He Built a 1,000 Unit Portfolio in 5 Years (Here's How)

How does a homeschooled college dropout go from zero real estate knowledge to almost 1,000 units in just 5 years? If you don't know us, we're Roots Reality Co. , an Indianapolis real estate team that's helped over 400 people buy and sell homes in our city. Today, Chad Schieler walks us through his journey of building a credit card processing company to a self-taught real estate portfolio worth over $40 million. All right, Chad. You dropped out of college at 17, built an incredible business that paid you passively, then you wound up giving it all up to jump into real estate, an area you knew nothing about. Take us through that. What an intro. Um, yeah, we're jumping right in. Yeah, jump right in. Let's do it. Let's do it. Yeah, kind of going back a couple steps here. You know, I was raised servant family. Uh, finished high school at 17, went to college for three semesters, dropped out like like you mentioned before. That wasn't for me. I was always an entrepreneur my whole entire life. I didn't really find my path until like eight years ago. I spent almost 20 years in the credit card processing industry selling credit card machines and services to different businesses across the country. Um did really really well at that. It was all residual. Um but I found myself really wanting more after a while and I really wanted more tax benefits. That was the main piece of what started real estate in general is the tax benefits. you as you know tax are your biggest expense in life and find a way to offset those uh that's that's better for you. So began a path in 2017 for myself um my my family to find that first real estate deal on my own and never thought it would become focused capital like it is today. It was never the dream of mine. It's kind of funny how things work. They just kind of become organic in a way and they just grow from a hobby to a a business somehow. And that's that was the evolution evolution of our business. One thing I admire, we haven't gotten the chance to sit down uh with one another, but was stalking on the internet trying to figure out anything that I could to prep. And I read somewhere that you've consumed over 50 real estate books before actually getting off the sideline and purchasing your first deal. And that took over three years. Was that some like analysis paralysis or was that just like straight up education to get in? Yeah, you know, that's I'm glad you found that stat. I forgot that I said that. It's probably more than more like 100 books now. Um, but yeah, I've always struggled my whole life. One of my weaknesses is that I've always had like analysis paralysis and afraid to take that next step. And I spent like three years in research phase trying to consume audio books and podcasts and coffee meetings and looked at properties. I'd go on tours, looked at single family homes, duplexes, make some offers, not very aggressive offers, which by back then the 2% rule was a real thumb. and they were like hitting 1. 5% 1. 8. I'm like, "U doesn't doesn't meet 2% rule." Well, now we know all this. We would go back and buy all those properties, right? [laughter] One of those. So, but all came to a head one day in my basement at Saturday morning 8 a. m. And I just I had had enough. I'm like, I have to go just buy a property. I'll figure it out. If I lose 20 grand, I don't care. I'm going to get my first one done because everyone You ever met a guy that does one deal then stops in real estate? Yeah. Oh, I mean we [clears throat] have a lot of people, but most guys don't. Not like a driven person. No, no, not like a driven person on like somebody just trying to put one. They may learn a lot and do something completely different, but like uh Yeah, cuz the first one's your education, right? Is cliche but so so true. Yeah, it is. It is. I mean, you learn I learned more in that first deal, the first six months than I learned of previous six months or previous three years of of research. And maybe that foundation helped to build a foundation of what to look for, how to underwrite deals and analyze, but man, you learn so much. Experience is the best teacher, too. Well, I think what's fascinating about you is you're you were talking about this on you went on the Brandon Turner Better Life podcast, which is an amazing interview. People should go listen to that. Brandon's awesome. It was a good uh to hear your journey that way. But you were talking about your disc profile, which I I was just fascinated. I don't spend a lot of time thinking a weird one for where I'm at. I thought you were a D, but you said you were a C, which is like I believe more analytical, detail oriented, like get all the facts and figures then make a decision. What I love about your story and what you exhibit that we're going to dive into is like on one hand you're a research guy, meticulous, takes your time, don't like jump right into it like a swinging for the fences type of person, right? When you step up to bat, you kind of take your time. But on the other hand, you actually do move forward and make take big swings, which is a very very rare combo. I don't see that frankly in almost anyone. Have you always been that way? No, I've not. I've I've I wouldn't say I've always played it safe, but I've not ever been that kind of a guy until the last few years to like take that big swing or really put yourself out there. It's just not been my core build, right? But this I've grown into becoming uncomfortable, being comfortable with that because I know it's where growth comes from. Over the last couple years, I've had three examples in our current business to where I've had I've had to go make some decisions to do some really big things, not knowing how it would actually get done and we got it done. During that process, it was extremely difficult, but I grew along the way. So now I've kind of got that ingrained in me to where all right, we can go take this big swing here with within reason, right? And we'll figure it out. We may have the clarity on how it's how we'll get there. Clarity on what we're going to go do, but not certain how it will get done. Yeah. Well, I love and we were kind of talking offline before about your story. What I love is I think you can take those big swings because you've set such a strong foundation. I know I don't know if this played into it, but I'd be curious to hear. I know you were homeschooled. You dropped out of college. Um, built an incredible business in the credit card processing, which I've not learned anything