What Losing $50 Million Taught Me About Real Estate Investing

0:00 In 2006, my net worth went up $17 million while I slept. You might say wow. And I said wow, and I got a head so big I could barely fit it through a door. I thought I was a real estate God. And you know when that happens, God of the universe will give you a nice little smack down. 2008 I conservatively lost about $50 million. How did you lose $50 million in the 2008 crash? I am a Dutch immigrant, you know, think wooden shoes and windmills. Immigrated when I was six years old with my brother Albert, my mother's Vontia, and we ended up in Denver, Co and we really struggled financially. You know, I remember eating expired food, believe it or not, they had an expired food store back then. And drinking powdered milk with our cereal in the morning because it was cheaper than real milk. And wearing hand me down clothes from the Goodwill in the Salvation Army all the way through junior high school till I lied about my age when I was 14 because I was tall and told him I was 15 and got a job at Burger King flipping Burger so I could buy my own freaking clothes, you know, and then ultimately buy a car, which, you know, every kid that age wants. And, you know, we struggled.

0:59 And, you know, my mom babysat kids so we'd have enough money to eat and with their babysitting money. She was a bit of an entrepreneur, no formal education. She invested in the stock market successfully and also invested in real estate. Well, her first real estate acquisition was the house right across the street that she bought when I was 14 for about 30 grand. Then when I was 17, she told me she'd made $20,000 in her sleep and he'd gone up in value 20,000. Like what now? This is when 20,000 was a lot of money, like screw college, I'm getting into real estate. So I got into real estate, actually got my real estate broker's license right when I turned 18. Back then you could do that with education. You didn't need experience. They got smart. Now you need to experience before you can have your own office be a broker. But I was smart enough to go work for another broker, but I was still living at home. I made about 8 grand my first year. I made about 10 grand my second year, but my third year I made over $100,000.

1:46 So what happened between year 2 and year three that caused me to 10X my income? What would happen was I met a guy, I was the broker I was working for actually, that taught me about the importance of mindset and psychology, how 80 to 90% of your success in anything is just that. Only 10 to 20% is the real estate stuff we talked about on our podcasts. You know, it's really the do when it's the keep doing. And so Fast forward to today, I've owned over 2000 houses. I've also owned thousands of apartment units. I'm buying senior housing now. I'm starting to, I've already bought some of that, you know, and in 2006, my net worth went up $17 million while I slept. You might say wow. And I said wow. And I got a head so big I could barely fit it through a door. I thought I was a real estate God.

2:28 And you know, when that happens, God of the universe will give you a nice little smackdown. 2008, I conservatively lost about $50 million. And So what I'm known for talking about on my podcast and at my boot camps and whatnot with my students is the mindset it took to have 50 million to lose in the 1st place. And maybe as important, maybe, maybe more important than my said took to recover from losing 50 million. OK. I want to hear the story. How did you lose $50 million in the 2008 crash? So I had 800 houses along the Gulf Coast of Florida. OK. And, and one of the issues, big issues with the logistics of it, because I had houses two hours north of me, two hours South of me and everywhere in between, just swath along the coast of Florida. Florida has no state income tax, so property taxes are higher. Although De Santis, God love him, he thinks he's going to eliminate property taxes.

3:15 They already passed the House. If it passed the Senate, we won't have property taxes here. But at that time, property taxes were higher, which impacts cash flow. I had properties in wind and flones, flood zones, higher insurance impacts cash flow. But what killed me was the maintenance. I these houses were primarily C Class houses. You know, there's ABC and DA's, the new stuff D is the hood. Stay out of the hood. Maintenance is what killed me because, you know, if I, if I sent someone to one of my apartment complexes, we could stockpile parts, plumbing parts, electrical parts, door locks, window locks, a appliance parts, you name it, and they're in and out in an hour. The maintenance guy, if I had to send them to one of my houses that's an hour and a half away, they have to go see what's wrong. Every house is different. They can't stockpop parts.

