Air Date: 07.21.2021
Steven Pesavento knows how damaging financial struggles can be, and from a very young age he decided he was going to do everything he could to ensure that was not a part of his future. Although he was determined, his limiting beliefs (which most listeners are likely to resonate with) led him down a path that was stable but unfulfilling, and he had to change his mindset in order to pursue his passion; real estate investing. Since doing so, he has seen enormous success with his company, VonFinch Capital, and his podcast, The Investor Mindset. In today’s episode he talks us through his inspiring journey and we discuss three vital factors which Steven believes are instrumental in determining whether or not we will succeed; our mindset, our purpose, and the people we surround ourselves with. Along with the sound advice he offers during the show, Steven also shares where you can access the various very useful online resources he has developed.
Key Points From This Episode:
- Limiting beliefs that Steven had before he began his real estate journey.
- Experiences Steven had as a child that drove him to make money from a young age.
- Dissatisfaction Steven felt with the original career path he chose, and his head-first entry into the real estate world.
- Steven’s definition of mindset, and why this plays such a major role in determining a person’s success.
- Why Steven believes so strongly in the value of community, and learning from others.
- The importance of attaching purpose to your actions.
- Realizations that Steven had while he was working in the single family space, and why these motivated him to pivot to multifamily.
- Who Steven’s ideal kind of clients are.
- Parallels between Kent and Steven’s career trajectory.
- How Steven decides which partners he is going to bring on board.
- Steven shares where you can access resources that will be of great help to you as a real estate investor, or an aspiring one.
“When I was a kid growing up, I was surrounded by two amazing, loving parents but the thing that always caused the most pain was money.” — StevenPesavento [0:03:18]
“Mindset is, by my definition, the thoughts and beliefs that directly lead to the actions that you take in your life and therefore, the outcomes you experience.” — StevenPesavento [0:06:59]
“That first investment’s always hard because there’s so much unknown but sometimes we just have to leap, we have to make that decision, and we just have to go forward.” — StevenPesavento [0:11:31]
“When we understand what we want and then we can combine that with why we want it, it ends up creating fuel so that every single day for years and years, we can go on that path.” — StevenPesavento [0:14:32]
“The more money that I can create, and the more money I can create for my clients, the more impact that I can create in the world.” — StevenPesavento [0:22:01]
Links Mentioned in Today’s Episode:
The Ultimate Guide to Passive Investing
The ABC’s of Real Estate Investing
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—Full Transcript Below—
“I can remember walking in the kitchen, seeing my dad crying, once again, about all the things that were connected to money and I decided then and there I was going to be rich, that I was not going to have money be a problem for me. And I’ve set out to do anything that I could to make a buck, from selling paintball gear online to hustling any way I could, selling booze out of my trunk in high school, things I was very good at but may not have been the right way to go about creating that money. But it was when I got into management consulting that I thought, “Well hey, I’m taking the traditional path, I went to university, I’m making more money than my parents have ever made, I’m still not happy.” It didn’t solve all the problems.”
[0:00:44.0] KR: Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies, and tools, and I break down the insights into practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Kent Ritter.
[0:01:08.6] KR: Hello, fellow investors, welcome to another episode of Ritter on Real Estate, where we teach you how to passively invest like a pro. Today, my guest is Steven Pesavento and Steven is the managing partner of VonFinch Capital. He has been investing full-time since 2016 and he’s completed over 200 transactions, renovated nearly 100 houses and transacted over 26 million in residential investment real estate. Steven’s also the host of the top-ranked podcast, The Investor Mindset, where he interviews some of the smartest investing minds and authors.
Steven, thanks for being here today.
[0:01:44.8] SP: Thanks for having me, super excited to be here with you and with your audience. I love what you’re doing my friend.
[0:01:50.5] KR: Yeah man, so excited to dig in. Steven and I have known each other for a little while. I know we met on the conference circuit and have stayed in touch, it’s awesome to see the platform grow and the success of your podcast. Before we dig into everything, why don’t you give people a little more background, tell us how you got to where you are today?