about that business, but apparently it made you quite wealthy, at least cash flow-wise. And then you dive into real estate at in your 40s, I believe, or at least high 30s. Yeah. When you've pretty much built you were a successful man, a successful business owner. So, how did that foundation help and where did that come from? the foundation as far as just the the the drivenness that the the part of me that want to go build a business out of this. Yeah. I mean, how did you build like if if businesses Alex Fromos always says you don't see anything when you're building a skyscraper for months and months and years and then all of a sudden boom, it's built. It just is up because they were drilling down deep in the foundation. Quick break for a second. If you're doing any kind of renovation work in Indie, you already know finding the right vendor partners is half the battle. It might be the entire battle. Best Flooring is one of those partners for us. Phil Nelson and his crew offer the best selection out there from a single bathroom refresh to a full gut job. Check them out at Best Flooring on Lake Plaza Drive. Use Apple Maps to get there or Google Maps, whichever one of your choice. Phil's got floors and you need them. Call them up. It started as a way to solve my own problem with with the taxes and then I found a way to just keep building upon that. There there never was like this really big plan to go create a company and go acquire a thousand units. never was. It was just like, let's just do one step at a time. And I started solving each problem kind of one piece at a time. And I kind of look back to I look at it as like if you're [clears throat] if you're solving a problem, not a solution, like that's going to I guess do more for yourself and drive you more. Um, but I've always been a very driven person my whole entire life. And I've always just wanted more out of life. And kind of back to your point about the the credit card business, I was doing just fine. And my wife would she even a few years ago she's like, "Whatever happened to the Clover Chad that was working three days a week and just no stress?" I'm like, "Well, we're this is going to be better for our long-term success. I mean, trust me, this is not how she thought the story would go. [laughter] You'd be retired on the beach by now." First, I know. I know. Like, we were in Hawaii for 3 months a few years ago for the winter time. And so, it's different right now, right? But we've we've got this vision and we're we're on on pace to accomplish it. So, how terrible was the first deal? It wasn't terrible. So, glad you asked. So, Saturday morning, 8 a. m. the basement, right? I've been looking on this one street in Indianapolis on Dixon Road. There's a bunch of forplexes on this one street. I'd seen like three before got out bid and this one property came up on market for like $220,000 forplex. And I called my broker and I said, "Listen, we're getting this property. I'm going to offer 10K over asking. This was the highest priced property at that time on the street. We're going to do no inspection required and they have till noon to respond. Offer accepted. I'm like, "Oh crap. Now what?" [laughter] Dream seller offer. Yeah. Great. But, you know, we overpaid for it if you look at the comps, right? But I learned so much that first six months. Fast forward to 18 months later. Um, a year and a half later, we sold over 300k off market. I doubled my money 18 months. Wow. So, that's that's how the first home went. So, it wasn't wasn't a disaster like I thought it could have been. Yeah. But I was I was willing to lose like 30k. I literally was willing to lose that. I didn't care. I want to get the first deal done, get my experience, then go from there. That would be better than any course on the marketplace for 30 grand to to learn how to do it right. You're going to spend less money. Yeah. It's it's fascinating how our minds can like put this blockade. It's like we have to solve a problem because we're having this cash flow from a business, but yet getting off the sideline can be a challenge. [laughter] And then you double your money and then you actually probably created a new tax problem. Well, well, in that 18 months, I actually acquired two more properties. Wow. During that time, so I kind of I started doubling and tripling down that first six months, I saw the benefits. I'm like, this is amazing. Were those other quads? What what type of properties? I bought a forplex first, then I bought a 15. So, I bought the forplex and then I bought the 15 unit property in Crawford'sville and that was a big value. I had tons of lessons to learn there. That could be a whole podcast by itself. And then I bought a 20-year property um about four months later. So over the course of literally 13 months, I bought 39 doors. Oh my. Wow. That is a lot to even take on. Uh where there's all value ads, the the whole goal to to flip and turn them. Yeah. The first 4 unit wasn't a big value ad. Like little bit of renovations inside, just some touchup. But the 15 unit was literally it was a ton of value ad. Landscaping, roofs. I mean, there was plumbing issues. We had to in install new laundry systems. We had to total gut rehab like three of the units. I had to fire a contractor, lost $40,000 from him. Like tons of mistakes there. Yeah. So, I think my understanding would be at the beginning, it's a tax saving strategy, which you can kind of honestly buy a buy and hold and you'll have paper losses and you can do the cost segregation, bonus, depreciation, but then it seems like you kind of switch into value ad, wealth creation. Was there a um intentional switch there? Did the strategy evolve or was it still just mainly just tax saving? Because now I don't know that I see it as a tax saving now that you're you're spending millions on n you know on properties. What's your full-time thing now? Right. The No, no, it was not. It was still in my side hustle still. Like I was still working the credit card business until later end of 23. Okay. I'm sorry, mid 23. So for a couple years there, I was still doing these houses on the side, apartments on the side. So at the same time, it's was so crazy is while I'm increasing my personal development and pursuing real estate, my income at the other business was like doubling like the last couple years. It was crazy. Like so like made it kind of harder to leave that behind, but I'd already had I was already set on my path to go do the real estate thing. That was my my vision there. Um but you had a question there a minute