OPEN TRANSCRIPT

00:00
if there's an opportunity that meets
00:01
your common sense
00:03
and today it makes absolute sense that
00:06
you feel you're going to be able to make
00:07
a profit on
00:08
no you know one way or the other
00:09
especially from a cash flow standpoint
00:11
like as a rental property
00:13
then you then you jump on it if you
00:15
believe we can change the narrative
00:17
if you believe we can change our
00:18
communities if you believe we can change
00:20
the outcomes
00:21
then we can change the world i'm rob
00:24
richardson
00:25
welcome to disruption now
00:28
welcome to disruption now i'm your host
00:30
of moderator rob richardson
00:32
i'm tunde ogallana and on the show today
00:34
we have gene schroeder who's a
00:36
man of many talents he's uh best known
00:38
for real estate and flipping but he's
00:40
also
00:40
he's also been a uh a reality tv star at
00:44
one point you've probably seen the uh
00:46
flipping wars on a e him and his partner
00:49
were on there and uh he comes here with
00:51
a lot of experience in real estate
00:53
nearly 20 years 18 years in the business
00:56
millions made as is really an expert and
00:59
we're really honored to have him on the
01:00
show gene how you doing brother
01:02
great thank you for that nice warm
01:03
welcome i appreciate it guys oh no
01:05
problem man
01:07
so you know you're take us back and you
01:09
know
01:10
a question i always ask folks who have
01:12
made who have been very successful i
01:14
like to take them back to their to their
01:15
younger selves and
01:16
think about when you first started in
01:18
real estate and you know you were a
01:19
young hotshot
01:21
thought you knew everything and now
01:22
looking back you look like damn that was
01:24
really really really dumb
01:26
like can you think of a moment or any
01:28
time or advice you might give your
01:30
younger self or
01:31
or maybe you all had it all together as
01:33
younger self i don't know
01:34
yeah no listen i i've uh i've started
01:37
this business over like three different
01:38
times i mean when i first got in the
01:40
business
01:40
i made some mistakes and i nearly lost
01:43
everything then i got
01:44
going good on it and then everything uh
01:46
and then then i then we
01:47
just had to start the business over and
01:49
then everything crashed in 2008 and i
01:51
had to start the business over
01:52
and uh you know so i started the
01:54
business over several times but the one
01:56
thing i i think i would recommend people
01:58
do
01:58
is diversify have a couple different uh
02:01
businesses you try
02:02
things even if you lose you got to keep
02:04
trying build a portfolio of real estate
02:07
that somewhat that can pay for itself
02:09
over time
02:09
because time happens and you know had i
02:12
just held on to
02:14
you know one out of every 10 properties
02:15
that i sold over the years
02:17
then uh i'd be in a pretty good position
02:19
at least from a cash flow standpoint
02:21
of having rental properties so um that's
02:24
what i recommend people just
02:26
buy something hold on to it you know as
02:28
long as it can cover all the mortgage
02:30
cover the rent
02:31
the rent can cover the mortgage you hold
02:32
on to it and regardless of what happens
02:34
in the
02:35
in the financial cycles you know you'll
02:37
be okay especially in 15 or 20 years
02:39
when they end up paying off but all
02:42
right so
02:43
that was a good answer but you kind of
02:44
avoid the question think about what you
02:45
did when you were young
02:47
that one or two things you could say
02:48
damn like if i would just talk to myself
02:51
a little different
02:52
uh and i just known xyz i would have
02:55
done that differently knowing what i
02:57
know
02:57
and a lot of knowledge and expertise
02:59
starting three businesses having to
03:00
start back over again
03:02
you think of a point yeah well that's
03:04
what i'm talking about you know i bought
03:06
and sold
03:06
every property i ever did okay a certain
03:09
point
03:09
so i sold everything so i would buy a
03:11
property or two or three or however many
03:13
and it was like get rid of it sell it
03:15
sell it sell it sell it because
03:17
my cash flow was my income right but it
03:20
had i just held on to some of those
03:22
properties
03:23
even one out of ten of the deals that
03:25
i've sold i could have had hundreds of
03:26
properties by now
03:28
and uh that would have been a very good
03:30
thing to do
03:31
not just look for the immediate pop but
03:34
hold on
03:34
and and work and focus on becoming
03:37
wealthy because in real estate investing
03:38
you know you buy you fix you sell
03:40
something
03:40
or you flip it out to another investor
03:42
that's how that's how i generally make
03:44
my money
03:45
but had i held onto properties as
03:47
rentals
03:48
they don't make a ton of money early on
03:51
but down the road once they get paid off
03:53
or they appreciate then there's a lot
03:55
more money to be made so i've had had i
03:57
just hold on held on to one out of ten
03:59
deals 1 out of 20 deals
04:00
that i did things would have been a lot
04:02
better
04:04
wow i mean you know a lot of folks would
04:06
tell you that they felt like they got
04:08
over leveraged
04:09
talk about the balance between not being
04:11
over leveraged and when to hang on
04:14
for folks that are trying to figure out
04:15
the game because it sounds like you were
04:16
i mean
04:18
flipping wars was the name of your show
04:19
so you i mean you were true to your name
04:21
i mean
04:21
you did you were flipping properties but
04:23
it sounds like you would have done a
04:24
little less flipping
04:25
and a little more preserving but how do
04:27
you know the balance i mean you're first
04:28
starting off in this business
04:30
how do you know when not to
04:33
over leverage yourself and what even
04:34
over leveraging looks like
04:36
and when to hold on and how you should
04:38
go about that strategy does my question
04:39
make sense
04:40