3:55 Then they have to go find a Home Depot or a Lowe's. We have an account. You know what took an hour at one of my apartment complexes? Took all day at one of these 800 houses. So they never really cash flowed That one. I was only at a 30% loan to value. OK, I only owed $0.30 on the dollar and still crashed and burned. Yes, Houses just don't cash flow well period, because they have their own taxes, insurance, everything else. What really killed me was I didn't pay attention to tenant demographics back then. You know, if they had a job or they had good income, they had good credit and I paid the at least a month's deposit, maybe more. Sometimes I let him rent. Well, what I discovered when the proverbial, you know, what hit the fan was most of these people were contractors, plumbers, electricians, drywallers, painters, roofers at work fell off a Cliff in 2008 and 9 they didn't have work. So it was like the perfect storm. Now you want to hear something crazy? My Portfolio by the end of 2009 was upside down. It dropped more than 70% value anyway, but that's that's what happened in 2008 now, But what, what got me was, you know, those apartment complexes would have survived, but Rod and his brilliance cap cross collateralized packages of houses with his apartment complexes to save 50 basis points, you know, half percent interest. So I lost everything.

5:04 But if I hadn't done that, I'd still have those apartment complexes. They pulled back about 11%, but they could have easily survived. And so I started my podcast about, you know, 10-11 years ago just to tell people, you know, if you're going to buy and hold real estate, for God's sakes, do multifamily, don't do single family. Ask me how I know they do multi. So I started my podcast and it turned into, you know, that it's I'm over 30 million downloads at this point. So it's I think it's pretty much the largest in my space, which doesn't sound like a lot in the social media world, but for podcasts it's not bad. And I was telling you before we started, my student success is extraordinary. Yeah. My students own about 300,000 multifamily and they're every other asset class as well. You're in, I know you're an industrial flex spaces. They own a ton of that senior housing, student housing, self storage, mobile home parks, you name it. It's just such a blessing.

5:50 So instead of OK, how did you come back from losing 50 million? Tell me about the mindset. Yeah, it's very simple because it's the same mindset you used to get started. If you're listening and you haven't gotten started yet, take some notes here because I'm going to tell you what I did to have 50 million to lose and what I did to get it back, OK? And it starts with with with goals. You got to know what the hell you want and why you want it, because how do you get anything if you don't know what it is, right? You got to know what it is you want and why you want it. You've got to create what Napoleon Hill calls a burning desire. You got to have that hunger because you got to have the the ability to push through fear, to push through any limiting beliefs that you have. Or maybe you're comfortable and that comfort zone is a nice warm place. We all know nothing grows there, right? So you got to want it.

6:30 So it starts with goals. People spend more time planning a freaking birthday party than they do designing their lives. Doing your goals is designing your life. Do your goals, have your spouse do your do their goals, have your kids, if they're over 10 years old, do it. Design their life. And then you got to make a decision. You know the Latin root for the word decision means to cut off. So you're not dipping your toe in the water. You're not, you know, 1 foot in, one foot out. And this is what I did back when I lost everything. I reassociated with my goals. I, I crawled out from underneath the rock I was hiding under. I'm like, OK, get up your big puss and go make something happen again and made that decision. And you know, like I said, I don't mean just thinking about doing something. I mean you're committed to it. Like if you're going to a great analogy for a real decision would be if you're going to attack the island in battle, you burn your ships because you're taking their damn ships home.

7:15 That's a decision. It's freaking done. Then once you make that decision, you got to take that first step. Sometimes that could The most important decision of your life is to take that first step. If you're sitting here listening and you've been in analysis paralysis, knowing you need to do something, I got to tell you, if you're in a job, that's a lot of jobs are going away. I mean, in a big way, AI is taking a lot of jobs. If you're in IT, even medical, legal, accounting, all these entry level jobs are gone. You better be thinking about another side hustle. What you're going to do real estate. There's incredible deals in real estate right now because the interest rates decimated a lot of especially multi family operators. And so, but you got to take that first step. You know, Doctor Martin Luther King said you, you don't have to see the whole staircase. You take that first step in faith, the next step will be revealed.