ago. I for what it was talking about the value ad value ad versus surplus or just stabilized. I was always a value ad investor initially. So I always heard about like you buy a property at a discount low basis you put money into it fix it up do the refi repeat right and there's still tax benefits there along the way and the year one. So I think it started as like the tax play then I realized well we can actually create some wealth here with these value app properties which we did. Um it took time though. How many are you holding today? As of right now we have 800. Um we'll be at,00 here in October. Impressive. I think what's interesting is we read somewhere as we were researching last year you put about 55 offers in on properties and only I believe two went through. So 53 negative offers basically didn't didn't meet with sellers. Something happened. How? Why? Let's just start there. This hurts even higher actually. Higher offers. It we we probably take us through this. I want to get in your brain of like how you're approaching finding deals. I think Tyler's trying to ask, are you sending [ __ ] offers or are these real offers? No. No. Here here's the thing, guys. Like robo offer. Over twothirds of our deals we've done have not been from us being the first buyer in line. We've been hanging around the hoop, right? We've been the second buyer in line. And I can tell you so many examples of like you keep pursuing the deal. The first buyer, a lot of buyers have to retrade. They back out the deal, can't find the equity, can't get the loan figured out. And we're as long as you're on that list with the broker, you put your offer in, your name's in the hat. They don't ever go back and remarket a deal. Typically, after the first buyer falls out, they go back to whoever put the offers in and do it quickly. So, a lot of these have happened from not being the first the highest bidder. So, we won't be the highest price bidder. We won't because we're going to be conservative. We're going to build in layers to guard our investors and have downside protection in there. We won't pay the highest price. So, I've always told my internal team like, look, all we can control is our activity. If you can focus on if the property is one we want we want to acquire, offer what makes sense for us. If that's half the price, I don't care what the offer in. Now, we are putting offers at half the price right now. They're but they're they're pretty close to guidance. They really are. But there's just groups that have more patient capital or maybe they are self-funded. Um sellers have been a little bit delusional the last like 24 months in this weird marketplace that we're in. A lot of things have been really high. There are deals getting done but you've got to really create the deal. Yeah. I love the the being second in line. I'm have listed a few commercial buildings in the past year and it's always all of them have fallen apart on the first deal. I'm realizing like all of them have fallen apart and what it's like to be on the sell side of that is you now have a seller who was selling for a reason because they need to get out of the deal and now they're pissed because they're like yeah why did this fall apart why is this going and you know what am I doing immediately the only thing I can do which is call the next guy in line to say let's get this pended if we go back to market and we're in this unknown period like it's not a fun time to be in my seat right now let's get it going but you know what's funny though you probably see something here in a minute but I had a broker tell me about three or four years ago because I wasn't finding very many deals before I ever hired my my guy from acquisitions. And he said, "Look, you got to stop being a sniper. You need to be take the take the shotgun approach." And I took that that's when I hired the guy to do my analyst stuff. Because I wasn't I don't want to go do the underwriting myself. And I thought, well, let's fill the pipeline, fill the funnel with all these offers and they'll start start coming through over the next couple years. This takes time. Takes time, right? Build your network up, build your name up. And what's crazy now is now we have kind of the opposite problem to where we actually for the first time ever we had to we had to decide between two deals to go do. We had to let one go under LOI and that was frustrating. So it's always chicken egg capital and deal problem, right? So got to solve both at once seems like. Yeah. Yeah. Yeah, I think it's interesting how you know to be able to do the shotgun approach um and you know hang around the hoop so to speak with a lot of deals and and open up a lot of potential deals, you have to get to scale like one man show can't do it. I think a lot of people that are maybe a little further on than me and Max even that are like their developer or their you know apartment syndicator, they're kind of like a oneman show maybe with like a VA or an executive assistant or like a small team. You hired an acquisitions guy. um how do you when is it the right time to make that move and make that hire and how do you incentivize that that employee? It's a great question. Um I don't have all the answers on that. I probably did it way too early honestly. Um I was in a different position to where I had the means to go fund the business and I could go a little bit longer time covering the payroll and overhead than most guys can do. That allowed me to go hire some great talent. Even though it probably cost me, it did cost me a little bit more early on, but I got my time back to focus on what I do best and hire somebody who to kind of fill in the gaps. I think for just an everyday person, it's going to be challenging when you're just starting out to go hire a six figure or $80,000 analyst for your analyst to go do your analyst work. What might be a better strategy is to find somebody to partner with you on these these things, right? with some good guard rails because you can give up some equity in these deals and that's a shouldn't say a free amenity. It's it's not going to cost you monthly on payroll right with with the salary might be a better strategy. It might cost you more in the long run long run right they're here for 5 to 10 years but man if you have the right partner that can make a big difference in life in business [clears throat] because I mean one plus one is three in business if you have the right people in place. Yeah, that's what I get ticked off at our own business. Like when I read a book like 10x is greater than 2x, just