[0:02:10.9] SP: Yeah, my story is very similar to a lot of other folks. I had caught that real estate bug early. When I was a kid, I can remember I wanted to be two things growing up, I either wanted to be a chef like Emeril Lagasse or I wanted to renovate property like Bob Bila. To be honest, all that HDTV definitely paid off because eventually, I entered the space in the single-family world and I quickly flipped over 200 houses in two and a half years and you know, 75 houses that first year and had quite a bit of success.
But it didn’t start out from that place. It started out from a place of having a lot of fear and disbelief and that lack of confidence that, “Oh, this is something I can actually do,” and it’s that same set of limiting beliefs that so many people experience when they want to move into real estate, when they want to really do anything in their life.
That’s the reason why I was no different. I read Rich Dad Poor Dad at 17 and it was 10 years later before I actually had that first property under my belt. I started a career in management consulting and I worked in that space. What I found was, when I was a kid growing up, I was surrounded by two amazing, loving parents but the thing that always caused the most pain was money.
I can remember walking in the kitchen, seeing my dad crying, once again, about all the things that were connected to money and I decided then and there I was going to be rich, that I was not going to have money be a problem for me. And I’ve set out to do anything that I could to make a buck, from selling paintball gear online to hustling any way I could, selling booze out of my trunk in high school. Things I was very good at but may not have been the right way to go about creating that money but it was when I got into management consulting that I thought, “Well hey, I’m taking the traditional path, I went to university, I’m making more money than my parents have ever made, I’m still not happy.” It didn’t solve all the problems.
It was pretty much right then and there that I realized like, “I need to work on myself. I need to work on my mindset, on the thoughts and beliefs,” and then that set me out on this path to go find passionate work, to find something in a group of people in an industry that had all of these things that I was excited about yet still had that possibility to make money. That’s really where I eventually made my way into real estate.
It was truly because after all of these years of having those fears and beliefs, “I don’t have enough money, I don’t have enough experience or I don’t have the family connections or I don’t know anybody who is in real estate,” I hit a point of thresholds where I had gotten clear enough about what I wanted and I can remember exactly where I was and I jumped up and I decided I’m pushing all into real estate and for me, I’m a “burn the boats” kind of guy.
I had to – I fired all my clients that I was working with at the time and I went head first into real estate in that first year, we did over 75 deals, and it was all because all those things that I just mentioned, all of them ended up leading up to that moment of deciding that this is something that I must do.
Many of us get to that point and unfortunately, many people don’t. They never hit that place of pain or threshold or desire or want, but for me, that’s where it was and that’s how I ended up jumping in and obviously my real estate career has changed quite a bit from flipping houses but it’s gotta start somewhere.
[0:05:42.7] KR: It’s an awesome story and just – it mirrors mine so closely, even the management consulting background, and maybe that’s why I appreciate it but I love the idea of the limiting beliefs, right? Because, I don’t love my limiting beliefs but I like how you brought that up because everybody goes through that, right?
When you want to make a big change or when you really want to set out to do something that you maybe don’t believe you can actually do at the beginning, right? I mean, I went through very similar feelings, changing careers to real estate like you talked about and also, when I was looking to start to build out my platform and my podcast and this idea of, “Well, who am I and what do I have to share and can I bring value in these ideas?”
Yeah, I mean, those are things that, man, I can’t imagine – I’m a year in now to this show and I’ve got great guests like you on, I can’t imagine now looking back and I’m not doing it but that almost happened, right? Those beliefs almost got in the way and it took a great network and some mentors and things to help me push through that but, I mean, I think, everything starts with mindset, right? Everything starts with just, what’s up in your head and you’ve got to get clear on what’s in your head before you can really take action, right?
[0:06:53.9] SP: It’s so absolutely true and those beliefs, it’s the operating system of our mind, right? Mindset is, by my definition, the thoughts and beliefs that directly lead to the actions that you take in your life and therefore, the outcomes you experience.
If you want to make a change, if you can change those thoughts and those beliefs, the way that you think, you can then change the action that you’re taking and essentially change your life, what’s showing up, your business, your relationships, all of these things. I’ve set out and dedicated a large part of my life to understanding how successful people think because once we can start to be able to model those thoughts and beliefs, once somebody can take a listen to this interview, they can come and join on The Investor Mindset Podcast where I talk about this kind of stuff all the time.