yeah no it makes perfect sense you know
04:42
a lot of people that do this business
04:43
they do it part time like they have
04:45
another job they have good income they
04:46
can be a teacher a firefighter a doctor
04:48
a lawyer
04:49
and they buy they buy and they sell a
04:51
deal or two a year
04:52
um and they have good income and they
04:54
have uh they have good you know credit
04:57
and so forth so my recommendation is
04:58
you know maybe flip a property and hold
05:00
on to a property
05:01
um but you want we ended up getting
05:04
lucky
05:05
because after 2008 my business partner
05:07
and i
05:08
you know our goal was to what we call
05:10
pre-sell deals we get them under
05:12
contract and then we hurry up and we
05:13
sell them before we have to actually
05:14
close on them
05:15
some people call that wholesaling we
05:17
call it pre-selling and then the ones
05:19
that we don't pre-sell that we didn't
05:20
pre-sell we would close
05:22
renovate and then turn around and sell
05:24
again wait so how did so
05:25
sorry my mind's going in twists because
05:27
i don't i'm not a real estate expert i
05:29
do have actually i do
05:30
you'll be proud of me i've gotten my
05:32
first real estate it's my old house i'm
05:34
moving to a new house i kept my old
05:35
house
05:35
in the downtown area see where you're
05:37
looking at the city back here yeah i
05:39
have a good piece of property that
05:41
has views of the city and i said i'm not
05:42
going to sell this i think that's dumb
05:44
uh so i'm holding on to it but how do
05:47
you go about
05:48
approaching this like and learning pro
05:49
like because you're you talked about
05:51
like you hold you sell and i'm not sure
05:53
what you meant in terms of
05:54
like you sell it before you close like
05:57
how does that work is that what is that
05:58
what you said
05:59
yeah okay i don't understand what what
06:01
that means what does that mean
06:02
for us yeah i'm sorry i'll back up all
06:04
right so basically my main as a real
06:06
estate investor there's three main
06:08
things that i do
06:09
okay um my the hardest part about my
06:11
business is finding deals right
06:13
finding properties that are 60 cents 55
06:16
cents
06:16
on the dollar right 70 cents on the
06:18
dollar so my when i get a property under
06:20
contract whether it be from a private
06:22
seller or a bank
06:24
or an auction company or something like
06:26
that my first goal is to turn around
06:28
and sell this property before i even
06:31
have to close on it i have a database of
06:33
about 8
06:33
000 cash buyers and people have raised
06:35
their hand and said hey man i want to
06:37
buy
06:37
i want to buy a good deal and so i
06:40
quickly try and turn around and sell
06:41
this to another tier investor
06:43
who will in turn close on it renovate
06:46
the property and then sell it
06:48
or keep them as rental properties yeah
06:50
okay so sometimes
06:52
um it doesn't happen in time right and
06:54
especially after 2008
06:56
we would get these deals and um you know
06:59
2009 10 11
07:00
12 and we will get these deals and
07:02
sometimes the market was not as
07:05
as hot as it has been the last couple
07:07
years it was people were just coming out
07:08
of that recession
07:09
and didn't have messy a lot of faith in
07:11
the market so some of those deals we
07:13
weren't able to sell before we closed
07:15
so we end up closing on them and then we
07:18
try and
07:18
we'd renovate them and then we try and
07:20
sell them for a profit well sometimes if
07:22
a property wasn't lingering or there
07:23
wasn't a market for it or there wasn't a
07:25
buyer for it
07:26
then we would turn those properties into
07:28
rental properties
07:29
okay so a lot of
07:32
the properties that we have now they
07:34
were our mistakes they mean we couldn't
07:36
sell them
07:37
so we ended up keeping them and turning
07:39
them into rental properties
07:40
but we bought them at the right time in
07:42
2010 11
07:44
12 13 and thank god the market
07:47
has gone up tremendously in those last
07:49
few in those last few years right your
07:51
mistakes
07:52
ended up being your benefit that's
07:53
that's fascinating that
07:55
that's exactly right you know
08:00
[Laughter]
08:04
owning real estate is very very powerful
08:07
right so the one way i do business
08:09
it makes makes a living but holding on
08:11
to properties
08:12
now that makes people wealthy however
08:14
you have to be able to weather the storm
08:17
because not every rental property you
08:18
own is going to be
08:20
people are going to pay totally on time
08:21
and take impeccable
08:23
impeccable care of your property so you
08:25
have to be able to have resources to
08:28
carry the property while it's vacant
08:30
repair the property
08:31
when it when it uh gets damaged or sit
08:34
on a property when
08:35
when uh you know one example is i had a
08:39
tenant
08:40
lived there for three years four years
08:41
never called me never had a problem
08:43
and i realized the reason why is because
08:45
they weren't keeping up very good care
08:47
of the property if i ever went there i
08:48
would have been disgusted
08:50
by the way they were treating the
08:51
property so after four years i was happy
08:53
because i made four years worth of the
08:54
income
08:55
but when they moved out i had to
08:57
renovate the entire property
08:59
and it was full of german cockroaches
09:00
and everything yeah oh my god
09:03
so so and it would be a little bit of a
09:05
of a
09:06
of a challenge but it's okay because the
09:08
property had a ton of equity in it
09:10
ended up being a very good deal uh and i
09:12
was and i was very happy but
09:14
i'm just saying if you're going to own
09:15
real estate and you want to wonder how
09:17
or when
09:18
you need to wait when you don't do it on
09:20
a shoestring budget
09:22
later you know for rental properties how
09:24
much driving flips
09:25
properly to build cash and then once you
09:27
have some cash flow
09:29
or an income whether it be from being a