hire the guy that can do the the the business like it can actually move you forward because we've been through so many 20k salary, 40k, 60 to get to the 80 to get to the and it's like, oh, if we just hired the guy for 100k, we would have saved 300 grand in the last two years like and then made that back 10fold. And it does get challenging sometimes. It's like our our employee who gets paid very well. It's like sometimes it's like it feels like man is he making is he making more than us? Like literally I feel like I've asked that question. They were at first, you know? Yeah. It's like that's hard. That's when entrepreneurship isn't sexy. It's like you're funding people making more than you are because your business isn't profitable yet. I didn't take a salary from this business till last year. I took a 70k last year as a salary. Like my my employees were making a lot more than I was. That's what people need to hear from the inside. They think Chad, he's rolling in it. you know he's we're building all this to a lot will come on the back end when these properties sell someday and the revised capital events yes that will be exponential right but in and this is not a big profitable business the feed business is not you know it's cover the overhead you have a lot of people involved it's not a cash flowing service based business it just isn't you know all all the all the liquidity comes at the very end after everyone else gets paid Yep. Yep. as long as you perform too, right? Take us through what are you aiming at. You know, our mission has been really three things. One is let's go impact a thousand people with real estate investing. Right now, we're at 165. That's our mission there. Let's go impact communities. Let's go help people with um with with their place of of where they live at. Let's go improve the communities. And one mi one one vision of mine or passion of mine is to is financial um literacy and we've been on a path it's still getting developed right now to actually roll out the Dave Ramsey program free of charge to our residents to be able to help them become more financially literate um develop themselves and maybe help them buy a home someday if that's their path uh which will in turn help the properties with the collections revenue and all that. So that's that's been a passion of mine. That's just matter of having a large enough team to roll that out properly. And then really just building a great company with fun culture and great people. You know, you ask what am I focused on right now? Right now, we're kind of focused on the next step at a time, but we have a we have a good three and five year vision. Like I do believe that we're on a path here to be at about $3,000 next next few years, which will put us at a really good place to be efficient with internal property management. I'm curious on the Dave Ramsey roll out. I I can recall an apartment. I had one lease and I remember there being like a if you need financial help like press this and I think I just like was curious thought it was gonna be a 1-800 number for some loan financial piece. [laughter] Right. I went through it in my 20s actually. Yeah. And and it ended up being like a similar not a proxy you know probably same fundamentals but that were built into the management app and I remember thinking like oh that's super smart and I was already under contract for a house like thinking of going into home ownership. Um, but at the time I'm like, why would a apartment building not want their residents to be residents anymore and to own homes? But I have another question which is does that help move the needle to home ownership or does development that you can create new job opportunities in a community that didn't exist before create the Dave Ramsey piece? Yeah. Is it like helping a resident get to the like knowledge and education or like in your shoes? What's better if you build an apartment up that has like um a lease space where somebody can go work or have like a a true development uh around a community that you're creating more jobs not only just housing. That's a great idea actually. Um I know some communities have like the live work little spaces to to help people to have at home businesses. Um I like that actually. My my main idea there is what's what's fi find a way to help the residents with their financial um well-being, right? Maybe they have too much credit card debt, maybe they can't manage their bills very well. If we can add value to them, then we get [clears throat] value back in return. If if they can pay their bills on time, pay the rent on time, it reduces collections, reduces vacancy and delinquency. Like it's kind of like a full circle thing. We've even found that certain banks um will partner on this program with us to deliver it free of charge, help service the program. So, it's really a really impactful community um uh service that we can offer. I'm just baffled by how much like AI influences the way that we can be educated because it's at our disposal. But my curiosity is in like these low-inccome areas. How well equipped are they to even chat or know what questions to ask uh to a bot to to become more educated, to know how to budget? Like we're not taught this in school. [laughter] Yeah. These are actually these are classes that are taught at the clubhouse. Like it's a eight eightweek class and they have an orientation class. So it's not it's like inperson digital. Oh yeah, it's at the property. Oh, that's that's really cool. So it's at per property. We have one that we're gonna launch it with here and um yeah, you you launch a program and people from the bank or one of our personnel would go administer the course to them. People can sign up for it ahead of time. So yeah, it's it's a it's a real thing. Oh, that's really cool. Uh yeah, I went digital in my head because then there's this optin, opt out that I would be worried about, but like in person you've got the person showing up on ground. Yeah. And you talked a lot on Brandon's episode about um apartment life. My cousin and his wife did it. They were the like residents for apartment life and they loved it. They were always doing a pool party or like watching the Super Bowl and like the the people were like having a blast. I was like I'm about to move in to this Florida. They live in Florida. [laughter] It's like this looks so it's like a resort community over here. It feels like a lot like it really does work. So there's something a lesson in there for apartment developers or syndicators of like make it a true community because