They can dive in to understand, “Well, how does that successful operator think? How does that successful researcher, that leader, think? What are those thoughts and beliefs that are going through their head and how is that actually directly leading to the success that they’re experiencing?”
Because so often, more times than not, I work with a number of clients one-on-one, we have a great mentorship program with a partner of mine, Reed Goossens, called Multifamily MBA but it’s – what’s incredible is when we’re working with people, so many people come and they’re always looking for that tactic, they’re always looking for that strategy. “Well, how can I find that deal? What’s the specific thing that I could do to be able to go in and make that happen?” Yes, those are absolutely critical.
But oftentimes, more than not, it actually starts with getting those thoughts and beliefs in line with getting first clear on what it is that you really want. What is it that is so important and then understanding who can help get you there is one of those lessons that I’ve learned over time because if somebody else has already been down this path so many times before, well, why should I go try to hack my way through the forest? Why not just figure out, “Well, what is the map, how can I specifically get where I want to go?” and be able to follow in their footsteps?
That’s one of the things that made a huge difference for me because I had these beliefs, right? I mean, I read Rich Dad Poor Dad early. That set in an idea of a different way of thinking, a different way of life. That idea continued to build over years but it took a long time until I eventually, when I made that decision, the first action that I took was I got into community.
I went to my very first real estate investor event, it was an event out in Southern California called FIBI, For Investors By Investors, and what’s so interesting about that experience was that I went to this place because I knew, “These people are doing what I want to do. If I can just get around them then this motivation, this energy that I have, this belief that it’s possible can be reinforced.” Because what you essentially need to do, whatever it is in your life, you need to get around other people who are doing it so you can start adapting and borrowing their belief as I call it and you can borrow their belief because you see them doing it.
You end up taking on their confidence but then when you actually experience it, you see those changes really happen. I think that’s kind of the key thing. We obviously met at a phenomenal conference, Best Ever Conference, big shout out. I think it’s one of the better events that happens every year for high level multi-family investors. What’s so cool about that is that we have an opportunity to get in community with all of these people. People who are at the highest level, people who are on the up and coming and each time we have that interaction, we get to exchange these thoughts and ideas and we end up being able to elevate ourself to another level.
I think it’s just such a good reminder that we don’t have to do this alone and that everyone has these fears and beliefs but it really comes down to making that decision and figuring out who can help make that happen. That’s true for all of the active investors and operators out there, people who have been doing this for a decade, you still have an opportunity to learn and grow, even from the young guys and from the older guys that have more experience than you.
Especially for those younger operators, it’s key, but it’s so true for passive investors as well because believe me, I speak to passive investors every single day with VonFinch Capital. You know, we invest in institutional grade multi-family and we have big deals and big raises and part of my work is actually talking with folks and helping them get clear in what they want so they can decide if it’s the right fit to invest. That’s one of the big things they get caught up on is that fear.
Getting clear allows them to overcome that fear and then it really takes that decision to move forward. And once someone’s invested a few times, it’s easy for them to decide again but that first investment’s always hard because there’s so much unknown but sometimes we just have to leap, we have to make that decision, and we just have to go forward.
[0:11:38.5] KR: I think you made a ton of good points there. Obviously, mindset is where it all starts. This idea of community and being able to use that as a tool, I think to change your mindset, I think is a really great tactic that you brought up of getting around people that are doing what you want to do is such a powerful motivator and just showing the path and that you can get there.
I think that’s a great tactic for people and I agree that even if you’re a passive investor, I mean, we talk about it on the show all the time, it’s not a passive activity, right? You need to be educating yourself to be able to make good investing decisions. I think those type of networking events and podcasts and other things are a great way to do that, right? Great tip.
One thing before we switch off of mindset is something that I think about a good amount is, you brought it up, it’s this idea of, it seems to me like if you change your mindset and you get clear on what you want, you have these goals and these ideas, then that clarity helps propel you forward. Helps propel you and helps you keep going. As you get months down the line, it’s easy when you first have the idea, but as you get kind of months, even years down the line, there’s this idea versus the idea of willpower. Which is how I think a lot of people approach things, which I think is more of like a pull, you’re kind of pulling yourself along, dragging yourself along and your willpower can only hold out for so long, right?