8:01 And you know, a lot of people, people that are interested in commercial real estate are analytical and I love you're some of the most successful students I have. And I know how you have to check off every freaking box before you make a move. And you can't do that here. You got to actually just take that first step. And you know, a lot of people fear failure. And I'm going to tell you don't fear failure, fear freaking regret, fear being in the same place you are right now. One 2-3 years from now, especially if the shoe could drop on your business. I'm actually laying off my daughter now. I'm helping her start another business, but I'm laying her off because she does my SEO and AI is going to do it for us. And like, babe, I can't I, I made it silly. I, we can do it ourselves. And so I'm going to help her start a business. My point is, it's hitting me at home. And if that's you, you better be thinking about a side hustle.

8:42 You're thinking about what you're going to do. Don't don't hide your head in the sand and think it's going to go away because it isn't. And don't fear failure. My God, I've started 29 businesses. I call them seminars when they fail. OK, that was a $50 million seminar. It was an expensive freaking seminar, don't get me wrong, but I've started 29 businesses. Several were 10s of millions of dollars. Hell, I had two frozen yogurt shops on 6th and Wadsworth and Hamden and Wadsworth. I've had a carpet cleaning business there. I had a satellite business selling satellite dishes in the Denver Tech Center. I'm just, I'm just throwing some stuff at Aviva here that she'd recognized. So I mean, I've, I've built 29 businesses. Several were 10s of 1,000,000. Most were spectacular flaming seminars. OK, because we fail our way to success. OK.

9:24 So don't fear failure, fear regret. You know, I think about like the moniker of the person who exactly what you're saying is too afraid. And so they come, you know, they want to analysis paralysis themselves into nothing. How do you break from being that? Goals, goals, goals, goals, goals. You got to create that hunger. That's the first thing, OK. And then you then again, you make a decision, you take the first step. You get around people that want more out of life, OK? You get around a good peer group, OK. And you know, like when I was losing everything, I was in Tony Robbins platinum partnership, OK, It's like 100 grand. It's his high level mastermind. And I was around people that were killing it in that crash. OK, they were killing it when I lost everything. And they're like, get up, ya puss. 50 million million. That's who you want to be around when the going gets tough. You want to be around people that think what you think is hard is easy.

10:14 And the problem is most people default to a peer group they go to, they went to school with or they work with. And those people may have fears and limiting beliefs, you know, that'll hold them back and you may as well not. Let me tell you about limiting beliefs. So when I immigrated this country, I got thrown into school. I didn't speak English, found out what bullies were for the first time I got I hadn't learned how to fight back yet and I got my ass kicked occasionally and then my mom, proud Dutch woman these she is I had just had these right here just so you could get a laugh, sent me to school in these wooden shoes. These are the actual freaking shoes because we found them when we put her in assisted living and these leather shorts the Germans wear for Oktoberfest, crack cocaine for the bullies. So I got my ass kicked again. You know, bullies would chase me home and she'd chase them off with a fly swatter.

10:54 So the next day asked me eating. And so I came up with this belief system that wasn't good enough. And I used to ask myself, how can I show them I'm good enough? And so, you know, a lot of people have these limiting belief systems and they have no basis in fact. I'm not good enough, I'm not smart enough, I'm not courageous enough, I'm not young enough, I'm not old enough, whatever, you know. And there's a reason the acronym for belief systems is BS, because 99% of them are BS. But we believe they're real. And so if you have one of these, drag it out into the daylight. Look at it with your adult rational mind, recognize that it's BS and it'll go away. I mean, I used to be afraid to raise my hand in front of, you know, 10 kids in a classroom. And now I speak in front of literally thousands of people a year in flip flops. You know, it's, it's so you can, you can mitigate these, these beliefs. So.

