Host Ash Patel interviews Chad Schieler, the founder and principal owner at Focused Capital. In this episode, Chad shares his experience getting started with partnerships, including the biggest lessons he learned from his early partnerships. He also discusses how he achieved the freedom that has allowed him to live in Hawaii part-time, a time he suffered from and overcame procrastination, and his blueprint for anyone to get started in real estate, including how to start raising capital from scratch.
Chad Schieler | Real Estate Background
- Focused Capital
- Portfolio:
- 275 Units acquired/developed, 39 SOLD, 236 current. 1000+ units as an LP
- Based in: Fishers, Indiana
- Say hi to him at:
- Best Ever Book: 10x is easier than 2x – Dan Sullivan
- Best Advice: "Getting outside of your comfort zone is where the magic happens."
Click here to learn more about our sponsors:
Transcript
Ash Patel (00:13.698)
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, which acquires multifamily value add real estate assets. Chad is a returning guest on this podcast. If you Google Joe Fairless and Chad Schieler, his episode will pop up. Chad's portfolio consists of hundreds of units that he's either acquired or developed. And he's also been an LP on a number of deals. Chad, thank you for joining us again. And how are you?
Chad Schieler (00:53.615)
Thanks, Ash, doing great. Good to see you again. Appreciate it.
Ash Patel (00:57.235)
It's a pleasure to have you back and Chad, where are you right now? I see palm trees.
Chad Schieler (01:01.527)
I am in Hawaii. It's not a fake background behind me. So yeah, I'm here right now. It's nice and warm by 80 and sunny.
Ash Patel (01:06.046)
All right. So yeah, you're not in Fisher's Indiana. Chad, again, thank you for coming back. And, um, today I want to focus on scaling and mindset, right? Um, you've built out a team. I'm assuming you started out as a one person shop back in the day. And how long ago was that?
Chad Schieler (01:26.103)
Yeah, over three years ago, I was a one man band, you know, trying to figure it out, trying to acquire a couple properties, get a couple of deals with some other joint venture partners. But yeah, it's all started.
Ash Patel (01:38.238)
All right. And you are in Hawaii for an extended period of time. How long are you down there for?
Chad Schieler (01:43.939)
We're here for three months, my wife and daughter and I.
Ash Patel (01:47.07)
Okay. I think a lot of our listeners would love, especially this winter that we're having would love to trade places with you. So let's dive into how can somebody achieve this level of success, some struggles that you've had to overcome to have a lifestyle where you can move your family to a nice location for several months. When you started out as a one person shop, what was your mindset struggles at the time and how did you overcome them?
Chad Schieler (02:17.783)
My initial mindset was that I couldn't find any deals. There was no deals out there. Um, you know, I wasn't going to be able to manage the property myself really. I saw this huge mountain that had to climb trying to figure out all the components of real estate investing and how to do it all right. And from the beginning, it was one of the mistakes made, but, uh, it took a long time to get started. Actually, I spent about three years actually researching, analyzing. My personality is very analytical to a fault. I spent three years finding the first property. It was a long time.
Ash Patel (02:54.37)
Brother, three years. Talk about analysis paralysis. Was that what it was?
Chad Schieler (03:00.331)
Not so much. You know, back then I feel like I had to know everything about an industry to get started. Now, for now, that's not the case. You have to know maybe 80% and just go with your gut. Just use clarity over certainty. But a lot of that time was spent looking for properties, starting with the first single family homes, then for duplexes. So couldn't find the ones that would meet the 2% rule, which we know now like those are a no brainer, that's 2% rule but ended up finding the four unit after a few years.
Ash Patel (03:37.37)
You found a four unit and I'm assuming you self manage that property. Um, you had your sites set on bigger, faster. What was your, did you struggle at all with growing too quickly?