What’s the difference there of someone that’s being driven, just purely by sheer willpower versus somebody who seems to be effortlessly moving on this path? You understand what I’m saying in that question? It just seems like two different ways of getting to the same point.
[0:13:17.2] SP: Well, I think it’s so – it’s such a good point, I’m glad we have an opportunity to underline it here. I just want to point you guys, what we’ve talked about so far is three out of the five success principles that I’ve discovered after interviewing hundreds of successful investors on the Investor Mindset Show and in real life.
I encourage you guys, if you like what we’re talking about, go grab this free guide we put together. It’s called the Five Success Principles of a Successful Investor, you can grab it at the investormindset.com/principles and I’m sure we’ll include that in the show notes so investormindset.com/principles.
One of the third, that we haven’t talked about yet, one of the third important principles, is getting clear on your purpose. We call that the “why,” right? You can go forward with that drive and that grit and that willpower to go and make things happen in your life, right?
It’s definitely been a big driver for me, a guy like you, I know that’s true and for a lot of us, for entrepreneurs, for people who are going out there, and we are just grinding, we’ve had to self-motivate ourself from day one. We’ve had to push ourselves and that’s what’s allowed us to have success.
When we can actually get so clear on what that purpose is, right? When we understand what we want and then we can combine that with why we want it, it ends up creating fuel so that every single day for years and years, we can go on that path. Because one of the biggest challenges that people face is that they’re excited in the moment, but then they get punched in the face by reality and it hurts. Reality hurts. Sometimes things take years or decades longer than we thought they were going to take but when we know why we want it, when we know why that is a must, why that’s so important, why that’s going to change our life, why it’s going to impact our future family’s life, why it’s going to impact our community, whatever that reason or that purpose is, and the more connected you can make that to real people in your life and in the community, you’re going to end up having so much more drive, right?
Willpower is what gets the engine started, it’s that pull crank on the engine. When you’re deciding to get something going, you’re going to need that willpower to get that momentum alive but once you’ve got it, you’ve gotta really tap into that purpose because when you’ve got that purpose and you combine this with the other five success principles which we’ve talked about three of them so far, when you combine that all together, it ends up giving you this massive fuel to just keep going, right?
Because one of the big things that people end up facing, and it goes back to that getting clear, is they’re going in so many different directions, that that momentum’s not pulling them along continuously, it’s actually pulling them away from where they actually want to go. They’re not sure exactly what to focus on.
When you get clear on what you want, why you’re investing, why you want to do this, you understand who is going to help get you there, the rest becomes easy because the how is just a simple, “We’re going to try this, cool. That didn’t work, we’re going to try this, cool. That didn’t work. We’re going to try this, oh cool, we have a 10-million-dollar company, let’s try something new.” That’s the process of success and it’s really, it all starts out with those key principles.
[0:16:31.1] KR: I love how you framed that up, the idea of these five success principles, that’s great, and we’ll definitely link that in the show notes for people to check out. Switching gears a little bit, I know you’ve made this transition from single-family, where you started your career kind of flipping and doing these transactions to now moving into multi-family. I guess, why leave the successful business to kind of pivot and focus in this new area. What was the driver?
[0:16:59.1] SP: You know, it’s so funny, it’s like, you go through these processes, you talk about the stuff that I’m talking about here. You might not want to do it but you absolutely need to do it, it will change your whole life because you might not want to do it because also when you realize, “Well shoot, I was working without clarity, even though I know this is important and now I’m going to end up going in a totally different direction because now I’m even more clear on what is important, I have new information, I’ve had experiences in life.”
And I realized that the business that I was building was not the business that I wanted to run in 20 years. Imagine this, you’ve built a company that is built around systems and processes and people and you’re going out and you’re buying five to seven houses every single month in two different markets. These are 200 to $400,000 houses, they’re not $50,000 houses in the middle of the country, right? They’re beautiful places and we’re going through the process and we’re renovating those houses and you know, we’re rocking and rolling this business. We’re making good money and we’ve got a high-volume operation going. Imagine that you’re spending all of this money, one, to get a customer and then two, that customer is only going to buy from you once because people only sell their house for 70 cents on the dollar one time, maybe twice. But it’s mostly a one-time sale.
