, you know, talking to cactuses at retreats in the middle of the desert and stuff. But he also talks about travel. He talks about climbing Mount Kilimanjaro and learning to scuba dive. And I’ve done a lot of that stuff, and it inspired the way that I lived my life. And what I realized is this is a guy who is a Harvard trained medical doctor who never practiced medicine. He went out and followed his passions every which way he could right. He wrote books and movies and things like that, but he also just traveled and experienced the world. And that set me on a train of reading about other authors and their autobiographies so well, is that the best book ever? No, but for me, it had the most influence, and I think that’s what the question

Sharad Mehta  44:46  

was. So, yeah, no, absolutely great answer. My final question, if you could spend a day with anyone, dead or alive, who would you want to spend the day with, and why?

Jeffrey Holst  44:57  

Um, that is very interesting. Um. Uh, I could, it’d be easier to name 10 people than one, right? Starting to narrow it down. Um, yeah, I’ve, I’m fascinated by people who do really big things, and so I would definitely be interested in talking to somebody like Elon Musk, if there were someone alive. But I think I would pick Da Vinci if I had to pick anyone of all time I pick, I picked Leonardo da Vinci because he just looked at the world in such a different way. Yeah? But, I mean, it’s a close call. Musk Franklin da Vinci. I mean, hell, even someone like Trump, like is complicated and weird as that guy can be, like, the guy just doesn’t seem to quit. Yeah? I love people that just don’t like

Sharad Mehta  45:40  

absolutely. I mean, you have to admire that the

Jeffrey Holst  45:42  

guy completely disagree with his personality, like and, I mean, there’s other people you know, across the entire political spectrum like that, but it’s just when, when someone is willing to just go for it, like that, that’s really interesting to me. Like when you look at the world in a way where you say, I create my own reality. And that’s Elon Musk, right? Elon Musk is probably the best living example of that. So here’s a guy who grew up lower middle class in southern Africa and now is the richest man in the world and revolutionized not one, but like three or four industries already. And he just keeps going,

Sharad Mehta  46:20  

keeps going. Yeah, no, absolutely no. All great answers, right? Jeff, this isn’t critical. Someone listening to this wants to connect with you, you know, learn more about your journey, or wants to find out more about the coaching program. What’s the best way for them to do that?

Jeffrey Holst  46:34  

I mean, I’m Jeffrey Holst everywhere, right? So all of the social media is Jeffrey Holst on Facebook, Instagram, X, whatever doesn’t matter, but my website, jeffreyholst.com, it’s probably the easiest way. Perfect.

Sharad Mehta  46:45  

All right, we’ll put links to all of that in the show notes. Jeff, thank you so much for coming on the podcast. This was absolutely incredible, super inspiring, and congratulations all the success you’ve had. Yeah, thanks for having me. Thanks. Applause.