Chad Schieler is the founder and principal of Focused Capital, which acquires value-add multifamily real estate assets in markets with strong fundamentals. In this episode, Chad shares his real estate investing journey (which only just started in 2020), how he moved from investing with his own money to raising capital, and the tools he’s using to network and find deals.
Chad Schieler | Real Estate Background
- Founder and principal of Focused Capital
- Portfolio:
- 140 units across six properties
- Based in: Fishers, IN
- Say hi to him at:
- Best Ever Book: Who Not How by Dan Sullivan
- Greatest Lesson: Delegate and outsource by managing and leading people.
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TRANSCRIPT
Ash Patel: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel, and I'm with today's guest, Chad Schieler. Chad is joining us from Fishers, Indiana. He is the founder and principal of Focused Capital. They are a value-add multifamily syndication firm in the Midwest. Chad's portfolio consists of 140 units across six properties. Chad, thank you for joining us, and how are you today?
Chad Schieler: I'm doing great, Ash.
Ash Patel: Good man. We're glad to have you here. Chad, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?
Chad Schieler: Yeah, so I spent the last 17 years in the electronic payments industry, serving small businesses with their credit card processing services, and when [unintelligible 00:01:31.23] systems. While did very well with that, I've now taken an opportunity to develop a real estate company, and right now we're focused on building out a local team to develop a firm foundation to help us in the years ahead. This year our goal is $20 million in asset purchases. So yeah, that's where we're going now, that's what we focus on. Value-add.
Ash Patel: You started with "We're focused on building out our team." Did the team start first, or did vision start first, or did the first deal start first?
Chad Schieler: The first deal started first. We didn't intend to have a team to build out; it was a hobby at first, and then it kind of evolved over time. I had a couple of partners here and there, and now I've got a clear vision. I'm more focused on building a local team here.
Ash Patel: What was the hobby? Was it single family houses?
Chad Schieler: A fourplex.
Ash Patel: A fourplex deal?
Chad Schieler: I skipped all those, yeah.
Ash Patel: Smart man. Let's dive into the numbers on that. How long ago was that?
Chad Schieler: So I bought that one in March of 2020.
Ash Patel: Oh, just before the COVID lockdown.
Chad Schieler: Yeah. That was a great time.
Ash Patel: So what was the purchase price?
Chad Schieler: 230k. I actually bought it sight unseen. I paid 10,000 too much for it. I knew I paid too much for it, but I knew how to get started.
Ash Patel: I like it. Where was it?
Chad Schieler: Indianapolis, so Northeast side.
Ash Patel: Why was it sight unseen when it's only an hour away from you?
Chad Schieler: I looked at properties on that street before, I knew they're all fourplexes on this one street. I knew what they were, and I kept missing out on these opportunities... So one Saturday morning like at eight AM it popped up on the MLS, I got a notification about it, I texted my realtor, I said put an offer in, give them two hours respond. We'll give them [unintelligible 00:03:07.10] and then it was mine.
Ash Patel: How many deals did you miss out on that you were that jaded where you had to just do this?
Chad Schieler: [laughs] Probably 10 that I offered on, which in the scheme of things is not a lot. Most guys offer on like 100. But to me, I knew that getting my first deal was so crucial that if it cost me $10,000, it was a small price to pay to learn and get experience.
Ash Patel: Yeah, I applaud you for that. There's no substitute to being out there and getting deals done. So $230,000 for a fourplex... Was it in need of heavy rehab?
Chad Schieler: A lot of rehab. It was actually fully vacant. I didn't get an inspection either, so I have two mistakes right there... But it ended up being a good deal. The play there was do light renovations, fix the floors, just the basic paint... Nothing major at all. We put about 20k into it, on the whole building, and then held it for a while, learned a lot of lessons about the management company, and then we sold it off market 18 months later.
Ash Patel: Man, you had a management company for a fourplex... You read the book "Who, Not How", didn't you?
Chad Schieler: Dude, that's my Best Ever book.