09:31
real estate investor
09:32
or some other income then you start
09:34
accumulating properties but you have to
09:35
know
09:37
you have to be able to carry it if
09:38
there's a lean time or a challenge
09:40
yeah um you you said the you mentioned
09:43
the hardest thing for you
09:45
in terms of this business is is finding
09:47
the right deal was that correct oh yeah
09:49
hands down
09:51
so can you you've obviously had success
09:53
and you've had some failures which is
09:55
led to some more success according to
09:57
what we just talked about so
09:58
it sounds like you have a lot of good
09:59
knowledge in this area
10:02
how do you advise people to go about
10:04
finding the right deal like what are the
10:05
ingredients to a good deal and how do
10:07
you go about finding the right deals
10:09
well if you're looking to buy fix and
10:11
sell a property
10:12
it's all based upon what the market
10:14
value is
10:15
uh how much a property can be sold for
10:17
how much you're going to renovate it for
10:20
how much you want to make on it and then
10:21
how much you can pay for it
10:23
the problem is a lot of people overpay
10:25
for properties and they get talked into
10:27
bad deals by realtors that
10:29
aren't real estate investors so it's
10:32
yeah what what what did warren uh
10:34
oh wow about lives in his name the
10:35
famous investor
10:37
uh warren buffett warren buffett yes i
10:40
don't know why i couldn't think of it
10:41
so that's there's a fool in every deal
10:43
and if you don't know who it is it's you
10:44
so
10:46
yeah that's exactly right so one of the
10:48
things that i heard you say is don't
10:49
listen to the realtors but go ahead
10:50
finish
10:51
why don't you say don't listen to
10:53
everybody
10:54
but a lot of realtors you know if they
10:57
could be real estate investors they
10:58
would you know what i mean and
11:00
they don't necessarily know what a deal
11:01
is so it all boils down to paper it's a
11:03
it's just a math problem
11:05
and if you if the math doesn't work out
11:07
to where with a buffer you're going to
11:08
make a profit
11:09
then you got to walk away from the deal
11:11
so and uh you know to do it uh
11:13
you're better off not doing a deal than
11:15
doing a bad deal for sure
11:17
yeah tune day oh this is great gene
11:20
thank you
11:20
this is um it reminds me that the i keep
11:23
thinking of the book rich dad poor dad
11:25
remember that from like 20 yep
11:26
yeah i remember that book my mom made me
11:28
read it yeah
11:29
i first read it when i was 22 and that
11:32
that really started my journey down
11:34
this whole game of money and learning so
11:37
this is i can appreciate what you're
11:38
saying because it reminds me a lot
11:40
of of the principles taught in that book
11:43
that even after your own experience
11:44
you're touting income
11:46
keeping the property you know all that
11:48
stuff and
11:49
and this is great i mean i'm writing
11:50
questions and notes um
11:52
some of it you've already started
11:54
answering which is great because
11:56
it what you're saying reminds me a lot
11:58
of what i deal with
11:59
in my wealth management practice
12:01
obviously i don't do real estate
12:02
directly
12:03
but i advise on the capital market so
12:05
you know investments and
12:07
and what you're getting at gene is great
12:09
because it's really about
12:11
behavioral finance it's about people's
12:13
emotional states
12:14
and like i wrote here you know that your
12:18
an investment property is not the same
12:20
as your home right
12:21
because i've already done the math i
12:23
mean i plowed so much money into my
12:24
house and i'm never going to make that
12:26
money back but
12:26
oh it's a hobby but i'm okay it's my
12:29
home
12:30
i'm raising children my wife you know
12:31
like this is somewhere where i'm not
12:33
looking to flip and turn it into a
12:35
dollar tomorrow
12:36
but you're right about you know i'm
12:38
impressed with your ability to find the
12:40
properties at 55
12:41
60 cents on the dollar and one of the
12:44
one of the things i wanted to ask you
12:46
and maybe help the audience here is how
12:48
do you know when a market is kind of
12:50
frothy
12:51
like it's it's like with me in the
12:53
market you know we have barometers like
12:54
you know
12:55
p e ratios you know you you can look at
12:58
you know certain things in charts and
13:00
all that to kind of get an idea of
13:02
if a company is priced in line with the
13:05
overall market or not
13:07
and i was going to ask like how do you
13:09
do that in real estate
13:11
and then the last question to throw on
13:14
there is
13:16
have you seen a change over the last
13:18
decade with big firms
13:20
uh private equity groups like blackstone
13:21
and all that coming into the residential
13:23
market
13:24
and has that affected your ability to
13:26
find the 50 60 cents on the dollar
13:28
so yeah well yeah you got a lot
13:32
you got a lot of questions there so i'll
13:33
just kind of go backwards and then maybe
13:35
it's tuesday yeah you never ask me
13:37
questions
13:42
yeah so no blackstone is funny because
13:44
when they came in here
13:45
you know they were brilliant uh they
13:47
came in they put together a ton of money
13:49
warren buffett said hey listen if i
13:50
could get into uh i'm sorry
13:52
see you later guys take care all right
13:54
bye-bye sorry they said he said if i
13:56
could you know if i was
13:57
younger or whatever i would get into
13:59
buying single-family homes and that was
14:00
like in
14:01
you know 2011 or 12. and then all of a
14:04
sudden blackstone went and put together
14:05
fun and started doing that
14:07
and these guys are big brain people that
14:09
work in blackstone
14:10
and um i think they took some lumps
14:13
tonight they got they took some hits but
14:15
i think they ultimately figured it out
14:16
they ended up selling out just recently
14:18
i think at a very good time
14:20
to invitation homes and back in 2008 or
14:23
nine
14:24