11:37 It's interesting, you know, I find for myself my lifelong journey, like I was put on this earth to work in commercial real estate. It is my blood, it is my being. It is. Is it your passion though? Absolutely. Oh, I love it. OK, OK. Because because you got to play to your strengths, that's another piece of this. When you play to your strengths, you love what you do. You're in the zone. You never work another day in your life. It's a beautiful thing when you love what you do. I mean, obviously you can feel my passion. I freaking love this. I mean, you know, just love talking about it. I mentioned something else that that was that's really important, that it was important in my success journey and, and my recovery journey. And that's focus. You know, wherever focus goes, energy flows. And you know, the most successful people on the planet have the highest degree of focus.

12:19 Look at look at Elon and look at Bezos, you know, but here's the other thing, whatever you focus on gets larger. It would have been very easy for me to focus on losing $50 million. Instead, I use it to teach. But you know, another thing is don't let it become your identity. So if you decide to start another business, for God's sakes, have it be your vehicle, not your identity. People kill themselves if they if they fail in their identity, you know, So be careful with that. It's your vehicle. But again, whatever you focus on gets larger, both positive or negative, you know, and I'll get people call me and say, how do I get out of student loan debt? And I'm like, wrong question. How do you make so much money? The debt's irrelevant is the question. You know, they asked Mother Teresa if she was anti war. She said, no, I'm pro peace.

12:59 I mean, you get the you know, and I listen to podcasts, okay, I listen to Joe Rogan and I listen to Tim Ferriss. I try to get both sides of the aisle. I'm definitely on one side. On the other side in Tim Ferriss show is he interviews the best of the best in the world, okay, best athletes like Michael Phelps, the swimmer, NFL, NBA players, billionaires like Ray Dalio, heads of the biggest companies in the world like Zuckerberg, famous actors, Arnold, Jamie Foxx, Ed Norton, you Jackman and he deconstructs their success. It's fascinating conversation. This is ties into focus and and I talk about my 30 million downloads. They get that a week on those shows. You know, I mean that they're just like the largest in the world. But I started to hear a pattern on Tim Ferriss's show, all these best in the world people almost all meditate.

13:41 I think we did an analysis, 85% of them meditate. What does meditation enhance focus, right? So focus is super important. Don't lose sight of that. We are in a world where it's just notification after notification, be it on your screen, be it on your everywhere is 1,000,000 notifications. In a world of endless notifications, how do you focus completely? I don't know about you, but I'll be sitting watching Netflix script, scrolling through my damn phone, which kills your focus. You just got to pay attention to it. I think meditation is a good practice. You know, I had Hello Rod, the author of the Miracle Morning on my show a couple of times. And that's a morning practice that you do to set your day off, right? Like it includes meditation or prayer. It includes journaling, includes exercise, just a fantastic way to start your day.

14:26 But I think you have to manage it. Honestly, I think that's the only thing you can do. And of course, scrolling kills it. But, and I'm, I'm guilty of it. I get sucked into that freaking tick tock. I used to read a book a day when I'd go on vacation, I'll sit there and scroll freaking tick tock for five hours. It's just mind numbing waste of time. And so, you know, I think you have to do social media detoxes from time to time. I find I can be very intuitive, but if I'm scrolling on social media it's gone, like I have to make make a very conscious effort to. I mean, I'm I'm I'm biohacking like crazy. I do NAD plus I do methylene blue. I do PEP, you know, peptides. I do if you saw my supplements, you'd you'd die.

15:07 How much I take in supplements and and exercise room is, you know, I exercise like crazy and I think all that helps, you know, and that's another thing. If you're listening and and you know, your job could be on the line or, you know, you need to get started. Pay attention to your health, OK, and, and not just so for the health, but for the energy, but the energy that's required to do a side hustle, to stay up late, to get up early, even if you've got a consuming W2 job. I've got numerous students that have eclipsed their W2 income, heavy duty W2 income through commercial real estate, but that requires some, some energy, OK, especially if you've got kids, soccer, church, whatever. So pay attention to, you know, you know, your exercise and your diet, so you can grind for a few years like most people won't, so you can live the rest of your life like most people can't, right?

