As you may know, I put my daughter into college last week. Exciting and anxious times.
Anxious because of her belief that college was her only entry to success in today’s world. An ingrained belief system (from high school) that her choice of college would dictate the rest of her life.
Total nonsense and way too much pressure to place on a 17 year old. Here’s what I’m teaching her…
I attended 3 universities and received advanced degrees. Six years of hard work.
Twenty five years later, let me tell you what I’ve learned.
Financial freedom has little to do with college. Very little.
Don’t believe me? Ask Bill Gates of Microsoft. Ask Michael Dell of Dell Computer. They both dropped out of college to start their own businesses. And they are now worth a zillion dollars or so…
Yes, college teaches students how to think and live independently. Very important skills. But college’s main mission is to create good employees. E-M-P-L-O-Y-E-E-S.
I sat at the university last week with my daughter listening to them brag about their Career Services Center and I cringed. Literally. That is not the type of belief system that I want my daughter to fall vicitm to.
Don’t get me wrong. I obviously don’t fault the university. It’s the same path I went thru 25 years ago. They are following the charter of every other university in the nation.
BUT… I am continuously reminding my daughter that she is not limited to the traditional employee career tracks that the college will promote. She can do anything she wants with her life. And I am nudging her to the entrepreneurial path.
I guess my teaching is starting to pay off because she is considering majoring in business and minoring in entrepreneurship. Atta girl!
As we approach this Labor Day Weekend, the excitement builds over the fact that employers give their employees permission to take an extra day off.
Wouldn’t it be better to not have to be given permission?
Why couldn’t you choose your own 3 day weekends? How about every weekend?
In my opinion, that’s one of the joys of being an entrepreneur. More responsibility and more freedom. Now there’s an interesting combination.
And if you are considering entrepreneurship, consider big ticket apartment deals that you can do on a part-time basis.
Here’s my challenge to you. Make this your last Labor Day Weekend – the last Labor Day weekend where you need someone else’s permission to take Monday off.
Challenge yourself to show up and create your own financial freedom. Create a lifestyle where you choose your own Labor Day weekends.
It’s time that you showed up. For you and your family.
Be safe this weekend.
Lance
As you begin investigating the ins and outs of multifamily properties, you’ll hear terms such as “Class C Property.” Don’t let the terms make you nervous. Once you understand these terms, they will help you to understand a property’s assets and make quick decisions. Below you’ll find a guide to property classes and what they mean for you as an investor.
Class A: Class A properties are new, upscale apartment buildings. Average rents are high, and they are generally located in desirable areas. Class A properties have the highest valuations per door and the lowest market cap rates. Their main attraction is their area appreciation.
Class B: Class B properties are usually around 10-15 years old. They’re well-kept and have middle class tenants. They will have cap rates higher than Class A but lower than Class C properties. However, they are primarily appreciation, rather than cash flow, vehicles.
Class C: Class C properties generally have blue-collar and low to moderate income tenants. The buildings are 30-40 years old, and the rents are low. Class C buildings are very attractive to cash flow investors because they offer the best cash flow – compared to Class A and Class B. And they can be the first to appreciate in a rising market.
Class D: Class D properties are in shady parts of town. The neighborhoods feel like war zones and are plagued with violence. Class D properties can be cash flow machines, but they don’t appreciate because of their condition and where they are located. Owners of Class D properties have to spend more money on management and security.
These class distinctions are part of the vernacular; they’re not set rules used by appraisers or banks. Investors use them as a way to immediately understand the state of properties.
Class C properties are the bread and butter of the apartment industry for the cash flow investor. The best deals occur when an investor finds a Class C property in a Class B area and makes improvements to it. Likewise, finding a Class D property in a Class C area and repositioning it to generate more income through higher occupancy or increased rents can reap great rewards in equity.
Here’s another “Aha Moment” from one of my classes. This student has realized how simple it is to determine whether or not a multifamily property is worth buying.
“Being able to immediately identify the averages you gave us is powerful, being able to figure out on the back of an envelope whether or not you should move forward with a deal only has to take a few minutes.”