Ash Patel: [laughs] Listen, the "Who, Not How" - you've got to learn how to do this stuff first, and then offload it.
Chad Schieler: I know...
Ash Patel: But I like it. I liek where you're going.
Chad Schieler: [unintelligible 00:04:21.03] for years and years. She's like, "You're not gonna manage the property yourself. We're not gonna do that." I'm like, "Alright, fine. I'll just [unintelligible 00:04:27.05] for me, which was actually the best way to go with.
Ash Patel: What were the hard lessons you learned about the management company?
Chad Schieler: There is none that are awesome. I feel like they have all got things about it that aren't great. And when you're starting with only a fourplex, you're not going to get the price that you get when you have 500 units. So you kind of learn who's gonna nickel and dime you, you learn what they're focused on... They're usually only focused on top-line revenue, that's what they're paid on. They're not focused on expenses or NOI growth. You learn the turnover time, and this one in particular, this was very, very slow at leasing... Communication wasn't very good. I since then parted ways with that company, and went with somebody else much better... But we learned a lot about just how they operate, and communication style, and the speed of turnover is so important. Your vacancy is what can kill a property.
Ash Patel: Do you still own this property today?
Chad Schieler: No, I sold it off market 18 months later.
Ash Patel: What did you sell it for?
Chad Schieler: $300,000.
Ash Patel: See, that's a win.
Chad Schieler: Yeah, it was. It ended up being one after all.
Ash Patel: What's the next deal that you did?
Chad Schieler: After that... I bought that in March, and then about eight months later I bought a 15 unit. Just a little tertiary market.
Ash Patel: In Indiana.
Chad Schieler: Yep. All of these are in little markets around Indianapolis.
Ash Patel: Okay. Are you doing this full-time at this point?
Chad Schieler: Pretty much. I'm about three to four hours a week in my other business right now that I still have, but this is [unintelligible 00:05:46.29] full-time for me.
Ash Patel: Okay. What was the numbers on the six-unit?
Chad Schieler: The 15-unit?
Ash Patel: That's right, 15-unit.
Chad Schieler: Yeah, we bought it for 785k. I did a JV with a partner friend of mine. I was 80, he was 20. And it had a ton of deferred maintenance. This was probably the one that I learned the most lessons on. We had budgeted about 250k for renovations. We went about 100k over that. We just stabilized it last month, actually, so it took a little while to get it stabilized, but we're getting much higher rents than we thought we would get, and it's going nice now.
Ash Patel: What's the play? Are you going to keep this for a while?
Chad Schieler: No, [unintelligible 00:06:24.06] do a 1031 exchange, or something else.
Ash Patel: Are you in a locked interest rate?
Chad Schieler: Yeah, I've only done fixed-rate debt so far.
Ash Patel: Good.
Chad Schieler: Yeah, we're at 5% on that one.
Ash Patel: Did you have a property manager for this one too, I imagine?
Chad Schieler: Oh, of course.
Ash Patel: Alright. Your next deal? You have a JV partner on this... And were they primarily there for capital?
Chad Schieler: No. He was the one that found the deal for me. He's got a broker's license, and he was contributing a little bit of capital and a little bit of time. So we split kind of pro rata what our equities were.
Ash Patel: Okay. And he gets some reward for finding the deal as well.
Chad Schieler: Yeah, we're splitting it 80/20, basically.
Ash Patel: Got it. And the next deal after that? Because we've got a ways to go to get to 140 units...
Chad Schieler: Yeah, it goes kind of fast here pretty soon.
Ash Patel: Alright, let's go.
Chad Schieler: Then I bought a 20 unit in Columbus, Indiana. That one's been a friggin' home run. CapEx budget is like half what I thought it'd be, we're getting rents way over the top, demand's great over there... That's been great. Then I bought a --
Ash Patel: Wait, hold on... Why is that one so great? Why is that a home run?
Chad Schieler: Okay, so this property was so well maintained by the previous owner... We've had very little maintenance issues. I underwrote it much more conservatively, because I learned with the first few properties how to underwrite better and how to make mistakes... So we've already hit our stabilized value much faster than I thought we would. I think the market is demanding higher rents than we thought it would get, which is great.