The third thing was that I realized that the people that I’m working with, though I’m making a massive impact in their life, though many are very grateful for that effort and work that we’re able to provide to them, what I realized was that their mindset was not in the same place that I – with the type of customer client that I wanted to be working with every single day.
They were in survival mode, “How can I figure out this thing right now and I don’t care about creating a better vision of the future?” What I realized was that these are not the clients that I want to work with for the next 20 or 30 years. It’s nothing bad about the industry, I absolutely love it, it’s a phenomenal way to get started. And the barrier to entry is low, so anybody can really get started in single-family. Maybe not everybody has the same ability to go and do 75 houses a year and do it consistently but when I was in that moment, I remember I was sitting at an event and I was going through this process and it just dawned on me and I said, “Oh I’m going to have to change some things.” And I went through my business and I started making some tweaks and changes, trying to work on optimizing the business that I have, the business that I have been running.
What I ended up realizing was in this process I started searching for a better answer, which is exactly where we all have to go when we want to make some kind of change or improve our life. And in that process I knew, “Okay, well these are the things that I love about this business and these are the things that I don’t.” And one of the things that I didn’t like is that I had built a scaled business but I had hit kind of a threshold on the ability to scale further, and living out of state the entire time that I have been investing, one of the biggest challenges when you are buying a single family home, it takes a lot of effort and work to look at that individual property but I can’t fly in for every single visit. I have to really trust all of my team 100% and I can’t verify on a consistent basis, so it just ends up leading to a lot more risk.
When I ended up seeing some of the benefits of multi-family apartments, it ended up changing my whole view on things. And it goes back to an earlier discussion where we were talking about beliefs. I remember reading The ABCs of Real Estate Investing by Ken McElroy, before I started flipping houses that first year, when I had had read 60, 70 books that first year and I remember thinking to myself, “I want to do this,” but I had that same thought, “I can’t do this, I don’t have enough experience, I don’t have enough money, I don’t have enough connections,” and even though I had overcome it once, that same thought and belief popped into my head there but I realized that, “Oh, well now is the time. I can do that. There’s no limits other than the limits that I create for myself.”
And so I went out on this path specifically with the intent of building a business around my ideal client, around people who are already successful like me, or are really committed to finding success and making their life better, people who are making a great income in their life and they are looking to create more freedom, flexibility, and fun in their life. And then third, and this is really important for the people that I work with, for the people who invest with me, the people who work one-on-one with us or in a mentorship capacity, people who are committed towards growing their mindset, growing their life, creating a better future, a better vision of the future.
So those three things are really all about the ideal client and it really came down to, “How do I build a business around people that I am excited to work with every single day and that is going to be able to create a massive impact and of course, make a lot of money?” Because that impact is directly connected with money.
Money, to me, even though it started from a place of survival, it’s come to a place where it’s a tool, and I know that if I can make a million dollars, 10 million dollars, 100 million dollars, whatever that might be, the more money that I can create, and the more money I can create for my clients, the more impact that I can create in the world. I set out on this journey to start transitioning into this space and it was tough because when you go from being one of the fastest growing companies within your community that you’re growing within, and you’re kind of like that wonder boy, like you are going out and you’re doing these cool things and things are exciting and your ego is definitely getting to you, but then you take a step back and you take a step down. You are at the top of the mountain but you realize that the actual mountain you need to climb is over there, so. “Now I actually need to start heading down into that ravine so that I can start going up to the other side.”
But I knew, because I got super clear on what I wanted and why it was important, that that journey was no problem. You know it takes time to get to the other side, then you end up building the kind of company we have today.
[0:22:54.6] KR: Well, I think it’s a really fascinating story and obviously you’re practicing what you preach, so I love seeing that in practice. And this idea of being okay taking a step backward to take two steps forward because you’re confident in where you wanted to go because you had such a clear vision to get there. I think that would be a really tough decision to make so that’s awesome. I love hearing that story. I hope that’s inspiring to others too.