You can have this knowledge, too, and it will jump start your apartment real estate business.
I love it when my students have “Aha Moments,” when they understand a new skill for the first time or put together the pieces of the system.
I’ll paraphrase the student in this video. She says, “After flipping houses and looking at comps. . .the neatest thing for me was that all we need to know is the NOI to figure out the value of a place.”
In the previous 2 excerpts to the story, I outlined the analogy of my Hawaiian mountain hike to the journey of the successful apartment entrepreneur.
Taking 1 step at a time and refusing to succumb to our Little Voice, we reach our goals.
And in this video, you can see the view from the top of the peak. The goal was reached.
I reached the highest point – the location of the central cell phone tower for the entire island.
And the view was spectacular. In this video, you can see – like I did – both the windward and leeward sides of the island and you can see the accompanying peaks and the journey traveled.
One of my mentors taught me something that has always resonated with me.
He taught me, “The benefit in setting a goal is not in reaching it. Rather, your benefit is the person you become in achieving the goal.”
And that is so true.
Real estate entrepreneurship is about overcoming obstacles for the person we become in the process. Because once we reach one goal, we are prepared for even higher goals – with the confidence that we can reach it.
It all starts with a conditioned mindset for success. Conditioning for which we are responsible in pursuing.
Apartments are simple but not necessarily easy. There are challenges. There are problems. If there were no problems, there wouldn’t be any motivated sellers.
Think about it. The problem with most apartments is not the property. It’s the ownership. Specifically, limitations in the mindset of the owner.
And so to be successful in this business, we simply need a mindset that is bigger than the mindset which created the problem - or which can’t correct it.
Done your daily mindset routine today?
If not, I urge you to do it today. And to continue it on a daily basis.
For more information on boosting your apartment mindset, see the Resources Box to the right.
Aloha,
Lance
When we last met in Part 1, I shared how my family’s hike in the mountains of Oahu was a life lesson in apartment entrepreneurship…
The lure of the start, the attraction of the goal and the challenges encountered along the way.
And despite the challenges: the heat, the increasing grade, we progressed 1 step at a time. One Step at a Time – just like in apartment entrepreneurship.
Up to this point, the trail had degraded from pavement to gravel to dirt along a narrow ridge.
Guess what, when we reached the base of the summit to the top, the trail further degraded to a steep slope with a rope as a climbing aid. That’s right, the last 100 yards was with the aid of a rope.
Winded by this point and with water practically gone, it was certainly a gut-check.
And this is the point, where most of the remainder of real estate entrepreneurs on the path to the summit succumb to their Little Voice and exclaim, “This is too much. This is too dangerous. I am turning back.”
They give up at the last 100 yards. They make it so far – only to quit when the pressure is applied. They succumb to the Little Voice.
You see, most people FAIL to complete what they start. For a myriad of reasons – distractions, challenges, even fear of success. “If I get to the top, will I be able to get back down?”
Think about it, in retrospect those are really silly reasons to miss the goal.
After all, the fact that there is a trail means that others have been before us. We really have it easy. We didn’t have to blaze any trails.
The fact that there is a rope proves that others have made it to the top. Otherwise, how would anyone have placed the rope up there?
All we have to do is follow the trail blazed by others and use the guides and resources provided by others.
After all, that is the role of the real estate entrepreneur – to live the entrepreneur’s vision, using the time, talent and resources of others. Just like others had used their time, talent and resources to blaze this trail for us.
This video shows me within 50 yards of the summit, after traversing the rope portion of the climb. Unbeknownst to me, the rope portion was not that long. It was just taking on the unknown.
When I first reached the ropes and the steep incline, my Little Voice was certainly talking, giving me all of the reasons to turn back, “This is good enough. That rope looks dangerous. What if you fall?”
But my response was this, “I complete what I start. I didn’t come all these miles up the trail to stop short 100 yards of the goal. I’m going for the top!”
Now this peak is no Mount Everest but it might as well be if we allow our Little Voice to internally create a Mount Everest out of a simple mountain hike.