Ash Patel: Why is that?
Chad Schieler: The jobs there are really great. There's a lot of growth in the area. It's not like a major MSA, but it's a great blue collar town. And there's no new development there, so what product is on the market is there, so we've had a lot of interest in the property.
Ash Patel: And I'm hoping you took that knowledge about the demographics, the jobs, the area, and applied it to the next purchase.
Chad Schieler: Yeah, I did.
Ash Patel: Okay. And you found something that also required very little maintenance?
Chad Schieler: Well, the next one had a little more work to it, but it was a big discount, and it's a good deal. In between that point in time, I joined a mentoring program... And that enabled me to learn more about syndications. And I put together a syndication deal on a 67-unit property; I got my first experience raising capital, the whole nine yards, PPM, journey stuff... But that one has been a good experience so far, too.
Ash Patel: How did you raise capital for that? And at this time, did people know what you were doing?
Chad Schieler: I kept it all under the radar for a long time. I didn't start really promoting this business until a couple months ago on LinkedIn and online. For that one, I had two friends of mine that were partners.
Ash Patel: So you raise money from two people.
Chad Schieler: Yeah, so two friends of mine, they raised most of the capital. And I raised a very small part of that. My lead role in that deal was I found the deal, I underwrote it, I manage the whole entire closing process, and now after acquisition, my role is basically business plan oversight.
Ash Patel: The two partners on this deal - was it a partnership just for this deal, or was this a partnership for everything we do going forward?
Chad Schieler: This was actually a partnership for this deal, and I forgot to tell you about a deal between this one and the 20-unit. We did a 25-unit together as well. So these two partners of mine, we did two deals together.
Ash Patel: So going forward, you're still able to do your own deals, with different partners, or just solo?
Chad Schieler: Yeah, my mentality right now is -- our agreement was we'll do two deals together with those two partners, and then we'll kind of see how things go. I want to give it some time with that syndication, to let the dust settle and just kind of see how everyone connects together and meshes... And then going forward, I'm open to co-GPing with other partners as needed. I think it's important to have complementary skillsets on every deal. There's a lot of overlap in skills.
Ash Patel: Yeah, it's such an important lesson, Chad... A lot of people from the tech world, they saw what you do is you get a group of friends together, you start a company, and hope you make it big. And what you're doing, I think, is the right way to do it. You test partnerships deal by deal. And if things go well, look at forming an entity going forward, but don't handcuff yourself to partners if they haven't been tested. So I applaud you again for doing that.
Do you raise any of your own capital today? Or do you rely on others to do that?
Chad Schieler: Yep, I am now. So after that deal, I think I realized that I've got a skill myself; I'm kind of a sales guy by nature, I feel like, but I actually really enjoy talking to people about the capital raise, about real estate... So ever since January this year, just three short months, I've now taken a lead on capital raise. That's probably my number one task that I do, my number one revenue activity.
Ash Patel: What are the action items that it takes to go from somebody relying on others to raise money, to becoming a capital raiser yourself? One, you've got to let people know what the hell you do, right? Because no one knew you're this real estate guy that's doing these awesome deals. So you've got to put yourself out there. How did you start doing that?
Chad Schieler: Yeah, the first step was I basically started texting and emailing everybody with a non-ask approach, and I said, "Hey, I have a new project that I'm working on right now. Here's what I'm doing. I'm working with a mentoring program. I have a big team behind me. There's no deal today to invest in, but if I ever do have an opportunity, would you want to hear about it? I'll put you on my list. You won't hear from me every week. A couple of times a year I'll haev a good deal. Just let me know if that's convenient." I made it very, very non-confrontational, just very simple... I got great feedback from that, it was nice.
Ash Patel: Who did this go out to?
Chad Schieler: It went to all the people that know, like, and trust me. So the lowest-hanging fruit. The people that were my closest friends, maybe my closest business contacts, people in my family, which - I didn't talk to those actually; I tried to avoid some of the family... But just all my friends that already know me, that already know what I'm doing. That's the easiest ones to really target first.