15:52 Absolutely. I want to understand the full story. 2008 crash, We lose $50 million then. I lost all my real estate. I and I lost everything. Yeah. Thought I was set for life. You rise like phoenix in the ashes. Well, I rose like a crow for a while there. But yeah, I mean, I I started a litigation support company, turned it into a $10 million company. It almost bankrupted, too. I mean, you go through these ups and downs and then one of the guys I hired, my CFO for the litigation support company said he'd done some commercial real estate. I'm like, hell, let's do that. So we bought, I don't know, almost 3000 apartment units together and kept going from there. But but yeah. And that's when I started my podcast because I, you know, I knew I wasn't going to do houses again. It's ridiculous.

16:34 And I've owned 2000, so I've got some credibility in saying that. But yeah, so I just rebuilt and didn't realize that that I love being an educator. I absolutely freaking love it. And and I'm pretty good at it. And so, you know, I think I mentioned to you our, our our student success eclipses everybody else combined, including big names that you'd recognize their programs. Our student success eclipses them combined. I guess I'm bragging, but I, I get love every single day. I've got a stack of gifts on my counter, kitchen counter right now that I haven't unwrapped yet from students. I I have a wall of thank you cards, hundreds of thank you cards. I get DMS, emails every day. I get hate every day, too. Don't get me wrong. You know, no one should have owned 800 houses. Yeah, well, no one should be in their mom's basement bitching about their life either.

17:18 But yeah, but, but I but I get love every single day. So, you know, it's a beautiful thing. Hey, the more you give, the more you get. That's how that, well, let's talk about that for a minute. OK, Let's talk about touch for a minute. So let's first let's talk about the most important foundational emotion you have available to you. And that's a gratitude. Now I know some of you are going to be like, oh good God, can we get on with the real estate stuff? Listen, if you want success, listen up. OK? Ignore what I'm going to say at your peril, OK? It's the most important emotion we have. It makes us stronger when we face adversity, strengthens our immune system, makes our hearts stronger, lowers our blood pressure, brings us closer to our spirituality. But it's also how you attract everything you want into your life. You could call it prayer.

18:01 Most mornings, I will sit in my recliner and I've got my vision boards there. And I'll just do gratitude for the people that I love, that you know, my, my blessings. And then I'll do gratitude for the things that I want as if I already have them. OK. And I've been emotional being grateful for things I don't even have yet. You're like, oh, good God. Well, this is how I had 50 million to lose and how I got it back. So ignore it at your peril is all I can tell you. And, and, and we'll talk about one more thing here. You know, I lived in Denver and, but I knew I wanted to live on the beach. And as you're well aware, unless you go to Cherry Creek Reservoir, there's really no beach in Denver. And so, you know, and that's, that's, that's a stretch there too. But, you know, but I knew I wanted to live on the beach. And so I would visualize the palm trees and the surf and the sand.

18:44 And 20 years later, I built this incredible mansion here in Sarasota on the beach. I owned the beach on one side. I had my boats on the backside. It was called a gulf to Bay. 10,000 square feet elevator, wine cellar, giant waterfall from the 2nd floor balcony into the pool. You had to walk through the waterfall to get the pools and magazines. You know, on the 2nd floor. I had aquariums built around the staircase. Cost me almost 200 grand. This gives you an idea of the house. Well, two months after I moved in. So I worked for this thing for 20 freaking years. OK, two months after I moved in, I'm floating up. I'm floating in the pool at night. It's changing colors. It's got fiber optic lighting and I'm looking up at this testament to my ego. It was to prove to the world I was good enough. I mean, if that didn't do it, forget it. You know, I had the Maserati and the Mercedes and all all the stupid shit I thought was important, the boat and the jet skis, all the toys and stuff.

19:31 My family's inside sleeping and I got depressed. And this is 2 months after I moved. I don't mean a little depressed. I mean like, holy crap, depressed. And I'm like, what is going on? I've just achieved success like times 10,000. There were three things happening, Aviva, and that's why I want to share with your listeners here before we cut loose. One is you should never achieve a big goal without having other goals lined up behind it. Like a good book somewhere says without a vision, the people perish, right? And I didn't have a vision for the future. OK, that's number one. Number two was it's never about the goals that, you know, they say the happiest days of a boat owner's life, the day they buy the boat and the day they sell the boat, right? If but but you need the goals to create that hunger to get off your ass, to actually go do something, create that burning desire. You got to have the goals.