like think about the turnover cost of just like a couple units, you know, and what that costs in vacancy versus like a place people can call home. There's a difference between a house and a home or an apartment and a home. And most people don't see an apartment as a home. So creating that is, I would imagine, tough. Like you're far off, you know, you're you're you're communicating through phones. You're not often times at the apartments, right? Yeah. So that's tough to do, I would think. Yeah, that is. I think for me, too, it's like, well, how can we be different? Because if you're like every other sync area out there, other operator out there, like what's what makes you stand apart from somebody else? Why would somebody else choose to invest with me versus somebody else? Like what's what's the differentiation factor there? Oh, I would assume it helps tremendously with capital partners. Yeah. And that wasn't the intent initially, but we have noticed that people love that that side of the there there's a giving back piece of this. Mhm. Yeah. I've I've heard recently um or at least on I keep referencing Brandon Turner's podcast. I promise I'm not trying to just rip everything from that podcast. Shout out for Brandon. It was just great. Uh I learned a lot, but you were raising I think $10 million. Now you're you've raised I think a lot more. What have been the biggest lessons you've learned from raising capital? Pause. A quick break from the episode. The lender you choose will make or break your experience. That's why our team at Roots consistently works with Rnado Lima from Approved Mortgage. He communicates clearly, moves quickly, and understands both retail and investment loans at a high level. When my guy Renado's on the deal, things move steady. When you get serious about buying, click the link in the description and contact Renado today. The biggest lesson is like get uncomfortable and be okay with that cuz that that is, as I mentioned before 10 minutes ago, that's where I've seen the biggest growth personally and just like that muscle of getting outside of your comfort zone. like so many stories of just these big capital raises and not sure how it's gonna get done. And when your back's up against the wall, you got to figure it out or else your money goes hard. Lose your money. Relationship with the brokers and the market is bad. Can't fund your business. Like, you'll figure it out. So, when there's a will, there's a way, right? Whether it meant closing on a property and putting in two million bucks of your own money and borrowing from your dad and your uncle and draining your whole savings and your home ethic credit, which which happened, by the way, to get the deal done. Sometimes you got to take those risks and go figure it out. That's a tough tough place to be in. Um yeah, I just want to hijack whatever list of questions that we have and and really just think about Tyler and I's situation, the way that we're trying to build. We're closing on Friday on our first property together, nine unit Midian and Kesler with two partners, capital partners coming in and it's like a small equity exchange deal. We go do a good job and we get equity in return. Um I don't see the path to the next deal currently because it's like we worked hard. We got this done. Feels great for us. Uh love that we got uncomfortable and we don't have to put any money up. It's awesome. And I'm like how do I do just keep building? How do we go to the next one? Um, I don't know if you have anything to add there contextually. We've been in single family up until this point and this is like the big I think what I'm realizing what I'm realizing what I I realized from the last podcast I listened to you is it's tough in a 9 to25 unit space to raise capital and produce the economies of scale and the right returns for everyone including yourself. I think we'll make a great return for them. I think it's going to be we're going to have to bust our butt to make a return for us. Yeah. because we get to a 60/40 split after we perform. We we have equity to start actually two it's not set up that way. This is set up as a joint venture. Okay. At 7030 to begin with. We're 30. We brought the deal. We're doing the management. We're doing the setup the you know, but we put nothing in. Yeah. No money. Put our commission in. They uh negotiated that which I was like sure found money. Um, and then once they get paid, uh, all their capital back switches to 60/40, which that'll be that'll be awesome. I mean, to the return for us is infinite because we put nothing in. So, I'm just thrilled to be in, but we are kind of like, okay, this is a unique situation, a 9-unit boutique space. It's it's like what I learned from Paul Thrift's episode was he was like everything changed for us when we had a business plan to go national to sell our assets on the secondary market and we knew this is how we're going to find the deals and this is where we're going to sell them and this is the margin and then we'll hire the right team and just go want go execute. They executed their plan. It was like one before that it was like we're buying gas stations then we're building student rentals then we're doing this. It was just not successful because they're sporadic. That's where I think we're at. But it's like how do it's not like we're going to go build a 200 unit tomorrow probably. You know, I think that you're in the spot like I was in years ago and Paul was too back then. And you don't always have it figured out at first. You don't know that yet. And I I think it's a little far-fetched to believe that you you're buying one property and you develop this large business plan that's going to succeed the next 20 years. It's you're going to have it's have to evolve over time, right? That's how our business has evolved as well. We don't we didn't have a figure. Every year we keep getting more and more clear on our vision of where we're going. It just takes some time. So I think this this first deal get it knocked out. You learn a lot of lessons here and look for the next one. Maybe do bigger ones. But the bigger ones are a little bit easier, right? I think deal by deal. I think each deal as long as it's a good deal and you're not paying above market price or there's no value creation that can be had there. Obviously that's just a bad deal. Run away from it or lowball them basically. But each deal that is a good deal, there's a right setup with the partners, whether they're limited partners or fallen, you know, equity partners, that's to be found. And it's