Ash Patel: Can I push back on you?
Chad Schieler: Yeah.
Ash Patel: Why not take everybody that's ever been in your email box for the last 10 years?
Chad Schieler: I like that. I'll have to do that.
Ash Patel: Yeah. Because look, you're going after the low-hanging fruit, the easy people, the people that know, like and trust you. I'm coming from a point of experience, where the very first time I sent out a newsletter, it literally went to everybody that's ever hit me up through email, and it was amazing. I had people respond that I knew for one or two years when they lived in Cincinnati, and then they moved away, but I hadn't spoken to them or emailed them in 20 years. And all of a sudden, they're like, "We've been looking to invest in real estate, we've got $300,000 saved up, but we just don't know how to get started." So hit everybody up. And push back on me if you can... Not enough people do that. But why not share something personal about you? Obviously not in a text, but make it an email newsletter. "Here's a milestone that we've hit. Here's a hard lesson that I recently learned. Here's a failure and what I learned from it." Some of the best newsletters I've seen written, or some of the best guests that I've interviewed, have been people that share their failures, shared hard lessons learned... And I think that's a great way to connect with your audience. So I'm going to challenge you to push yourself.
Chad Schieler: Yeah, I do agree with that. And actually, I do send out newsletters every other month right now, to my whole group.
Ash Patel: Good. Is it all business, or is it some personal stuff in there, too?
Chad Schieler: It's some personal, it's mostly business... It's got maybe a book pick of the month in there, what we're doing as a team... But I will use the personal side like that. Thank you.
Ash Patel: And what's your goal with the newsletter? ...to get people to...?
Chad Schieler: My goal with the newsletter is it goes out to all my subscribers on the website, and my goal is really stay front of mind. Just keep relevant to them. Because a couple months may pass before I have a deal or don't have a deal, ic could be six months... So stay front of mind, and just keep them updated on what I'm doing.
Ash Patel: And to get them to know, like and trust you, as you said, right?
Chad Schieler: Exactly.
Ash Patel: What better way to get them to really connect with you, know, like and trust you, other than sharing something like a secret about you, or a lesson learned, a failure? As counterintuitive as that may sound, that really bridges a gap there.
Chad Schieler: It shows you're human. Not everyone always talks about their failures, [unintelligible 00:14:33.21]
Ash Patel: Yeah. And go through your inbox and look at all the newsletters that are just business. Look, this is my opinion, and it's probably wrong, but I like keeping my newsletters in email format. Not a bunch of marketing colors and bars... Pictures are great, but not a lot of formatting. Not a lot of different colored text, bold, underlined, italic... Those just are difficult to read, they scream "Here we are marketing something towards you." I'd love to hear your thoughts on that. Would you rather have something professional, or just something plain text email?
Chad Schieler: You know, I think as an email user, I quickly just bypass any of those, like, marketing. Because we're always busy. We're so busy. So if it looks like just a regular email that was sent to me, something casual, I think I'm more apt to open it up and read it and spend time in that, than I would some advertisement.
Ash Patel: Yeah. So listen, all the Best Ever listeners out there that are listening - Chad is going through this evolution, so please, take notes on the steps that he's taken. So you started the text email blast; you mentioned LinkedIn... That's a goldmine for getting yourself out there. What's that experience been like?
Chad Schieler: I'm only a few weeks into that, honestly, and I'm still learning algorithms and how to get the most impressions, and get people engaged... But my goal there is to share three different types of material. One is to share something educational, to where I can be a leader, or an expert in the field. I share lessons that I've learned, lessons on due diligence, inspections, that kind of stuff... I also want to share things about me and about Focus Capital, what we're doing, how we're growing... And then I also want to show - a third thing would be industry news. So we share some articles about rent growth growing up in Indianapolis; maybe Indianapolis is a great place to start a business, that kind of stuff.