when all that when everything crumbled
14:25
there wasn't a firm there was no such
14:27
company like that out there
14:28
so it's definitely uh created at least
14:31
if
14:32
even now with the way the market is if
14:34
everything goes to hell
14:35
there's still a big company out there
14:37
that's well-funded that potentially
14:38
could go in there
14:39
and buy up you know who's huge swaths of
14:42
properties
14:42
if the banks wanted to let them go and
14:44
they met their certain buying criterias
14:46
um so that change that really changed a
14:49
lot uh then all of a sudden just
14:50
recently
14:51
all these companies huge companies
14:52
zillow and these other companies start
14:55
jumping into the market to try and buy
14:56
properties
14:57
and i i still don't understand what
14:58
their method is because they lost like
15:00
100 million dollars
15:01
you know buying real estate because you
15:03
have to buy right numbers
15:04
but once again they got big brains they
15:06
got big money they got big pockets
15:08
yeah 100 million dollars when you got
15:10
billions right it was just yeah
15:13
it's a problem i like to have that's
15:15
exactly right but you know at the end of
15:16
the day you know i started thinking
15:17
about it go you know if they're only
15:18
making if they only make
15:21
i don't know three percent on a deal
15:23
right they buy a property they turn
15:25
around they sell it and they only make
15:26
three percent but
15:28
if they can do that on billions of
15:30
dollars and they're doing that every six
15:31
months
15:32
they're really moving the needle you
15:34
know what i mean versus you know like a
15:35
small guys you know we've got to make 10
15:37
20 but you know we're pushing a hundred
15:40
thousand
15:41
a few hundred thousand or a few million
15:42
dollars but when you're trying to push
15:44
the needle on a few billion
15:45
you know you make a lot of money even
15:47
making three percent
15:49
yeah yeah yeah talk about two because um
15:52
rob mentions a lot the strength of
15:54
relationships and that was one thing i
15:55
was thinking about
15:57
when you're talking about knowing you
15:58
know your learning curve and all that
16:00
um how important was it to have the
16:03
right lenders
16:04
the right contractors like all that
16:05
stuff going on for you was that
16:07
something that you leaned on the same
16:09
group of people through your journey or
16:10
did it not really matter as long as the
16:12
deal made sense
16:13
there was an institution there ready to
16:14
lend you money and let me narrow the
16:16
question a little bit because i
16:17
was going to ask a similar question so
16:19
let's just bring them both together
16:20
you know my mother advised me that in
16:22
marriage your spouse is 90
16:24
of your pleasure or pain and in business
16:27
uh you know
16:28
your partners are 90 of your profits or
16:30
your loss so it really matters
16:32
who you work with the relationships in
16:34
business can you just give us a sense of
16:37
uh obviously the relationship with you
16:39
and angelo has worked
16:40
you know why has that worked and what
16:42
would you advise others on and then
16:44
doing business with others
16:45
that you're seeking to do relationships
16:47
like how would you advise
16:49
others about how to approach and look at
16:51
these relationships to make sure that
16:53
they're successful
16:54
yeah no partnerships are very tricky and
16:56
most times i tell people don't get don't
16:58
get into partnerships
16:59
because most people are not cut from the
17:02
same cloth
17:03
right so if you if you're gonna have a
17:04
partnership get it do it on deal by deal
17:06
basis
17:07
okay don't try not to look lump somebody
17:09
into all the business dealings that
17:11
you're gonna do
17:12
um but if you are gonna do something
17:15
with a business partner
17:16
you've got to bring something to the
17:17
table and they've got to bring something
17:19
to the table one person may have all the
17:20
time and energy
17:22
and the knowledge and some person might
17:23
just have the money right and they kind
17:25
of have to know
17:26
what each other's doing but most of the
17:27
time i talk to people that are
17:29
partnerships and they always say the
17:31
other person is not working as hard as
17:33
they are
17:33
right so they always think that the
17:35
other person's taking advantage of them
17:36
and that's a
17:37
that's a real problem what i tell people
17:39
to do is it goes back to a biblical
17:40
principle of being equally yoked so you
17:42
talk about being equally yoked in
17:44
marriage
17:44
like back in the day when you'd have a
17:46
cart you'd have to have an
17:47
ox pull the cart right or two ox right
17:50
so they would put a yolk around
17:51
their necks the each each ox's neck
17:54
right
17:55
so if you had a you know a big you know
17:58
above
17:59
sturdy ox next to a scrawny ox well
18:02
the yolk would all get messed up and
18:05
pull on the big
18:06
ox's neck and so they have to be the
18:09
same size and equally yoked
18:11
boxes and you have to be the same way in
18:13
your partnership you need to work as
18:15
hard as the other person
18:16
you have to be as conscientious as the
18:18
next person you have to be as ethical as
18:20
the next person
18:22
okay and one thing is
18:25
how people do anything is how they do
18:27
everything right
18:28
so if it's easy for somebody to lie or
18:31
cheat
18:31
or flub or or you know and
18:35
and you go oh well they they're not
18:36
doing it to me well they just haven't
18:38
done it to you yet
18:39
yep so you have to be very very careful
18:41
of who you choose because
18:43
you know if people are liar cheaters you
18:46
know they're going to do it to you
18:47
eventually you know people like getting
18:48
into lawsuits all the time
18:50
you know eventually they're going to do
18:52
it to you you know it's just
18:54
it's just how it is man you know so you
18:56
just want to be with
18:58
with good people because to me you know