Chad Schieler (03:50.047)
I didn't grow too quickly at first. I bought the four unit and then I almost gave up actually, like five months later. I was trying to find another one, similar size, and I almost gave up actually. I had actually put the pencil down and a friend of mine came to me, we formed a relationship and he was able to source a 15 unit deal, which is my second opportunity or second acquisition. And so I didn't grow very fast at first. It took a while to get going.
Ash Patel (04:20.138)
All right, so you're not very good at finding deals. You have and you brought somebody in to fill that gap. What are your thoughts on people starting out taking on partners?
Chad Schieler (04:36.147)
I think that partnerships are the way to do real estate quite a bit. It's a team sport, we really do. I think that you've got to hone in on what your power is, what your strength is and play to that. And then find a partner or you want to build a team and a way to fill in the gaps. Because, you know, we don't have, like, I don't have all the skill sets for real estate. So I'm just, I'm assembling a team of the people that are, that have what I'm missing.
And another point there, I think that with the partnerships, I've had a couple of those. I mean, it's really crucial to find partners that obviously have complementary skill sets as you, but have the same drive and have the same goals, long-term goals as you too.
Ash Patel (05:22.474)
I too have had many partners in different businesses over the years. And I saw a little bit of hesitancy when you, when you said that I'm assuming you learned some hard lessons about partners.
Chad Schieler (05:34.263)
I did, I did. I could share those if you'd like.
Ash Patel (05:37.142)
Yeah, I think it's important, right? Um, you know, it's such a great thing, man. When you go from being a one person shop to now you have a partner and, you know, it's almost like dating, man, you're enamored because not everything rests on you. And you have a sounding board. You have somebody that has similar visions and goals and man, life is good. You know, you theoretically should only be doing half the work that you were doing before. Why would life not be good? What can go wrong?
Chad Schieler (06:07.939)
What can go wrong, right?
Chad Schieler (06:12.119)
You know...
Ash Patel (06:12.402)
Yeah. So if you could share some of those lessons, I think that'd be important.
Chad Schieler (06:17.791)
Yeah, so I remember, I remember, you know, one asset I had a partner on, we had kind of divided up some responsibilities, you know, I was taking care of the underwriting and, you know, the, the closing process and then asset managing after the fact. And he was taking care of some of the construction work and taking care of due diligence, maybe review the inspection report. And he's a great guy. Great, great guy. Still love him today. Great, great friend of mine.
One part that we as a team fell short on is that we didn't, the special report wasn't reviewed carefully. And as a result, we didn't catch the property had a lot of deferred maintenance. We didn't catch extra repairs gonna be done. And then that resulted in six figures extra on capex expense costs, which affected the property.
Ash Patel (07:11.934)
Yeah. You know, with partners, the lessons that I learned the hard way is, um, I mean, this was probably 20 years ago, 20 years ago in a business that I built, I built it and I was so needing a partner that I gave away 50% of this company. And, um, that was actually part of the downfall of it. It's you cannot give away equity. It has to be earned over time is even better. Right.
So people have to prove themselves and you don't immediately need to give somebody equity. It can be on a deal by deal basis. If this is something that you built and you're bringing somebody in on now with startups, you know, by all means, sometimes you have to partner up with people from the get go, but have multiple exit plans and do things on a deal by deal basis or company by company basis. So yeah, partners. That's a tough one, man.
Chad Schieler (08:11.863)
Yeah, I'd say one more thing that I learned a lot was on the capital raise front. That wasn't ever a focus of mine. Um, initially I didn't, I didn't focus on myself. I didn't think it was my strength. It's my limited belief, but I want to ask that I brought on two partners to help with capital raise and we felt short, uh, before closing, I had to make a personal loan to get across closing and finish line, but I learned there that if you bring on people for capital raise, it's probably a good idea to to do some digging with them to kind of see their previous truck with raising capital and kind of make sure they can execute before you rely on other people to fulfill that duty.
Ash Patel (10:46.958)
Chad, now let's go to your first hire. Was that a struggle or was that just, I have to do this.