Ash Patel: I love that. That's great advice. The educational stuff I don't do, but I wrote it down and I'm going to start doing that. The news is great; if you are at a loss of what you're going to post, go newsjack a story. Do a search for multifamily news, commercial real estate news, and find an article, put your opinion out there, and have an ask. "What do you think? Do you agree with me?" Push people be like "Somebody tell me I'm wrong. Disagree with me. And let's go." Right?
Chad Schieler: Yeah.
Ash Patel: Good for you. I love that approach. How about your personal Facebook marketing?
Chad Schieler: I don't have Facebook. I do have Instagram, and I've tried to keep Instagram mostly personal. I sprinkle in the real estate stuff, but once a week in there. I'll put some on the story... It's very, very light. I want to keep that separation between personal and business. I don't want to put it to business-heavy on Instagram, but I do a little bit.
Break: [00:17:19.26]
Ash Patel: Instagram is more for entertainment, quick hits. Do you know anyone that's really successfully doing real estate on Instagram?
Chad Schieler: Not that I know of.
Ash Patel: I don't either.
Chad Schieler: I keep seeing sponsorship advertisements, but I'm not sure if they're working or not.
Ash Patel: I know. You go to Instagram for some quick entertainment. Do you really want to hear people pitching their latest investment? Do you know go there to be educated on what interest rates are going to do? No...
Chad Schieler: I think there's people in my Instagram followers network that are interested in real estate, and my goal would be to move the ones out of Instagram into LinkedIn, or out of Instagram on the website, that are interested. Put them in a funnel, give them more information, educate them more, and then follow that process.
Ash Patel: I like that approach. And have you had people directly message you from Instagram, talking about real estate?
Chad Schieler: Not quite yet. Like I said, I haven't done a ton on there yet... But what might be a good idea, that I haven't thought of, is just like you mentioned with mass emailing everyone in my inbox, going through my Instagram followers and whoever I've had a direct message with, messaging them, because they may not be in my inbox. It'd be a manual process, but that would be a way to target those, too.
Ash Patel: Yeah. Do you include your Instagram and LinkedIn links in your newsletter?
Chad Schieler: I don't.
Ash Patel: Listen, I'm thinking out loud with you... I think it might not be a bad idea, because I think it's a very divergent crowd. People that are either on Facebook or Instagram, they're rarely on both... Other than when you post on one, it posts on the other. I would recommend getting on Facebook. I think it's a lot more real estate-centric than Instagram. Don't stop what you're doing, because I think when somebody goes to Invest With Chad, they are going to want to stalk you on all social media, and make sure they can know, like, and trust you. So I think having that presence is awesome. But I would strongly encourage you to get on Facebook, and do a mix of personal and business, and join all of those real estate groups, and connect.
I've got a guy in my mastermind who everybody seemed to know; everyone knew this name. His name was Vish Mooney, and when we started making introductions, everyone's like, "Yeah, I know that guy. I don't know where... I know that guy." Finally, I asked him, "How does everybody know you?" And he's like, "Well, I made it a point to do one Facebook post per day, for one year. And it's amazing how many deals I've gotten, how many investors I've gotten..." And his posts, they're not really real estate-centric. They're motivational, pictures of him running a marathon, or something... His family... A little bit of real estate sprinkled in... So I put that on my list of things to do. It's not getting done, but...
Chad Schieler: One day...
Ash Patel: I've seen it work from him, right? [laughter]
Chad Schieler: Yeah, social media is so powerful. It really is.
Ash Patel: Yeah. If nothing else, make sure your Instagram posts hit your Facebook as well. One last piece of advice that really worked for me is on my newsletters, have a Calendly link. I used to put "If you're interested, hit me up. Call me, email me, text me." As soon as I put "Click here to schedule 30 minutes, 15 minutes with me", it's amazing how your calendar just fills up. You knew that already. Good. I've just learned that a month ago.
Chad Schieler: [laughs] [unintelligible 00:22:41.00] so efficient for you.