19:00
i don't love conflict
19:02
i don't i don't have the energy for a
19:04
lot of conflict you know
19:05
so i'd just rather do good business uh i
19:07
don't know why
19:08
other people don't feel the same way
19:10
like even our political system i mean
19:11
it's crazy
19:12
aren't we all trying to work together to
19:13
move the american people along but man
19:15
our political system the
19:17
all the infighting everybody's trying to
19:18
do their way it's ridiculous
19:20
and uh oh just you just have to be super
19:23
super careful
19:24
um and and put parameters hey listen
19:26
we're going to do a partnership
19:27
on this deal or that deal you know and
19:29
you have to be honest my goal is to
19:31
you know put this much money in the bank
19:33
and then i'd like to do it on my own and
19:34
as long as everybody
19:36
lays out their expectations in advance
19:38
then
19:39
then everything's fine it's when people
19:41
have expectations that they really
19:42
didn't share they just thought the other
19:44
person knew
19:45
where everything falls apart and becomes
19:47
very uh
19:48
there ends up being a lot of conflict a
19:51
couple of follow-ups to what you said
19:53
that i think are really important
19:55
something that i like to do
19:57
with folks is that you know i think
19:58
you're saying this doing this deal by
20:00
deals essentially
20:01
you test people you test them on small
20:03
deals you test them on things
20:04
and because how often how people do
20:07
anything is how they do everything so
20:08
before you do something
20:10
see how people act see like see how they
20:11
interact with others because
20:13
there's gonna come a time that they're
20:14
gonna do the same behavior to you
20:16
and it applies across the board like i
20:18
said it's it's you need to observe what
20:20
people do
20:21
not just how they make you feel but what
20:23
they are actually doing
20:24
and doing to others and you'll and you
20:26
and you'll know a lot about how they're
20:28
going to
20:28
act with you in situations the second
20:30
part that i think was really important
20:31
what you said
20:32
i had two tunas heard me say this before
20:34
i probably got it from the godfather or
20:36
somebody else or some combination
20:37
thereof but
20:38
it's a lot i have i said i have no
20:40
problem with agendas i just don't like
20:41
when they're hidden
20:42
and they're misaligned with the overall
20:45
purpose like
20:46
that's the problem you got to
20:47
communicate what you want communicate
20:50
what the expectations are and what your
20:51
agenda is people's people
20:53
are act as if there's something wrong
20:54
with agendas there is not it's having a
20:56
plan
20:57
having a motivation for why you're doing
20:59
sad activity
21:01
you just need to and you know have clear
21:03
clear communication
21:04
and as long as you express that and the
21:05
other understands your point of view
21:07
but a lot of times gene people aren't
21:09
genuine with their real intentions and
21:11
they hide it
21:11
and that's the real issue it's not the
21:13
part of having an agenda
21:14
it's not being honest about what that
21:16
agenda actually is so i really think
21:18
that's great advice
21:18
um oh can i just follow up one other
21:21
thing sure
21:22
you know and being an entrepreneur when
21:23
you go into it when you're going into a
21:25
uh
21:26
into a business you know all you see is
21:28
the good stuff right you're excited you
21:29
don't want to talk
21:30
negative right what happens if this
21:32
thing but at any
21:34
in the very beginning once you're
21:35
getting into that partnership you have
21:37
to have a what-if session with them
21:38
well what happens if this doesn't work
21:40
what happens if this does fail
21:42
what happens if we do need to split
21:44
apart right who's going to be on the
21:46
hook for what and you have to go through
21:48
it no i know nobody wants to
21:49
because you only want to focus but you
21:51
have to you have to
21:52
figure out your demise before you can
21:54
even figure out your
21:56
your launch you know and uh that way
21:59
while you have cool minds you're not
22:00
emotional about it
22:02
and and and you let it and you break it
22:04
up before you ever get started
22:05
so there's a clear plan if it doesn't
22:07
work out this is what's gonna end up
22:08
happening
22:09
i'm gonna owe this much money you're
22:10
gonna owe that much money
22:12
or what have you and and you move
22:14
forward
22:15
yeah that's a great advice let me jump
22:17
in because someone i knew once said i
22:19
was talking to them about
22:20
doing a buy sell agreement with the
22:23
business owner clients that we were
22:24
working with at the time
22:25
and um the guy made a profound statement
22:28
that was so simple that it made sense
22:29
and he said
22:31
yeah that's great you got to remind them
22:32
that contracts are for one you're not
22:34
talking
22:35
and i thought how simple but how like
22:38
perfect because and his point was
22:40
basically yeah because they either had a
22:41
fight as business partners and they're
22:43
not talking or one of them's dead and
22:44
they're not talking
22:45
and that's the simplest way in the most
22:48
matter of fact common sense way i've
22:50
ever heard of put and it's that's right
22:52
you're right gene a lot of people i
22:53
think it's like a marriage with a prenup
22:56
um marriage obviously is different
22:57
because it's really personal but
22:59
uh but not that much no but what i'm
23:01
saying is i can understand emotionally
23:03
somebody's saying what you don't trust
23:04
me when it comes to
23:05
marriage let's let's shelf that one for
23:07
another show but but with a business
23:09
it is true that if you're going into it
23:11
from a business mindset you should be
23:14
able to say look let's have an exit plan
23:16
and have a runway to get off this thing
23:18
in case one
23:19
or both of us isn't happy for whatever
23:21
reason that's right
23:23