20:15 But happiness comes from progress and growth. It doesn't come from the goals. And I didn't know how I was going to progress. What am I going to do after that? I mean, I've just achieved this incredible success. So that was a problem. But the big thing was I had been totally focused on me. Rod, Rod, Rod, blah blah blah, show the world I matter. That's the year I went and saw Tony Robbins, saw that he fed families for the holidays. And I'm like, what a concept, do something for someone else. I had to be 40 to get that memo, regretfully. But I called my brother in Denver who I was going to go visit for Thanksgiving. I said, bro, let's feed five families. So he called his church and found five families. It really needed help. The third family changed my life. This was a house. This was one of these flat roof row house shit holes built in over 100 years old. It was a Hispanic woman in this thing with five kids. It was one of those where you walk through the bedroom to get to the kitchen, which has the bathroom off of it. So I mean, it's not even a one bedroom, it's a crappy one bedroom.

21:10 So we bought toys for the kids, we bought frozen turkeys, food. She comes out, she sees all the stuff on the porch and she starts crying. Her kids come out to the older ones start crying. I start crying and I'm hooked and I'm blessed to say and don't tune this out guys. If you want success, listen up. This is not me bragging. There's a real message here. In the last 26 years I've had over 150,000 children here in the Sarasota Bradenton area for the holidays. I've provided 10s of thousands of backpacks filled with school supplies to local kids that don't have the basic supplies for school. Thousands and thousands of teddy bears, local police departments for their officers to keep in their vehicles if they encounter a child that's been in a traumatic situation. Now here's why I bring this up. Tony Robbins calls it the science of achievement versus the art of fulfillment.

21:52 Achievements of science. You want, you want to learn how to do commercial illustrator multifamily, Get your ass to one of my boot camps. I do them every 30 days. It's like 47 bucks. I don't sell anything there. There's no excuse. 2 days of training, $47. Tell me your excuse, but I'll give you the blueprint. You just got to do it. It's a science, but fulfillment is an art. You got to figure out what juices you. For me, it's kids. It's also the elderly. And don't say to yourself, well, you had money, that's why you gave back. You want the money, give back. That's the way God works. That's the way the universe works. Whatever you give, you get back a hundredfold, A thousandfold. Would you agree with me on that one? All day. Yeah, so find out what juices you start giving back right now because the six you don't do it for this reason. But I promise you the success will come faster. You know, I'll land the plane with this. I did an event in Denver.

22:38 I had 1000 participants, 3 day event. And I did this Hall of Fame award for my warriors. That's what we call my coaching clients, my warriors. And it was just the people that helped other Warriors the most. OK, It wasn't just yeah, they were some very successful as well, but it wasn't just their door count or anything like that. And I did a slide for each one. I started to it was a pattern. Every single one of them gives back Schools in Latin America, schools in India's, human trafficking, veterans, homelessness, veterans suicide. And I looked at the 1000 participants and I pointed at the PowerPoint. I said that's what we call a freaking clue. OK, power moves to those who serve this. Is great. There's like a therapy session. Oh, thank you, thank you. I'm very, very passionate about this, as you can tell.

23:19 Hopefully nobody's falling asleep. Oh, I don't think you're putting anybody to sleep, but everybody wants to know, Rod, what is your commercial real estate secret? Massive freakin action. OK, my most successful students aren't the smartest. I've had. I've had NFL, NBA players, famous actors. They're not the ones that have the most money. They're not the ones that live in the biggest cities. They're the ones that change their story. Everybody's got a story about why they're not doing stuff. They change their freakin story and they just take massive freakin action. It's not a secret. Just got to go do it. Do it like Nike says. Massive freaking. Freaking action.