Ash Patel: Good for you. So now you've got momentum picking up... What are these conversations like with people that are interested in investing? Have they invested in other deals, the majority of them? Or are they new to investing in real estate?
Chad Schieler: I'd say a lot of these guys are a little newer to it. I'm thinking that [unintelligible 00:22:59.17] I had last week, he was actually vetting another company, which is pretty large, and vetting me out; he was a referral by a coach of mine... And after our discussion, he had never invested in real estate in the past. He was always in like stocks, and his own kind of stuff, with his own advisor. When we were finished, he was like "Alright, I like what you're doing. I trust you. We've got 500k on your next deal."
Ash Patel: Incredible.
Chad Schieler: Yeah.
Ash Patel: Do you use a CRM to follow up with people, or to put notes about them?
Chad Schieler: Yeah, I do. I use monday.com.
Ash Patel: Mighty.com?
Chad Schieler: I'm sorry, monday.com.
Ash Patel: Monday.com, Awesome. Good for you. So what's your next deal look like?
Chad Schieler: Well, we're evaluating several right now... My next deal is probably going to be between $10 and $15 million. It's gonna be a value-add deal, in a great MSA market. It's got [unintelligible 00:23:49.16] growth behind it, great tailwind, it's got a big value-add component to it, to where we can grow the rents a couple hundred bucks a month or more per unit, with some moderate renovations. [unintelligible 00:23:59.03] some great debt on the property as well, and hold for five years, and then rinse and repeat.
Ash Patel: And Chad, speaking with you for about a half hour, you're obviously a visionary. What is your vision for your company long-term?
Chad Schieler: My vision long-term - by end of 2025 we will have $80 million assets under management at a minimum. I think it's probably actually a low target, but I want to set them realistic based on where I'm at right now. My three-year goal, we will have a team of about 10 people, analysts, a closing guy, an asset manager, an investor relations person... I've got a couple of VAs right now that help me out... So right now we're going to build our team, we're going to keep pushing forward. In today's climate, we're still making offers, we're still finding deals out there that may not pencil out today, but we're building relationships.
Ash Patel: Back to your Who, Not How - in 10 years, ,what's your role going to be?
Chad Schieler: My role will be CEO.
Ash Patel: And will you still talk to investors?
Chad Schieler: I will, yeah.
Ash Patel: What's the most fun thing that you do in this whole evolution?
Chad Schieler: I get a rush when I get an offer accepted. I don't know what it is, it's like an endorphin high. I love finding properties, and talking to brokers, and getting an offer accepted, obviously... But talking to investors is a big deal as well, helping them achieve their wealth goals is obviously important... And lately, I've actually been helping a few people find their first property; they've reached out to me for some mentorship advice... I won't do it at a cost right now, but I just offer free advice and help them out, and that gives me a lot of fulfillment.
Ash Patel: So you're a deal junkie, like a lot of us, right?
Chad Schieler: [laughs] Yeah.
Ash Patel: ...whether it's raising capital, or actually finding the deals, and executing on them. What's been your biggest challenge with investors? Are they skeptical of rates, the real estate market as a whole? Because all the clickbaity headlines, "Real estate is going to have a huge demise, and it's going to crater."
Chad Schieler: I don't believe that. I really don't.
Ash Patel: We don't, but in terms of investors, have you found yourself having to convince them that it's still potentially a good asset class?
Chad Schieler: No, I haven't. I feel like this actually is black and white. I feel like either you're all about real estate, you want to invest in it, or you're not. You're that guy, or you're not that guy. [unintelligible 00:26:12.27] who's on the fence. It's like you either are, or you're not. And if you're not, maybe you're a connector, and you have people that are interested. That's what I've found so far. And again, I'm only a few months into capital raise, so I'll probably find those investors eventually... But people have a lot of questions. They want to know how I feel about the market. They want to hear about how we're underwriting conservatively to mitigate our risk. They want to hear how our past deals have done so far, to kind of vet us as operators... So I think we'll have a lot of questions; I think we give them reassurance, and the fundamentals of multifamily as a whole, and that there'll still be good investments going forward.
