Short 15 minute conversation saved a $2.5M Investing Mistake.

I have gone through a bit of a transformation in the last 12 months that I thought would be worthwhile sharing.

While setting up my coaching business, I invested over $150k into courses, coaches, seminars and events.

I was committed to the idea of becoming a coach. I wanted to help professionals and business owners who wanted to invest in commercial real estate, do so safely. And, get paid for this help.

My coaching business never really took off.

I felt the value proposition was strong.

People would ask - how much money do I need? How long will it take? Can you guarantee I'll get a property in X time.

To which I told them the truth.

• It would be hard.
• You're competing with people who do this full time.
• You'll need a min of $250k and more likely $1M.
• I don't know how long it will take to find a property - I did 2 deals last year.

I was attracting people who were already doing well. They earned high 6 & 7 figures. They looked at the coaching pragmatically and decided it was not worth the effort for an uncertain outcome.

(In hindsight, I don't blame them).

• The payoff, would be in the future.
• The learning curve was steep.
• The required effort was high.
• It was somewhat uncertain - I could not guarantee they would find a suitable property in X time.

Comparing my coaching offering (long, hard, uncertain) to the coaches I was hiring (easy, fast, guaranteed), it's no wonder I kept buying into the dream.

One day it clicked for me.

I had just started working with my buddy (Mark) helping him in Construction company. We were in a meeting and a consultant had booked in a time to chat about how he was going to create marketing and sales processes to help us grow.

In less than 3 minutes, Mark cut the guy off and told him we'd follow up with him. Mark had zero emotions when it came to growing his business.

It was clear- can you help us, yes or no. If you spend 3 minutes on platitudes or fluffy talk, you're wasting my time.

That conversation woke me up.

Why was I buying into what these coaches were selling so quickly? Why was I so hopeful that something would work?

Confronting the real reason few people were signing up with me.

1. I was not selling hope.
2. I was not selling a cookie cutter approach.
3. And, people were not going to pay for something that was uncertain and difficult.

Reviewing my financials with my accounts, I could no longer ignore facts:

• Coaching was costing me money.
• Developing real estate and growing the construction company was paying me.

In Jan 2023- I stopped coaching.

I would focus my energy in where I could influence the outcome directly. I could find properties, raise money and attract developers who wanted to build with us.

It was simple and rational.

People would pay for the outcome. And, they would pay well.

It's similar to the options someone has to change their appearance.

Option A - hire a personal trainer, eat healthy food, drink lots of water and workout 3-5x week. Buget - few hundred dollars a month (max).

Option B - go to a cosmetic surgeon. Immediate results and no problem paying 10K+.

What's the point of sharing my realization?

As a reminder to me, the value in delivering the result people want. Successful people generally look for people who can deliver the results and they are not easily swayed by emotions.

People struggling, will pay for the quick fix (like I was doing). They don't ask the right questions - probably because they are afraid of the answers.

I'm sharing this story today, because of a call I had with a friend yesterday who wanted to me to look at property he was offering on.

When I looked at it, I told him I thought it was a horrible idea. The conversation went:

• Q. Why do you want to buy it?
• A. Because I want to get a property before May 30th this year?
• Q. Why?
• A. I had a goal of getting 2 properties this year.

A random goal, fueled by emotions was pushing him down the path of investing in a property that could cause him hell for the next 10 years.

Stepping back and looking at the property rationally was simple.

What is the NOI? $125k.

What is the cap rate (what return would you want if you paid all cash). 8-10% minimum.

Based on that, the property should be $1.25M - $1.56M. Why are you offering 2.5M?

Ignore what the seller paid. Ignore what the broker told you.

Look at the facts.

There is little upside. The highest and best use of this property is to fix it up (at a cost of $500k) and increase the rents a few hundred dollars a month.

If you do everything right - it will be worth $2.5M in 2 years.

So, if you offer 2.5M, and put $500k into it - you'll basically work for 2 years to solve someone else's problem and lose half a million dollars.

This was a 10 minute conversation, that I suspect helped my friend save $2.5M and more importantly years of struggle.

Do you need a coach to do this?

No.

Just like sitting in that meeting with Mark.

You just need someone who has clarity on the problem you're trying to solve and isn't afraid to ask you the right (tough) questions.

The right questions will take you out of the emotional high of 'buying'. And, focus on the rational questions- why are you buying? Is it right for you? What could go wrong?

There are no shortcuts to growing a business or investing in CRE. There will always be a buyer of 'hope'. Easily tricked by scarcity and FOMO.

Better to go in eyes wide open.

If you do hire a coach, consultant, mentor, be ok with doing the work. Commit to the process. Follow through.