and trust me that question you just
23:24
mentioned about marriage oh you don't
23:25
trust me
23:26
well that happens in business too oh you
23:28
don't trust me yeah
23:29
yeah you know you know i don't know if i
23:31
i don't know you that well just yeah i
23:33
don't
23:33
right i know if i trust you just yet is
23:35
that okay do you mean do you trust me
23:37
with your bank account because
23:38
that's what you're gonna have to you
23:40
know because you have to talk through
23:41
money issues you have to talk through
23:43
conflict
23:43
i actually think it's i think it's very
23:45
similar like you have to talk
23:46
to your partner about potential issues
23:49
because they're going you're going to
23:50
have some
23:51
how you deal with disagreements what is
23:52
that it's no different
23:54
i don't think it's really that much
23:55
different there are some obvious
23:56
differences but there's
23:58
there's a lot of similarities so people
24:00
should look at do
24:01
i i tell these people in business do you
24:03
want to marry this person like
24:05
financially do you want to tie your fate
24:08
to this person that's how you need to
24:09
look at
24:09
who are you going to business with not
24:11
how you feel at this moment but
24:13
long term and if if that's so have you
24:15
woke or have you have you walked through
24:17
all the possible issues that can go
24:19
wrong like nobody likes doing this it's
24:21
horrible right no one likes to say well
24:23
how are we going to come with situations
24:24
if things go wrong if the business fails
24:26
if you don't come through if you don't
24:27
meet your expectations but how else are
24:29
you going to deal with it
24:30
unless you actually address it and
24:32
people don't like to address things gene
24:34
that are uncomfortable but
24:36
i think part of success is being
24:37
uncomfortable this leads me to my next
24:39
question
24:40
uh you said once in uh in uh the
24:43
flipping wars
24:44
uh from your from your partner angelo i
24:46
guess he got you to
24:48
he got to listen to some hip-hop so and
24:50
uh and he had you quoting the line from
24:51
hip-hop
24:52
where you said scared money doesn't make
24:54
money don't make money
24:56
yeah right you remember that yeah yeah
24:58
yeah people are scared right now in this
25:00
uh in this moment with with covet 19
25:04
and what's going on and they're scared
25:05
they're uncertain how do you advise
25:08
entrepreneurs those in real estate who
25:11
are
25:12
scared uncertain about the future how
25:14
would you advise them
25:16
my recommendation is obviously scared
25:19
money don't make no money right so
25:20
that's it so
25:21
so if there's a if there's an
25:23
opportunity that meets your common sense
25:25
and today it makes absolute sense that
25:28
you feel you're going to be able to make
25:29
a profit on
25:30
no you know one way or the other
25:32
especially from a cash flow standpoint
25:34
like as a rental property
25:35
then you then you jump on it that's it
25:37
can a better deal come down
25:39
down the bike and you're like your
25:40
money's all tied up it could but at the
25:42
end of the day at least you you bought
25:44
something
25:44
you've got it and you bought it with
25:46
basic common sense right what hurt
25:48
people is when they're buying something
25:50
expecting it to go up and the only way
25:52
you're going to make money is if
25:54
everything goes up well that's not
25:56
common sense that's that's just hope
25:58
and hope is the last thing you lose you
26:00
know
26:04
that's good yeah yeah so so
26:07
buy things with your basic common sense
26:09
if it's going to make you money on it on
26:11
a monthly basis and you can afford it if
26:13
something's
26:13
some bad things happen now of course you
26:15
can't prepare for everything there is
26:17
always a little bit of risk there's
26:18
always a little bit of
26:19
you know of uh basically risk a little
26:22
bit of danger
26:23
but you ba you make your you make your
26:25
decision based upon common sense
26:27
i try and tell people listen i'm not
26:30
going to promise you i'm always going to
26:31
make
26:32
the right decision but i will promise
26:34
you that i'm always going to try and
26:35
make
26:36
the decision for the right reason okay
26:39
and it doesn't always pan out but man i
26:41
i really did it for the right reason it
26:43
wasn't
26:43
you know to you know to get rich or to
26:46
screw somebody over
26:47
or it was to it was to better the
26:49
situation it made sense
26:50
and you know and that's it you know so
26:53
you try and make good decisions
26:54
common sense decisions you know if you
26:57
don't understand it
26:58
don't do it it's uh i mean you made so
27:02
many good points in there one
27:03
towards the end about the value of your
27:06
reputation
27:07
and why that matters because part of why
27:09
you have so much currency
27:11
is because people people people know
27:14
that you're that you're true to your
27:15
word and you've and you've made a
27:16
reputation off of that
27:18
and you know nothing's more important
27:19
than reputation that has more value than
27:21
anything because it can take you places
27:23
that you can never get into without that
27:24
so
27:25
uh operating with integrity really
27:27
really really does matter
27:28
uh you know second point is uh kind of
27:30
another warren buffett i remember the
27:32
name this time
27:33
a line he said and he people asked him
27:36
why he didn't invest in some tech
27:38
companies
27:38
he had a very similar answer to what you
27:40
said he said i don't understand those
27:41
businesses so i'll only invest in things
27:43
i understand
27:43
period perfect yeah
27:47
exactly right i mean you can't go chase
27:48
the next trend
27:50
if it's something you don't understand
27:51
you know take the take the fundamental
27:53
time to make sure you understand what
27:54
you're investing in not
27:55
not trying to chase the the best deal
27:58
that you think is the next deal try to
28:00