Ash Patel: Chad, you had some difficulty with your PM companies early on... What have you done different to find and manage property management companies better?
Chad Schieler: Well, I've gotten referrals from people... So I've found a company who was referred by multiple other operators. So that was good. I've found ones that really do a lot better job at marketing, they drive leasing, they're great at quick turns, our communication is great, the reporting is better... Really, just getting referrals from people of what the best companies are. So I do a little better job interviewing them ahead of time to make sure I know what their goals are. And moving forward, one thing I'm going to do is we're going to give a small slice of the GP to the PM company, because right now interests may not be aligned completely, because they're focused on top-line revenue, not expenses and NOI. And I strongly feel that by giving them a couple of points, that can get them more engaged and [unintelligible 00:27:44.09] interest in making sure that NOI growth is in the plan.
Ash Patel: A couble points on the GP... What if you do a percentage of the increased NOI instead?
Chad Schieler: That's great idea. I like that. Like over target.
Ash Patel: Yeah. Here's the problem - when you have an employee, if you give them equity in your company, they are now on the books as someone who has ownership in your company; that's fine if there's a vesting period of five years, where they've earned the right to be an owner alongside of you in your company. Another way for an employee would be profit sharing. If we do really well, you will get a nice bonus. So I like the incentive part with the PM company. Now, some property management companies would be like, "Damn, you know what? I own part of that. Let me take care of that one first." But if you find a lazy one, you can't pull back that GP that I gave you. "You suck. You don't deserve this. I'm taking it back." Guess what - I'm on the paperwork. But instead, if you just have a side agreement that maybe doesn't even have to enter the PPM... It could be just a management incentive kind of thing...
Chad Schieler: Yeah, I love that.
Ash Patel: Give it them and make it so that you could take it back. If they are asleep at the wheel and your efforts are increasing NOI? Hey, guess what? You failed, you're not getting it.
Chad Schieler: This is so powerful, Ash, because part of what we do within due diligence is we get them to agree with our budget. So if you agree with the budget when we're going to the property, that's saying that you agree with the NOI. So you should be able to exceed this if we have incentivization properly. This is great. I like that idea.
Ash Patel: Yeah. Look, this is all new to me, too. I'm just thinking this stuff out loud. I like it. And I bet a lot of people don't do what you're doing, where they give the property management companies ownership or equity or a stake in this deal. So now they're vested. That's cool, man... Because you've met all those people that say "Yeah, I own 30,000 doors", because they're passive investors in 10 deals, right? Now, that's great if it's your PM company having other customers drive by and say "Look, I'm part owner of that apartment complex there." It gives them that pride, and they want to keep it up... So I like it.
Chad Schieler: That's awesome advice.
Ash Patel: A good brainstorm in here.
Chad Schieler: Yeah. Thank you. This is good.
Ash Patel: What's been your hardest lesson learned in real estate?
Chad Schieler: I think my hardest lesson was not getting started sooner. And I'm not gonna regret the steps that I took to get started on the first deal. I never will regret that at all. But I think two things... Can I give you two?
Ash Patel: Yeah, hit me.
Chad Schieler: Okay. I think number one is I didn't get started back in 2012, when every year on New Year's Eve I had my resolutions as "Getting my first property. Getting my first property." It never happened until like 10 years later. I wouldn't change it, but that is my regret. Number two is I regret that I would not have started with taking capital raise very seriously sooner.
Ash Patel: Yeah, that's important. Best Ever listeners, if you are like Chad and I, you are a deal junkie... Real estate's in your blood now; I'm assuming it is, just by talking to you, right?
Chad Schieler: Oh, yeah.
Ash Patel: You're hooked now. You've got to eliminate that mindset of "Yeah, I'm just going to use my own money. I'm never going to raise capital." I did that for probably 10 years. I was too scared to raise capital. I lied to myself by saying "There's a sweet spot of commercial deals between $300,000 and $800,000", and really, that was just me justifying my fear of raising capital. And what changed for me was I realized a lot of these high net worth individuals don't have an avenue to invest money with the returns that we do. So when I finally realized that these guys and girls are making investments in bars, restaurants, marijuana companies, things that don't give them any returns, I realized I'm doing them a favor. And so are you. You're doing these people a favor by being a steward of their money, helping them grow their money in ways that they don't have access to. So really important there; you're lucky you learned this early on.