[0:23:19.3] SP: You’ve gone through some of those things yourself, haven’t you?
[0:23:22.2] KR: Yeah, absolutely. I mean, my situation was actually owning a management consulting business and then deciding to, for reasons mainly around lifestyle and wanting to be around my family and not travel as much, you know, pivoting into another career. I kind of again, yeah, you’re at the top of your game and then you decide to pivot and you gotta start over again and so yeah, I’ve gone through it but I think the way you articulate it around that need for clarity and really understanding that why.
I mean I had a really strong why, it was my family, and what you’ve outlined I think is dead on of what you have to do to be able to do that, so I think that’s great.
[0:24:01.8] SP: It was so worth it to do that even though it was scary and even though you had to take that step down, now you’re in a place, I can even just tell just based on the conversations we have, and listening to the show, that your life is so much better and so for all of those people who are listening and they are thinking like, “I want to make a transition but I’m afraid. I’m afraid because I’ve got this family, I can’t leave. I can’t start going in multi-family.” Well, that’s exactly the reason you need to. So whatever that fear is you just flip it and then you kind of go after the same way Kent has.
[0:24:31.3] KR: Yeah, no I appreciate that. Yeah, I don’t talk about all that too, too often but I think you’re exactly right. I mean, you’re exactly right. You flip that around and use that fear as fuel. It’s like now I look at things and I say, “Man, yeah that really kind of scares me like in my gut,” and I’m like, “Well, I really need to do that. That means I need to do it. I need to go after it. It means I’m stepping out of my comfort zone.”
If you are not regularly stepping out of your comfort zone, you’re not growing. So now, you’re exactly right. I kind of look for those gut check moments and say, “Okay maybe this means I’m on the right path. This is something I need to pursue and go after,” so yeah, you’re absolutely right. That’s cool, I hadn’t thought about that really.
You’ve come into multi-family now and you’re developing and I know in your model and your business, you’re developing partnerships with good operators, right? I just wanted to touch on quickly because I think a lot of people out there, a lot of my listeners are looking to invest and are trying to vet sponsors and operators, so what is it that you’re looking for as you’re picking your partners that can maybe help others look in the same way?
[0:25:39.2] SP: It’s such an important question and, you know, at VonFinch, what we really are focused on is, how do we go and find really amazing deals and then how do we bring the capital that we have together with great operators to execute? How can we hire an operator on behalf, how can we partner with an operator who’s got 10 plus years of experience, a well-oiled track record in that market and then how can they execute on behalf of VonFinch and on behalf of our investors to go and create the type of returns that we’re projecting in our underwriting?
It really does come down to doing that due diligence upfront, and it’s really important to get really clear on what is critical to you. So for us, we’re looking for operators that have at least 2,500 units within their portfolio that they have owned, managed and/or sold. If they’ve had an opportunity to exit a property, that is a huge plus, and that moves them up the ladder and we’re often looking for people who have a decade of experience.
Now, that is somewhat flexible because it is a relationship-based business. We are looking for people who have been able to have that proven track record and they can prove it in other ways beyond being in the industry for so many years. But at the core for us, it really comes down to knowing that they are a true expert in that market that they are buying property in and that that expertise is going to allow us to more confidently close, operate, and then eventually sell that property for a profit so that our investors are really covered.
Because we’d be happy to go out and find a property, we’re happy to go and bring capital to the table to be able to make that happen and I am sure we’re very capable of operating but as somebody who has operated a lot of projects, partnering with experts has always been a part of my philosophy, you know? The 200 plus deals that we bought, the 75 houses in my first year, I partnered with an expert operator, somebody who flipped hundreds of houses and built hundreds of houses.
He had never built or done that at that kind of volume that we did. Once we partnered together, we were able to go much further, much faster in a much more effective way, and so that’s what we really looked for. And so what I’d recommend towards investors that are listening and they’re thinking, “Hey, I want to go vet an operator myself.” Well, one, you have to recognize how much capital you’re bringing to the table and then you have to adjust based on how much capital you’re bringing to the table, how much information you should expect or ask from that operator.