chase try to follow what you understand
28:02
and know and just the
28:03
common stuff because everybody's
28:04
following trends i think the way to go
28:06
is just to follow the new trend and it's
28:07
not two days you have
28:08
follow-up you didn't okay i thought you
28:12
had something to follow up
28:13
um but also go back one thing because i
28:15
know sunday had a question
28:16
earlier i thought he did about money
28:19
about how to get money and how to
28:20
finance these things
28:22
okay yeah and about relationships and
28:26
yes
28:26
that going back if you're just breaking
28:28
the business you've got to get a
28:29
relationship
28:30
and you know as of three weeks ago money
28:32
was very easy to get
28:34
money is not that easy life change is
28:36
quick yeah i mean
28:37
the whole world is different you know
28:39
just in three weeks or four weeks
28:41
so but yeah my relationships um you know
28:44
listen i lost everything in 2008 man i
28:46
had tons of foreclosures i had
28:48
lots of lots of problems like everybody
28:49
else i mean i thought there was going to
28:51
be some kind of uh
28:52
i thought these banks had some kind of
28:54
plan of how to not let you know
28:56
everything go crash
28:57
and they didn't they just they just
29:00
walked away
29:00
you know yeah that's that that's that
29:02
was their plan yeah
29:04
i was totally surprised i was naive to
29:06
believe that
29:07
that was going to happen so but um
29:11
i did have with private lenders i had a
29:13
good reputation my business partner and
29:15
i we always paid them they always made
29:16
sure they got they got another deal
29:18
and therefore even though our no other
29:20
lender would fund us
29:21
these guys were there to lend us money
29:23
on on on deals
29:24
and uh so you definitely want to build
29:26
good relationships pay people
29:28
uh sometimes even pay them early and
29:30
fast and and
29:31
and uh they'll be there for you down the
29:33
road even now you know people are people
29:35
are scared about what's going on the
29:37
market you know i
29:38
have my trepidation i have my concerns
29:40
but if if i if i'm gonna
29:42
do a deal the lender is gonna fund me
29:44
because they because of me
29:46
you know not because of uh you know the
29:49
potential deals so
29:50
relationships getting to know people
29:52
super important and uh performing
29:54
so uh that was one of the questions i
29:56
think you mentioned earlier about
29:57
getting how to get money and stuff
29:59
yeah and can i ask a quick question that
30:01
you can follow up on what you just
30:03
said gene because um i have my own
30:06
opinion that i share with clients about
30:08
kind of the stock market and where
30:09
things think think things are going and
30:11
part of it is
30:12
the maturity that all of us probably
30:15
share here on
30:15
you know on the screen here because
30:17
we've already been through this before
30:19
you know that the the great financial
30:21
crisis of 12 years ago was a great
30:23
learning experience i think for for for
30:25
all of us that deal with money in
30:26
general
30:27
um so can you talk to us a big gene
30:30
about with your experience
30:31
making it through the last crash and all
30:33
this like where do you think
30:35
like and obviously no one's holding you
30:37
to this so let me put that disclosure on
30:38
the show but
30:39
just your experience i think because you
30:41
you sit you're speaking to something
30:42
that i think a lot of people are
30:44
interested in like where are we in the
30:46
cycle here like do you think that
30:48
we're gonna get like a weight where it's
30:50
from the
30:51
top of real estate prices let's say if
30:53
we say that was in january when things
30:55
were normal
30:56
last to the bottom will be a 50 60
30:59
move or do you think that it doesn't get
31:01
much worse than here i mean i know
31:02
there's a lot that's going to happen
31:04
over the next six
31:04
to 12 months that you can't predict but
31:06
from your experience
31:08
what do you see and and maybe where do
31:10
you see coven
31:12
as a pandemic and an issue just being
31:14
different than what we had in the
31:16
financial crisis which was a true like
31:18
business recession that was caused by
31:20
too much leverage
31:21
here's the challenge like i listened to
31:22
some really you know some some really
31:24
smart guys
31:25
um and they all think there's no way of
31:27
getting out of this
31:28
without some serious major crashing i
31:31
mean you know ronald paul and
31:33
these these really brilliant guys that
31:35
know the stock market and so forth
31:37
i'm not that guy i don't i don't i don't
31:40
operate
31:40
at that level those guys are dealing
31:42
with billions and billions and billions
31:44
of dollars
31:44
me i'm a street guy okay and i know on
31:47
the street
31:48
i know that us guys we just want to get
31:50
back to work
31:51
we want to just get back to making money
31:52
we want to be able to you know take our
31:54
families out
31:55
and so so the human spirit is there to
31:58
hey
31:59
let's just get this past us and get back
32:00
to work right i think
32:02
so of course these other factors i mean
32:05
like
32:05
you know uh the oil dropped whatever
32:09
negative terms
32:12
what does that do for me what does that
32:14
do for you i don't know i don't know
32:15
what it means you know what i mean
32:17
i don't i don't know did my did the gas
32:18
prices go down a lot today i
32:20
i don't know next time we show up at the
32:22
gas station they just give it to us
32:25
right right if apple trades at a hundred
32:28
dollars a share if it
32:29
trades at 300 a share how does that
32:31
really affect me
32:32
i don't know i don't know how all that
32:34
stuff really affects i mean
32:36
when the stock market went up and then
32:38
we had
32:39
we had the worst jobs report like in
32:41
history like i don't understand like
32:43
like what that why why didn't it go down
32:46
right we're gonna be started
32:48
yeah we can't that's a that's a long