Chad Schieler: You're so right, Ash, and this is actually an opportunity that's unique. These aren't advertised online. They're not publicly known about all the time, so I think you're right there. And the second thing is, I was just like you, where the first few deals my mentality was, "I'll use my own money, I'll make my mistakes, and that way if I lose it all, it's my own money, not somebody else's." So while I still wish I would have started raising capital earlier, I think it was still good that I did the first couple on my own, to make my own mistakes with my own money. And then it gave me confidence to use other people's money.
Ash Patel: I agree. And I think you should share that maybe in the newsletter, or when you're on the phone with investors. I think that's very important, because I think we've gotten a bad rep in this industry, when there's very, very young people with no experience, going to a bootcamp, reading a book, and raising $10 million for a deal... It's mind-blowing. And we know now a lot of those deals are suffering. So increasingly, our industry is going to get a bad rep. So you sharing what you've just said I think is very important, and powerful for listeners to hear.
Chad, we're running against the clock here, brother. Let's get to the Best Ever lightning round, and one of the questions I always ask is the Best Ever real estate investing advice. I'm sure for you it's getting started sooner.
Chad Schieler: Yep.
Ash Patel: Yeah. I interviewed somebody not too long ago, and they said, "Do one deal." Because he's never met a real estate investor that's only done one deal.
Chad Schieler: You're so right.
Ash Patel: Yeah. Once you do one, sky's the limit.
Chad Schieler: You're hooked.
Ash Patel: Good. Another lightning round question. Chad, what is the Best Ever book you recently read?
Chad Schieler: Who, Not How. This book just blew me away. I should note that I give it to my top clients as a thank you gift, and they all love it, too. It was just so powerful, just to show that it's all about creating more who's in your life to get accomplished what you want to get done. You can't scale this by being the one guy doing it all.
Ash Patel: Yeah, I don't think you need this next book, but Rocket Fuel... Have you read that?
Chad Schieler: I have. Yeah.
Ash Patel: Yeah. You know you're a visionary. And you know that you have to have people around you that are integrators. Because - are you one of those people that can start a lot of things, but not follow through and finish them?
Chad Schieler: Yep.
Ash Patel: Yeah. Look, again, man, I'm a late learner. 10 years. I thought bad about myself because I was envious of people who had a clean desk, people who can follow through and get things done. And reading that book, it made me realize it's a gift that I think much differently, and I have no desire to complete tasks. As dumb as that sounds...
Chad Schieler: Yeah. You've got to focus on your unique ability. That's just how you are.
Ash Patel: Yeah. Good for you. You're lightyears ahead of me. Chad, what's the best ever way you like to give back?
Chad Schieler: Well, besides my local church, of course, like I mentioned earlier, I like to give back my time to help other people get started in real estate. It's not a professional [unintelligible 00:35:00.03] business, but whenever people have questions from time to time, I love giving back that way.
Ash Patel: Good. And Chad, how can our Best Ever listeners reach out to you?
Chad Schieler: So our website, InvestFocused.com. Or my email, Chad [at] investfocused.com.
Ash Patel: Chad, thank you for your time today. This was a great conversation. I learned a lot. We did some good brainstorming, and we got to hear your rise in real estate from zero to 140 units on six properties, lessons you've learned, and most importantly, you pushed yourself to get started. And that was it.
Chad Schieler: Thank you.
Ash Patel: Awesome, man. Thank you for your time again.
Chad Schieler: Thank you.
Ash Patel: Best Ever listeners, thank you so much for joining us. If you enjoyed this episode, please leave us a five star review. Share this podcast with somebody you think can benefit from it. Also follow, subscribe and have a Best Ever day.
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