Chad Schieler (11:00.812)
Um, it, it was a struggle because it was a big leap of faith, you know, to trust those, make the right decision. I'm going from one to two. Um, again, my over analytical self was always telling myself, well, it might be the wrong one or if it's not the right one, but I knew in my mind that one plus one is not two in a business one plus one's like three or four and it's not, like you mentioned earlier, it's not just cut and dry to where, oh, I'll have half the amount of work now. There's still work involved, but if you find the right person that has the drive and has the complimentary skills that you're missing, it can be formed really good team. So it was hard at first, but it's going really, really well now.
Ash Patel (11:42.402)
You know, as real estate entrepreneurs, people think it's a right of passage or some kind of attribute that you're working 16, 18 hours a day. And these are people that are desperately the ones that need to hire somebody, but they can't seem to get out of their own way. I was one of those people for many years should have hired people way before I did. What's your advice to those folks that, you know, they're stressed out, they're inundated, they're doing it all. And you were there.
So what's your advice maybe to your past self and to those of us who struggled or are struggling with hiring your first hire.
Chad Schieler (12:21.276)
You know, a couple of thoughts come to mind, Ash, like in the book, Good to Great with Jim Collins, he says, you know, the rate at which a company will grow is by the amount of people, the quality of people you'll attract and the rate of people you'll retain, right? So you have to have people to grow a business. You can't do it yourself. I think one of the flaws that I've had in the past, a lot of entrepreneurs have, is they think that no one could do it better than me, I do it the best way, and I have to do it all myself.
And that's a very highly limiting belief. You've got to accept that people do it maybe 85% the way you do it and then train them to 90%, 95% and then be done. But you've got to focus as a leader on the 20% of your tasks that bring 80% of the results and outsource all the rest. And don't feel like if you've got extra capital sitting there, don't hold onto that. Like invest it in your company, invest in yourself because that's how you're going to grow.
Ash Patel (13:21.154)
Do you always have to have a goal or can you hang up your gloves at some point? Right. I mean, especially if you're young, can you just get to a certain point, hit that number and be done? Or does that goalpost always have to be moving?
Chad Schieler (13:37.976)
reminds me of the book The Gap and the Gain. I think it's important to reflect on the gains you've made along the way so you have gratitude for where you're at today. But I think a lot of people, myself included, there is that gap between where you are today and where you want to go in the future. I think it's important to have goals but to remain grateful for where you're at right now and to recognize your accomplishments.
It's a tough one. It really is because I think as human beings, yeah, I, I set a new goal. I'll be honest. I really do.
Ash Patel (14:06.666)
Well, what happens when you hit your goal? What happens when you hit your goal?
Do you always have to set the next goal or can you just be done?
Chad Schieler (14:22.864)
In my mind, so for me, it's like, if I'm not growing, I don't feel accomplished. There is a point now, you know, where I've been in my life to where I've reached a certain point and I thought, okay, I'm very happy where I'm at right now. I still want to keep growing as a person. I want to grow as a leader if I can, but I'm not trying to be as aggressive as I was in the past with just exhausting myself on burning the candle on both ends, my wife and daughter. We have one on the way. It's my family. You know, being able to, you know, location freedom, time freedom, financial freedom, relationship freedom, that's what really drives me today. Providing for them and give them great experiences and being able to do work in different locations is what drives me.
Ash Patel (15:20.63)
All right, let's back into this goal. I am maybe new to real estate investing or I've been doing it for a few years and that's my goal is I wanna be able to live in Hawaii for three, six months at a time. Develop a roadmap for me, how do I do that?