And that is what happens to most real estate entrepreneurs. For lack of a properly conditioned mindset to combat the Little Voice that wants us to be content with the status quo.
It all starts with desire. And then progresses 1 step at a time. And then culminates with a determination to act in spite of fear and to insist that we complete what we start.
I have learned that when we act in faith – and take that first step – and then continue step by step, the universe will present us with what we need, when we need it.
Just like the rope was there when I needed it.
This story and lesson concludes with Part 3.
Aloha,
Lancce
One of my core beliefs is that “Everything happens for a reason and it serves me.”
As a result, I tend to find metaphors and lessons in everything. Everything.
On a recent vacation to Hawaii, I found yet another lesson relevant to apartment entrepreneurship. This time it came in the act of hiking the mountains.
The goal was the peak of the highest point of the mountain ridge of Oahu.
Occupied by a cell phone tower which services the island, this peak offered a view of the ever-reaching Pacific on both sides of the island – windward and leeward. Certainly a goal worthy of achievement.
The hike was very akin to the journey of real estate entrepreneurship. The trail started off looking very easy. In fact, the entrance to the trail was actually paved for the first 200 yards – the lure to enticing the mildly interested.
“No problem“, says the Little Voice. “This can’t be too tough.”
After the first 200 yards, the pavement turned to gravel and the grade increased. Not enough of a challenge to turn anyone back but now the Little Voice starts to inquire about the real intent here… “Hey, just how long is this journey anyway?”
And of course, the goal – the summit – could not be seen. And the length of the journey was unknown. But we progressed on.
On the way up, we encountered people who were on the way back from the top. When asked if they made it, some said “Yes” and some said, “Not quite”.
But we continued.
As the grade increased, ultimately the gravel gave way to dirt. The heat and the challenge started the Little Voice to chattering a little louder, “How long is this going to take? What if we don’t have enough water?”
And this is where the mindset training comes into play.
You see, my wife is not much of a hiker but she believes in me and was open to coaching. So to counter her Little Voice, I told her, “Honey, just take it 1 step at a time. You can do anything 1 step at a time.” And so she continued.
When the goal finally made itself visible – the cell phone tower at a distant height – the Litte Voice started screaming, “Hey, no one told us it was it was going to be this far. Our water is really getting low. It’s getting hotter out here. Wouldn’t it be nice sitting by the pool instead? This is good enough.”
But we continued 1 step at a time.
This journey to the top of the mountain is just like starting your new real estate business. Discovering the challenges that were not mentioned in the sales pitch. All that was told was the beautiful view at the top and they showed photos of the paved trail at the entrance.
Many – correction, most – turn back with the first obstacle. They succumb to the Little Voice. Those 5%, with the proper mindset conditioning, progress – 1 step at a time.
Living in the moment and acting in faith.
In the above video, you can see my family spread along the trail – with the summit in site. This is after probably 2 miles of hiking. And I pan back to show the origin of the journey.
Taking 1 step at a time.
This story continues in Part 2.
Aloha,
Lance
Comments from Students Gordon & Penny Jones:
“We are here in Dallas attending Lance Edwards’ Multifamily Seminar and we’re having a blast!”
“It’s been a great eye-opening experience for me in turns of learning some of the mechanics, and the skillsets as well as the mindset of becoming a Multifamily Millionaire. Theres been a lot of ‘Aha’ moments.”
“I know that we can do it.”
Gordon & Penny Jones
Houston, TX
Comments from Student Curtis Minor:
“Lance has presented this information in a form that anyone can understand. It allows you to go out and make deals almost instantly. The biggest thing that I’ve gathered from this is that the Mindset to do these deals is definitely within your reach. ”
“I would recommend to anyone who wants to get into Multifamily Investing to definitely check out Lance’s Program. Join us here at the next seminar… if there is one in your area I would definitely suggest that you do attend. You won’t regret it. I think it is the best investment that you could make for your career and for your future.”
Curtis Minor
Westchester, CA
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