getting creative and then figuring out what do you like. I think right now we're doing a joint venture with guys who have a great reputation. They trust us. They're like they're kind of involved like Godfather level of like, hey, yeah, like slap on the wrist if you don't do this right. But for the most part, like you guys go run. We're too busy with our own other businesses. Yeah, they're kind of like that. So, I think our current game plan is that we do have a pretty good game plan. It's to perform really well to refinance it, get them reloaded as much as humanly possible. I don't know if we'll fully cash them out. It's going to be tight. We might if we get a cuz they're getting a 70, you're getting a 30 initially. Yeah. We want to give them as much capital back as possible at the beginning. Obviously, a dream scenario is a full cash out refi because then boom, we switch to 6040 immediately and we still own the asset and then we can sell it later and make 40%. Yeah. Which is the dream scenario. So, it's like for us it's it's really simple. It's like renew these leases as fast as possible, renovate as fast as possible, have great management, you know, keep it fully occupied. Yeah. And get a good bank to give us a good value. and which is good for this one joint venture, but then that that's the joint venture, but there's another entity of raising capital and going after bigger deals, which is where I think we're stuck. That's what we were going after on this one, and we ended up in a partnership instead of because the capital piece. It Yeah, it's just where we ended up. We didn't There wasn't enough room to raise in it. There had to be somebody that actually wanted to be involved in three partners in to help raise and split the pot three ways, right? It was just too small to be honest to go out and get public like have an LP involved. Yeah. Yeah. It we we tried at the beginning to do it the GBLP model. We couldn't figure out how to make the LPS enough money. The the way the cookie crumbled is that one of the partners, I'm going to say his name, wanted to buy it. And then he he wrote a lowball that I submitted as his agent and they were like, "Yeah, sure." And I was like, "Hey, can I get him the deal?" Good kid, my partner. That's how it worked. And now we're in it, I think. So, wait, so lowball offers actually work? Yeah, they do work. Yeah. Yeah, I mean they were what I'm learning about commercial is that appraisal and the income based approach in the cap rate is everything. So unless you're paying cash, there are confines as to how high this value can go. The sellers originally wanted a pie in the sky price and then realize no bank can appraise this price because the income is just simply not there. Yep. That's what I love about commercial. So if we go in and perform, raise the income on, you know, do the value ad, knock out the dot tube, all this stuff that needs to happen, then, you know, we'll get the value and there could be some cap rate compression in the time because right now cap rates are a little wider than they used to be. Rates are higher, you know, this. Yeah. So, it's like we're hoping for we're still making sure the deal pencils at a higher cap rate, of course, but it would it wouldn't hurt, you know, cuz a lot of the guys we've talked to, Ethan, Tad Miller, all these guys, a lot of their true wealth creation was made when cap rates were compressing. If you just look at it. Oh, yeah. I mean, I'm not going to name names. I was about to name a name, but like some of them told me like their deals haven't been profitable last three years. Well, I've seen a lot of these guys. I've seen several deals that were exited in 21 and 22. If you look at the deals that are hard to look, some of these deals never had NOI increase. They benefited purely from cap rate impression and when your exit appreciation basically whole different topic about your full cycle deals, but yeah, it was it was a good time. It was lucky time, right? I wasn't there for that time unfortunately. um or and that's why I'm curious to like learn from you because I feel like you're the only one that I've gotten to sit across from that didn't start in the time of like massive that's why we're most curious and I I'm honestly curious like you've really only ever owned in a market that has kind of been I don't want to say going up is not the word but steady steady so it's like um how do you think about changing markets And is that something that you've had to prepare for, you know, potentially down market or slower leasing? Like do you have those protections in place? Have you thought about the contingency path because you've kind of been investing in a similar market this entire time? Yeah, I mean it's changed a little bit. We're a little bit up there at the very beginning. I was the the tail end of the upswing, which is the not the best time to get in, but I've always believed that if I can do it in the hardest time ever and learn my skills right now, then I'll be in a really good spot because real estate goes in cycles, right? Yeah. And I felt like, you know, it's been kind of steady. It's been harder to actually get deals done and it's been hard to operate transparently. Um, but yeah, it's it's always hard, I feel like. Yeah, it it is always hard and sometimes you get lucky, but you don't bank on the luck. But you asked about the market piece. Sorry, I forgot that for a second. Um, you're referring to like just economic market cycles, not really state-by-state markets, right? Yeah. I'm just thinking about um, you know, you like a lot of these guys like Apollo Thrift has been through recessions, have have been through, you know, some crazy high highs, crazy lows. I'm just curious if if you've thought through how a changing market could affect your business model. The number one thing that we do, two things. Number one is buy the right basis. Basis will normally save you from a lot of things. Buy at the right price. If you overpay, you're going to be going to be maybe in trouble. Second thing is your loan term. Make sure you have enough time left to go withstand those cycles. If you've got a short-term loan, two or three year loan, you might be in some trouble, maybe you won't. But if you got 5 to 10 years on on loan remaining, then you probably will be okay with staying power. Yes. And make sure you got reserves in place. Make sure you you're not highly leveraged on a deal. If you talk to a lot of the guys that went through pains this last cycle, the one thing they'll tell you is they overpaid for properties