If you’re writing a $50,000 check, that number or the amount of information or time spent with that operator is probably going to be much lower. If you are writing a million dollar check or a $10 million check, you’re probably going to be able to ask for a lot more. But in that process what we typically look for are some of those experience traits that we talked about. We like to dive into past properties or projects that they’ve purchased and be able to start to compare and contrast, “Well, this is what you had projected and this is what your reports on a quarterly basis are showing, how is that lining up?” Then we run through, we have an institutional underwriter on our team that’s underwritten about six billion dollars of multi-family assets prior to moving out to work on his own, when he was working for a very large firm, and he goes through and dives into the details, the numbers, to really understand, “Hey, does this stuff line up? Are they underwriting conservatively?”
And so as we’re going through this process, what I recommend other people do is definitely ask some questions. What’s important to them, what are their values, how are they underwriting, are they being conservative, is there room left in the deal for additional upside or additional unknowns that might happen along the way?
Do you have a good connection with that person when you listen to them on a podcast or you watch them on a video? Do you feel connected? Do you trust them? Does it feel like they know what they’re talking about? Does it feel like the partners that are making the decisions and the deal feel like they are qualified? I’m not suggesting you make all of your decisions based on feelings but sometimes that feeling can be a good indicator of, “Oh, this is something I probably shouldn’t do.”
When you are in that moment, you have to ask, “Is this fear of making a decision holding me back or is this a feeling that I need to listen to?” We have to be cognizant of that, but all of those things end up making and playing a role in the decision of who to work with and you know for us, we spend a lot of time, many months building these relationships. Most people end up not being a great fit to partner with us for the long term but most of the time when that happens, it’s not because they’re bad people.
It’s just typically, maybe there is a lack of clear, transparent communication, maybe they are not responding quick enough, maybe they say they’re going to do something and they are not doing it. Maybe we don’t feel like they have the capacity to handle the growth that we’re expecting or maybe there is just some value that’s not there. For you as an investor, for those listening I encourage you to get clear on what’s important to you and then go seek out people who have those factors or those values.
[0:30:47.9] KR: Yeah, I love that. You hit on a lot of really good points, I mean including – man, I think from integrity and making sure it aligned with values. I do think that gut check is really important. It’s not the only thing but it definitely – you’ve got to jive with the person and have an understanding that – have a feeling that they have that integrity there, right? Then you talked about all the vetting that you’re doing and I think you’re taking on a lot of that burden for the investors that you bring in, right? You’re doing a lot of that upfront.
If you are coming in as an individual investor I guess either way you got to do that on your own but track record, and then the systems in place to execute and execute over and over again, I think the other thing you said was the relationships, right? For being in that market and being an expert and a lot of that goes in the relationships in that market and the ability to sell and exit successfully, right? I think a lot of good points that you hit on there on things to look for and great tips for our investors.
[0:31:42.3] SP: Just to kind of further that point, I mean, it’s so important to do that due diligence. It’s absolutely critical. Again, if it’s okay if I share a tool with your audience, I put together a tool specifically talking about how do you do that due diligence and it is part of a very comprehensive resource that we call the Passive Investor Playbook and if you guys want to download a copy, it’s totally free. It is about 52 pages where you can just dive right into the section on due diligence to get the information and detail that I was talking about there.
You can grab a copy of that at theinvestormindset.com/passive and you get that Passive Investor Playbook at theinvestormindset.com/passive.
[0:32:20.4] KR: Awesome. Well Steven, fantastic resources for the listeners. We’ll make sure all those are listed below. Thank you for coming on the show and sharing your mindset with us and helping us, hopefully. Just another good example of how you crashed through limiting beliefs with clarity and conviction and so, I hope you have inspired a few more people. Before I let you go, I want to take you through our keys to success round.
I’ve got four questions I want to ask you. First one is, what question should every investor ask their deal sponsor? I know we just covered a little of this but if you only had one.
[0:32:54.1] SP: If I only had one question that somebody should ask their deal sponsor, it should be along the lines of, “What’s most important to you?” Who are they as a person, right? I want to ask a question to understand, what are their values, what do they say their values are but what I’d really want to understand is how do they actually show up in real life? I might phrase that question a different way depending on the conversation.