32:49
conversation yeah
32:51
so so my only point is that listen i
32:53
know that the last 10 years
32:55
i think the banks did a really good job
32:57
which i don't even like saying anything
32:58
positive about the banks
32:59
but i think that because of dodd-frank
33:01
and the legislation that was put in
33:03
there was good legislation
33:04
that i think saved us but the banks
33:06
either people paid cash or they bought
33:08
properties with
33:09
good underwriting guidelines like how
33:11
did they
33:12
put money down how what's your income
33:15
and so forth and i think generally
33:16
speaking
33:17
as long as the interest rates stay stay
33:19
low and not even they don't have to be
33:21
two percent
33:21
for the market to go but like you know
33:23
somewhere around four percent give or
33:25
take
33:26
i think people still want to own houses
33:27
or they want to own rental properties
33:29
and if that can if we can stay liquid in
33:31
the lending side
33:33
okay if somebody can buy these loans on
33:35
wall street or however that's going
33:37
then i think we're going to be fine if
33:38
we if they stop lending if it's not
33:41
buying these loans
33:42
then you know then we just got a repeat
33:44
of 2008 again
33:46
and i don't i don't know how it can
33:47
sustain however hopefully the banks are
33:49
a little bit smarter and they're
33:51
in their game plan is hey let's work
33:52
with people because all people need
33:54
sometimes is a little bit of time
33:56
yeah you know yeah and back in the day
33:58
when if you
33:59
if you needed some time the only way the
34:01
bank would get you could get the bank's
34:03
attention is by not making your payments
34:04
but by the time you didn't make your
34:06
payments you always ruined your credit
34:08
you know and then and then the market
34:10
around you all the neighbors are
34:11
around you their property values went
34:13
they got foreclosed on and so your
34:15
property went down so it's like
34:16
strategic
34:17
well screw it they're not gonna help me
34:18
they're not gonna work i don't wanna
34:20
move
34:20
but if they're not gonna help me and my
34:22
property's already you know 30 percent
34:24
less value then why should i keep paying
34:26
but if the banks can just work with
34:28
people do some forbearances
34:30
put some money on the you know charge
34:31
your money on the back end
34:33
and then we can keep liquid i i think
34:35
we're gonna do just fine
34:37
you know um this kind of reminds me this
34:40
is more like
34:41
to me september 11th like all of a
34:43
sudden it was like
34:44
oh crap what just happened right right
34:47
and so
34:49
you know nobody wanted to go on a plane
34:51
nobody like people were scared for a
34:52
little while
34:53
and then and then we bounced back this
34:56
is to me is kind of like that
34:58
i mean way more hard on the world
35:00
financial system
35:01
but that's kind of kind of what i'm
35:03
thinking more so than 2018 when that was
35:06
all based upon
35:07
fraud and you know bank fraud and just
35:10
just greed and thievery and
35:12
and just malice man i think this is a
35:15
little bit
35:16
different and i think too that the fed
35:18
jumped in
35:19
and jumped two trillion dollars into the
35:21
market before everything which
35:23
that's a different topic yeah we could
35:26
all be down there because
35:28
we did yeah
35:43
just make sure it's better than the
35:44
first one but it can't it can't be any
35:45
worse damn
35:46
all right so it's sheer thievery i mean
35:49
and
35:50
you know my company listen i benefited
35:52
from it you know what i mean i'm
35:53
you know we we we we got a few thousand
35:55
dollars to carry our assistant through
35:57
and
35:58
and i appreciate it it really helps you
35:59
know i mean because maybe we wouldn't
36:01
have been able to
36:02
not necessarily wouldn't be able to but
36:04
it would have been a decision for us
36:05
whether we wanted to
36:06
keep paying our assistant or not you
36:08
know
36:09
um but man there's a lot of people man
36:12
just totally taking advantage of it and
36:14
there's no possible way
36:16
you could ever audit two trillion
36:18
dollars
36:19
no and then and then within all this
36:22
chaos remember
36:24
they they uh they fired the only guy who
36:26
was supposed to be yeah
36:27
all right let's let's stay focused let's
36:29
stay focused yeah let's bring it back
36:30
all right say i know we love to talk
36:32
about it but let's
36:33
let's stay a little focused i want to
36:34
kind of get back to you so uh
36:36
gene if you can think about uh a
36:38
billboard or an ad
36:40
that's that that has a saying that
36:42
signifies your belief system
36:44
what would that say and why oh brother
36:50
i'm gonna have to pass i just can't
36:51
think you can't take that all right all
36:53
right all right
36:54
i'll let you go next time be ready next
36:56
time
36:57
i'm going to give you that the one
36:58
business philosophy that we do
37:00
and it's just too it's too long for a
37:02
for a billboard but one thing that that
37:04
andrew and i do is we we try and run our
37:06
business
37:07
against the seven deadly sins right so
37:10
it's all based upon relationships and so
37:12
one of us are when we're doing great
37:14
greed or anger or slothfulness or lust
37:17
or
37:17
any of that kind of stuff we try and
37:19
check ourselves when we're making our
37:20
decisions
37:21
to not make any decisions based upon the
37:23
seven deadly sins okay because we all
37:25
we all you know what i'm saying for you
37:27
with hip-hop check yourself before you
37:29
wreck yourself
37:29
yeah that's not right
37:34
there you go i think that got it yeah
37:36
there you go okay perfect
37:38
okay we'll fit that on a billboard that
37:40
actually yeah there you go there you go
37:42
jean schroeder man it was a pleasure
37:43
having you on disruption now man don't
37:45
make yourself a stranger man it's been a
37:46
great conversation i'd love to have you
37:48
back
37:51
[Music]