and they're too high leveraged. Cheap debt was very attractive. So, take those lessons from those guys that have pains right now, like guys that we both know personally and socially. And uh that that would be probably the biggest things we're doing right now is making sure your loan is is set up right. Fixed rate debt is all I've ever done. Never done variable rate debt. I'm very very conservative, very riskaverse like you've noticed. Yeah. You're trying to raise $19 million right now to buy a building. We're going to Yeah. Going to not trying to absolutely going to. Uh what do those meetings look like? How many meetings are there? How are you uh raising that capital? Yeah, mostly friends, family, referrals of referrals of referrals. Um a lot of guys from LinkedIn that see us, a lot of guys from Instagram and Facebook see our content. Um it's been a pretty big mixture. It was it was only just my network and their referrals and referrals until about a year and a half ago. Now it's really expanded. Now across the country in a lot of different states, different just wild wildly different occupations, sales guys and doctors and dentists and business owners that real estate guys who are tired of being active. They want be they want to be passive now. But these meetings are either over Zoom. I love in-person meetings. That's how I built this business over time is just a ton of meetings and and coffee shops and 1933 and Rise and just shaking hands because you it's all about trust. It really is. And what's the fastest way to build trust is inerson meetings. It takes time though. Um it just asks for referrals like who do you know that wants to see this kind of thing and they might be like oh I do or my buddy does buddy does here. Um so it's just it's I hate to call it grind. It's like probably a bad word to use but it's hard work. Yeah. It's just put yourself out there telling people what you're doing. The best time to raise when you have no deal at all. That's the best time. There's no ask. Mhm. So what is the ask? they ask is do you want to see what I'm on doing going forward your email list and you drip on them with your email or you just have a conversation and the thing is investors they get very impatient when they have money not deployed. Most investors will already have a plan for the money to be deployed before it's even they have a capital event. So if you wait until you have a deal to raise capital on or you wait halfway through it, you may miss that window. I've I've talked to guys several times to where I didn't call them right away, waited like three or four weeks. They're like, "Man, Chad, if you had called me like two weeks ago, I would have had the capital for this deal. My god, are you serious?" So, you got to have got to be it's got to be early and often. But when there's no when there's no raise, it's the best time to go build your relationships. That's what you should be doing between raises. Does that just look like a really full Google calendar ready to go? Meeting after meeting after meeting, calls. Yeah. I mean, I'd say dur during the peak of capital raise, I'm probably on 20 Zoom calls a week and I probably going to breakfast and lunch every day with somebody. Maybe not every day, but three or four days a week. Last couple weeks I probably had like eight meetings in person and the rest were like Zoom. Um, but I enjoy those. I enjoy Inerson meetings. I love it. Yeah, the Inerson's great whenever you can get local involved, too. Zoom's great, too. Yeah. Yeah. Well, you know, to take our meeting for example, you met my dad. My dad put us in a group text message. We got breakfast at Rise. Heard your story. You know, credit card processing, had a tax problem, had no assets to pass on your kids. Jump into real estate. Took you four years to make your provocative story just off the cuff. I mean, you having that story, people can grasp onto that versus California trust fund just just buying it up like nobody gives crap about that story. You know, they that's like the anti-story. You have a Midwestern roots grassroots story and I would assume as long that that is going to get you a long ways. Like, oh, Chad Chad's kind of the guy I want to invest with Chad. I like Chad. They're betting betting on the horse they they know and trust. But then also, you know, I think for you, and I think you do this, um, having like a newsletter or having something to keep them in the drip, I would assume, is pretty important. Yeah. We're trying to do that a lot with like we have this podcast. We have a brokerage that's kind of our cash flow vehicle. We we do transact a little bit, but it's mostly now our our brokers, and we make a cut. And now we're we're like scaling the investment side. And so I literally have names in a spreadsheet of like people I've had a call like, "Hey, we're doing this 9 unit. Would you ever invest?" And like people are like, "Yes, yes, yes." I'm like getting all these yeses, which I'm sure it's harder when it's like, "Hey, we need 500k." You know, but they're saying an abstract yes. And so I'm like, okay, I'm about to start like we might start like a newsletter of like here's how our nine news is going, here's our progress just to plant some seeds for when there's a request or like oh yeah, they're the guys that like executed on that small apartment and it went well. You know, you remind me of what I did back in 23 to start and build my list and I I I think I read a book by Michael Blancc. I went through his coaching program like four years ago now, three years ago and it just said, "Hey, start the list in your phone, your email list. Email everyone say here's what I'm doing. No deal right now to raise capital on, but you want to be on the list." So, I built a list that way is probably I think 40 people at first. Very, very small built from there. Started doing monthly emails like the emails were like, "Hey, I've reviewed these properties this month. Here's what I learned. Here's my top book of the month." I mean, it was so like elementary back then, man. But you had just to find a way to get people comfortable with what you're doing cuz they have it takes time to get them warm. It does. Most people when you meet the first time, they don't invest right away. It takes our average life cycle from our online leads is 54 days when we meet they come in as a lead to when they actually invest. That's the average 54 days. That's crazy fast. That that's that's pretty good, right? Yeah. um in-person people and people that already know a little bit different, but