Chad Schieler (15:40.1)
Well, I think with real estate, it's so achievable. Real estate does not need to be something you do in the city where you live at and stay there. I mean, we've got property managers that manage the properties. I've got a team that we talk to remotely every day and on weekly calls. And real estate can be a great avenue to do that. And I think maybe it starts with the roadmap of, okay, well, if you want to live somewhere for a month out of the year, three months out of the year, develop a plan in the budget to set aside the funds to be able to do that for the cost you'll incur a year or two from now, and then work towards that goal, right, of the funds will need to do that. But you could totally manage your team and assets across the country. I know people all the time. Actually, a guy here right now, he actually owns assets in Indiana back home. I met him in my office last week. So you can do real estate across the country.
Ash Patel (16:30.486)
Um, so here's what I'm thinking in my head. Why don't you and I pretend to. Advise somebody young and new in real estate on how they can achieve this. Right. So obviously the first one would be to educate yourself as much as possible. What's the next step?
Chad Schieler (16:48.616)
I think the next step is to develop a plan to go find your first property. If you've got, if you're a hunter, if you have the skills to go, you know, talk to brokers and sellers, then you're the hunter. You go find the property. So what are your missing links? Is your missing link raising capital? Is your missing link underwriting? Is your missing link systems? Find a partner that could fill in those gaps.
Ash Patel (17:10.434)
So does that mean somebody's taking on multiple partners initially and building out their team initially?
Chad Schieler (17:20.216)
I would say so. If you're missing gaps there, you want to have a partner involved. Because if you're first person starting out, how can you possibly do it all yourself?
Ash Patel (17:30.546)
Okay, let's do it. So I'm going to be the hunter. I can call brokers. I can look at deals, not very good at underwriting. I don't have a network to raise capital from. So I'm going to bring on two partners. One very analytical can tell me if these deals are good and bad and why. And the third person is the capital raiser, high net worth individual, great network. So when we find the deals, we can have him or her pitch that. So we find a deal and it pencils out. What are the next steps?
Chad Schieler (18:04.304)
Next step is you guys get together on your action plan to manage a property, put the offer into the broker, probably get to best in and final round, hopefully, and win the deal. At that point, you've gotta divide up all the roles and responsibilities. So because somebody's a capital raiser alone, they can't just raise capital. They have to have a material participation in the property as well, have syndication. So I would divide the roles and responsibilities. I would have a memorandum of understanding so everyone knows their their lanes and stay in those lanes. And that way you'll have too many cooks in the kitchen, so to speak. If at that point, just execute the business plan.
Ash Patel (18:42.342)
And capital raising is easy for us to say, but you know, somebody that's never raised capital before let's advise them, him or her on how they go about raising capital.
What are the first steps?
Chad Schieler (18:55.356)
So that one I can attest to. So I say the one mistake not to make there, a mistake is, the mistake would be not informing all of your close friends and family of what you're doing. You know, I've spent two years kind of flying under the radar, not telling my whole network what I was doing. So when I started to raise capital about a year ago, I started from scratch. If you let your audience, your circle of influence know what you're doing, they can get warmed up this whole entire time and it won't be a surprise when you have a deal that you wanna go raise money on.
So the way that I started raising capital was I really sent an email or a text to all my circle of influence saying, hey, here's what I'm doing now. We're on new projects in real estate. I'm excited about it. There's no opportunity today, but if I ever had one, would you wanna be on the list for me to let you know about it? So the key there was there was no ask at all. You're informing them what you're doing and then you basically the people that opt in, you just put them on a list and correspond with them every so often when you have an opportunity.
Ash Patel (19:58.546)
Yeah, that's so important. Letting the world know what you're doing. And you sent out a mass email. Let's call it a newsletter. This is what I'm doing, right? And best ever listeners, you can't get to a point where you're ready to raise for a deal. And all of a sudden, email blasts everybody for the very first time saying, hey, by the way, I'm raising money for this great real estate deal. They're gonna be like, wait a minute, Sally, I thought, when did you become a real estate? What is all this? Like.