It’s probably something along the lines of, “Hey, you know, if everything happens to go poorly, talk to me about how you’re going to handle this,” or, “Why is this important to you?” or “Why is this not important to you?” and through those kind of questions, you end up seeing who they really are or how they’re going to show up when things go great or don’t go exactly as planned.
[0:33:40.5] KR: Yeah, I think that’s great. I think that’s great advice. Getting to the why behind what they’re doing, why they’re doing what they’re doing I think is a really good perspective to approach that. What are you most proud of in your career?
[0:33:54.3] SP: I’m most proud of taking action, of being able to overcome that fear and to be able to make a decision to step into being the best person that I could be, both in my business and my personal life and my friendships, to really step up as a go-giver and just to decide that even if I’m afraid of doing something, even if there’s fear there, that I have to do it because that gives me an opportunity to grow and it’s been able to inspire so many other people to take that same action, so I am very, very proud of that and everything that’s come along with it.
[0:34:27.9] KR: That’s awesome man. Yeah, definitely an inspiring story. And what book should everybody read?
[0:34:32.4] SP: Well, there are so many great books. I’ve got two that I have to tell you about but there are probably many others that are at the top of my list. I highly recommend you read the book, The Go-Giver. It is core to my philosophy, core to our values, and it’s really all about the idea of giving first without expectation of receiving, and when you do that consistently throughout relationships, you end up having the world come back to you.
The second book that I highly, highly, highly recommend, it’s a philosophy that I’ve been spouting and evangelizing for many years but it was put into such a great book called Who Not How by Dan Sullivan and Benjamin Hardy. And I highly recommend it. It’s a game changer. It really outlines the idea of why you need to work with experts, why experts are the core to everything and you need to find that who. Who is going to help you get where you want to go in life? I highly recommend it, I’ve read it a few times. It just came out recently. It’s a game changer.
[0:35:29.1] KR: I love it and then lastly, what is your number one key to success?
[0:35:34.2] SP: The number one key to success, I believe for everybody, is get your mindset in the right place. Get those thoughts and beliefs firing and aligned so you can consistently take the action that you want in your life. And it’s a constant process. This morning when I got up I listened to some specific mindset and motivation and some content that’s sharing these thoughts and beliefs with me. It’s the same kind of stuff we talk about in the Investor Mindset but I am listening to it every single day because if I don’t prime my mind for that then some of these other thoughts that maybe aren’t supporting me, they’re are going to bring me down, they are going to take me away from being able to show up as a person and the man that I was born to be, so mindset is core and you got to keep doing it. It is a never-ending process.
[0:36:13.9] KR: Yeah, absolutely. Fantastic advice and I know you’ve given ideas of a couple of resources but if folks want to just reach out to you, if they are interested in investing or what you’re doing on coaching, how can they get a hold of you?
[0:36:25.4] SP: Yeah, absolutely. I mean, great being here with you guys. I want to thank you so much for being a part of this. My biggest recommendation to you guys is that you must have heard something in here that was valuable. There is always at least one valuable thing from every Audible, every audio, every book you read, so what’s that one thing and take action on it and if one of those things is reaching out or connecting with me, you can do that on any social media.
Add me, shoot me a message and let me know that you listened to this show and I’m happy to help connect you. There is someone from my team that will connect with you and be able to point you in the right direction. Obviously, I encourage you guys to listen to The Investor Mindset. If you liked what we talked about here, we talk about it twice a week, every week and we have some incredible guests. I definitely look forward to serving you and hope you guys will check out some of those resources because they will make an impact on your life.
[0:37:14.2] KR: Awesome. Well, thank you Steven. Thank you for sharing so much with us today and giving us a little bit of inspiration and can’t wait to have you on again. Have a good rest of the day my man.
[0:37:23.5] SP: So much fun, we’ll see you soon.
[END OF INTERVIEW]
[0:37:26.0] KR: Thanks for listening to another great episode of Ritter on Real Estate. Hit the subscribe button to make sure you don’t miss out on the content that will make you a better investor. Also, visit kentritter.com for articles, videos and tools curated just for passive investors. Until next time, this is Kent Ritter on Ritter on Real Estate. Now go out and invest like a pro.