you've got to they have to get warmed up. It always, this might be the second thing that's pissed me off in [clears throat] business because it's just so it's like easy and you're already doing it. Uh is the the thing or the rhythm that always comes back to me like we're already doing the newsletter, we already got the relationships. It's just like we just need the next building to start ringing up the phone. So, uh I'm more of the okay, we've got the building now. Now it's my problem. He got us the building. Great. Thank you. go get us the next and keep on moving, which is fun to have the the partnership uh to do that. I'm not the coffee meeting person like that's more him. I'm pumped to go get in my hands dirty and rip some Nava tube out and holding back together. It's really hard, right? I've talked to a lot of guys like like you that are like doing it or adjacent or LPs. It's like to get in front of the owners and to find the deals is another story. And like that's a whole another spreadsheet of like here's this old boomer that owns a few that I'm interested in. I try calling try destinate nothing. It's like I just heard um from a guy on Instagram that what he does is just handwritten notes to the mailing address that our public records just [clears throat] in his own handwriting and he's doing it and it's succeeding very well for him. Are you getting people on the phone? Um this first one was a was a coffee meeting. I grabbed beer with a guy and then he winds up needing to sell. So it was a relationship off market 9 a. m. a coffee meeting. It was a beer at, you know, at 5 or whatever. Um, you know, he's like, I I need to sell. Great. You know, I'm a broker. I can sell it for you. Oh, we have the advantage of that. So it's like I think we'll get a lot of leads from the brokerage. Like, hey, I might need to sell this. What are my options? I know a buyer, me, you know, it's like that's actually what I did with them. I literally said that track of like actually we might be your buyer and he's like and then I kept trying to be like we could push it out we can do this and then he was just like no you buy it like he it was like very providential of like he just really wanted us to buy it. You'd find more of those guys. I've I pursued the offmarket route. Um I've only bought one deal off truly offmarket like cold outreach offmarket. We we tried a program last year for six months. It didn't work very well. And again, these the apartments that we're buying are 100 units plus in size and that the typical seller is not your mom and pop owner. Yes, there are some out there, but most are not. But in your in your size, you can find a lot of a lot of value there in those midsize assets, and a lot of those are mom pop owned. So, I would keep doing that. I heard from a guy, a buddy of mine a while back, oh, like three years ago, he said what works for him is he would call these owners up or text them and say, "Hey, I want to grab coffee and get your advice. I own some properties nearby. And the old saying goes, if you ask for advice, they'll give you money or a property. Ask for money, they give you advice, right? So, people love giving advice. So, maybe maybe try that one if you're already. Yeah. People love their back scratch. Yeah. Hey, I look up to you. I want to learn from you. People People will never say no. If you get in front of them, right, then you can close that way better than if they're on the phone. You're like somebody else there, right? I actually have tried that randomly texting. Didn't work. Um, but it wasn't the right guys. Like, you need We've only been doing it for like Yeah. Anyways, you need reps. I think you just got to keep doing it. Get the reps in, right? I would love to switch gears um into kind of our planting roots section, which is kind of like our rapid fire. Uh, you don't have to answer quickly. Um, so let's start with kind of a light-hearted one. What's your favorite date night spot in Indie? 1933 probably. Or H Steakhouse in Westfield is our our new one. Hm. Westfield's building a lot. It is. It is. But it's like a Never heard of that. It's far away from me. [laughter] What's the state cut that you get? Oh, I Man, last weekend I had this uh Wagyu Tomahawk. It was so good. Wagyu is so good, man. Yeah, you can just I had half of it that day and I that night I had the rest for uh lunch the next day. It was good. It's It's the best, man. If you had a billboard on Ice 465 up for a week, what would it say? I probably wouldn't do that first of all, but if I did, that's a great question. I don't know. What would you do? [laughter] Turn the tables. They turning the tables. It It would probably end up being something to do with furthering uh the Lord's kingdom. That would be my guess. If I had to like really think of a message, you're going to have to spread. I'm joking. I'm joking. Just you see those on your way down to Florida fear or something. Just like I've always took too long to make decisions on certain things. I probably have to think really hard about what would be so impactful. This this one big billboard. But generality speaking, it it'd be something with how can I deliver impact to people. You're going to see thousands of cars. It's going to see thousands of people see this billboard, not millions, right? Like what can you what's really going to be fulfilling to them that would deliver the impact? It's probably it probably something around financial literacy. That's what my passion is. That'd be awesome. That's great, man. Your kids are watching you do all this, seeing your story up close. What do you What is one thing you hope they learn from your story? To be comfortable being uncomfortable, to keep growing, and to be independent and make decisions faster than I have in life, you know, just and just don't be afraid of anything. just go your passions or dreams, just go pursue them and find the right people to bring you with you on those. It's awesome. It's been another episode of the Roots Podcast. Chad, thanks for coming on. That was great. Thanks, guys. Yep. Thanks, man. Where can people find out more about Focus Capital and what you're doing? Yeah, we're on the socials. Um, LinkedIn, I'm on there quite a bit, but focused capital. com's a website. Um, yeah, I'd say either that, DM me. I'm I'm I'm the guy that responds to DMs on there, not somebody on some VA guy. It's It's always me. So, all right. Connect with Chad. Thanks for going on, man. Yep. Thanks. You guys make sure to like and subscribe. Leave a comment below if you want to invest with Chad.