Slow down, right? So, and you know, the mistake that you made where not everyone knew what you were doing, I made that mistake for years, man. I quit my corporate career. My wife and I would go out to dinner with old friends and they would ask, you know, Ash, you know, how is the IT world? And I correct them initially. Yeah, you know, I'm in real estate now. I got so tired of correcting people. I just would say, yeah, man, everything's great. How are you doing? And I missed that opportunity to share with the world that I'm now a real estate investor. Right. And with the newsletter, I did the same thing. I sent out a general newsletter. Hey, world, this is what I'm working on. And then it was many, many newsletters later where I said, we have an opportunity for you to invest with us. So you've got to prime the pump. And I'm glad you brought that up. OK, so you go out there and you've sent out this newsletter, you raise the capital. You've now got the deal. It's underwritten.
You raise the capital, you take it down, you show up to the closing table. What are the next steps?
Chad Schieler (21:30.46)
Yeah, I feel like the next steps is you've got to divide up obviously the ownership interests in the deal and if you're raising capital It'd be that the general partnership Interest you know divided up and make sure it's fair according to who's going to be doing the work and what percentage they'll get of the general partnership, you know equity From that point you've got to have somebody who's gonna be on those calls with the PM company management company.
You've got to have somebody who's got oversight, you know, on the books of financials. And you have somebody who's going to work with the bookkeeper and the tax professional. Somebody maybe who has construction background to work with the capex plan, or maybe the PM company has that in house. And then for your investors, you want to send out updates. We do once a month to our investors so they can see what's going on, see the property perform, budget to actual. No in there, anything new that's happening. Maybe, you know, you've got some some new projects you're doing or some new signage you're doing, photos are great.
The key here is constant communication. This is a big area that's lacking with a lot of other groups. They don't communicate very well or very often. So not only will it help your current investors get up east on the property and want to invest with you again on the next project, but you're also being front of mind and relevant more often.
Ash Patel (22:48.502)
Best ever listeners rewind what Chad just said from beginning to end. Very important in Chad. One distinction we did not make was these are not established real estate professionals. These are probably people that have W2 jobs. So what you said in dividing up the post-closing tasks, very important communicating because you don't sit back and celebrate once you've got the deal. That's when the work starts.
Yeah. And that roadmap bro, that roadmap that you just laid out there is perfect. Yeah, so that's it, right? This is not rocket science. And then little by little, people can either quit their jobs if they need to devote more time to this, or they can hire an administrative assistant, hire a bookkeeper, whatever it is, hire out anything that is not something, in my opinion, something that is enjoyable and making you a lot of money, that is a great use of your time.
Chad Schieler (23:48.372)
Yep. I totally agree. You know, one exercise I did with my coach a while back was we were done everything I was doing, all the tasks, all the duties I was doing, and we put them in four different categories. And really what it came down to was which of the four categories or things that I love to do and I was great at everything else, who can we outsource it to? So we used virtual assistants for some of it. I sent some to my operations person, Jason, my CFO. So yeah, you want to figure out what your highest and best use of your time is. And if things cost 20 bucks an hour to have someone else do, outsource that. You should be doing things that would earn a hundred bucks an hour or more, for example.
Ash Patel (24:28.05)
Yeah. And, you know, many people struggle with that. I've got a friend of mine who's, you know, seven figure exit on his business. He's a real estate syndicator and he still cuts his own lawn because he doesn't think he should be paying the neighborhood kid 20 bucks an hour to cut it. He doesn't enjoy it. He just feels like it's something that is part of his duty to cut the lawn. Right. Bad, bad, bad. Like that's somebody that can't get out of their own way.
Chad Schieler (24:56.228)
Yeah, we have a finite amount of time. It's like you can't buy more time. It's impossible. So, we all have the same amount of time every day. And you got to sleep eight hours or whatever it is. So, all the rest of the time, you have family, you've got personal, you have relationships, you have work. So, you have your work pie, you've got to decide, and even personal time, you've got to decide what you're going to spend your time on. And if you're trying to grow a real estate business or grow your own business, like you've got to focus on the best task at hand. And I remember probably 15 years ago, somebody said, whatever I don't enjoy or I'll make money on, I outsource it. And I've always remembered that quote.
Ash Patel (25:31.882)
Yeah, you know, maybe add to that whatever you don't enjoy, uh, that you're good at, but that also brings, well, okay. The things that you should be doing are things that you enjoy the things that you're good at in the things that have a high return for your efforts, right? Could be monetarily could be, you know, different things, but yeah. Uh, anything that you don't like doing, it's more than likely you're procrastinating those tasks anyway. So anything you procrastinate offload.
Chad Schieler (26:03.972)
You know, lesson learned there as well. I actually, I'm good at underwriting, but I don't like it at all. I'm not, like I can read data on detail organising, but I'm not like in the weeds. So I actually missed a property about a year ago because I procrastinated so long on underwriting it, that somebody else got the deal. And I decided after that point, this never happened ever again. So I brought on an analyst to help me with the underwrites.
Ash Patel (26:27.59)
Yeah, man, you solved a problem. So yeah, anything you procrastinate, it's something you absolutely don't like, you don't, you know, you're dread doing, you don't look forward when you wake up in the morning because it's on your list of things to do, please outsource it. And I'm talking like I do that all the time, right? I really, I've got a list of things that I'm still procrastinating about, but trying to get better.
Chad Schieler (26:50.48)
Like we all do.
Ash Patel (26:51.774)
Yeah. Awesome, man. Listen, any, what's your final parting words for our best ever listeners in terms of people that are struggling with mindset?
Chad Schieler (27:03.152)
I think mindset is everything. I think the way, I think what you see and hear determines your thoughts, determines your beliefs, determines your actions and results. So I think watch what you're putting into your mind. So like, are you watching Netflix and other media? Are you filling your mind with positive people and personal growth, maybe podcasts or books? Just always be growing. And if you have the mindset that you live in a world of abundance instead of scarcity, I think that will push you really far.
Ash Patel (27:36.038)
I love that. I've got a friend of mine who, him and his wife will watch every new series that comes out on Netflix and they can't get enough of that. They're looking for more. They binge watch that, but they are struggling because they want to get ahead. That doesn't work, man. You're not growing. You're filling your mind with these. I get it. Everyone needs some downtime and time to relax, but man, try to incorporate some educational podcasts, videos. I mean, there's so much out there. So yeah, it may not be fun in the beginning, but find something again, that's fun, but that's also rewarding, right?
Chad Schieler (28:15.78)
Yep. I would say, Ash, one of the big turning points for me was when I started developing a morning routine for myself and the whole method behind this, the whole thought behind this was I could have refined time during the day for personal growth and development because the day got away from me. Like I woke up and emails were flying in, had to go to work, and then you got family and at bedtime you're exhausted. So for the last probably year and a half, I woke up probably an hour before my family does. And that first hour of the day, I focus on personal growth, gratitude, growing, you know, some physical stuff. But if you set aside time, the very first part of the day, put yourself first, because the best investment you make is in yourself, in my opinion.
Ash Patel (28:56.946)
Yeah, Chad, do you wake up at the same time every day?
Chad Schieler (29:00.456)
Pretty much about 5:30.
Ash Patel (29:03.35)
When's your first meeting or phone call?
Chad Schieler (29:07.296)
Normally, you know, back home, it's around 10 or 11 a.m. because I know that I'm most creative in the mornings. It's my focus time here in Hawaii. My first phone call is about seven or eight a.m.
Ash Patel (29:19.806)
Yeah. Listen, man, I got to thank you for your time. You're in Hawaii and you didn't have to do this podcast, but you took the time to share some great advice with our best ever listeners. So, man, thank you so much. Thank your family for having, giving us part of your time.
Chad Schieler (29:39.204)
Yeah, that's awesome. Yeah. Thank you.
Ash Patel (29:41.41)
All right, 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 someone you think can benefit from it. Also follow subscribe and have a best ever day.
