Reed Goossens  03:03

And hopefully today on the show, we can talk a little bit about what makes the United States such a fertile ground for investing and to achieve financial freedom. And so my whole shtick is that if I can come to the United States and achieve financial freedom, and so can the average American.

Reed Goossens  03:16

And we got visa issues in there, and all that sort of stuff. So there’s a lot of barriers to entry for me to get here. But I made it happen. And you know, I’m not trying to pat myself on the back, but try to inspire people to get off the fence and give it a go.

Robert Leonard  03:28

Yeah, absolutely. And definitely a big shout out to Pod Max. Like you said, we’re here live. I’m down from Boston. So I had a bit of a community as well. Yeah. So I’m excited to be here doing this live with you. And we recently had Diego Corps on the show. He also immigrated, I forget which country is from, but somewhere in Latin America, and he had a similar story. And he was able to overcome a lot of stuff and become successful in real estate as well.

Robert Leonard  03:49

So before we dive into what you’re doing here in the US, I want to talk about the perspective of international real estate, we have a lot of people that listen to the show that always asked me, is your content applicable outside the US? I’m not from outside the US. I’ve never invested outside of the US. So I don’t know really what to tell them.

Robert Leonard  04:05

So having invested in the US as well as being from outside, what are the differences? And do a lot of what we talk about in the US in terms of real estate, apply anywhere outside the US?

Reed Goossens  04:16

The short answer to the overall investing perspective is yes. There’s real estate everywhere, right? The whole reason we invest in real estate is because you can have real estate in Australia and Antarctica, on the North Pole, the South Pole, you can have whatever people need somewhere to live. So yes, there is ways to get deals done, specifically to Australia, and I’m able to talk a little bit more about that.

Reed Goossens  04:35

People ask me, how do you make money in Australia? And I’m like, Well, I actually don’t know because I’ve never invested in Australia. I only invested here in the United States. But what I can tell you is the difference, right? So Australia and America, exclude Alaska, but Australian American landmass wise, are roughly the same pure mass of land.

Reed Goossens  04:51

However, we only have 25 million people in Australia, because we can only inhabit about 18% of our land because the rest of it’s a desert right? Compare that to a America, where you have 350 million people. And you can do east coast to west coast north to south, you have these coastal markets like Boston, where you’re from New York and California. But then you got all these interior markets, which we call secondary markets. Just compare those two for a second for the sheer volume of population, we’re not even 1/10.

Reed Goossens  05:19

Now, what does that mean? Well, we have a supply and demand issue in Australia massive supply demand issue. So think of the Australian market like an LA, New York, San Francisco, Boston, all over the country, right or all over the major markets. We have a lot of people who want to live there, but they’re all constrained around major cities.

Reed Goossens  05:35

With a lower population, we also have only four major banks. So with four major banks, we don’t have the debt financing vehicles like you do here in America. And what I mean by that, well, there’s no multifamily in Australia, like literally you can’t go and find a god install multifamily apartment in Australia. The reason is because in Aussie because he’s earning for banks, low population, they only borrow to sell. So condo market, right? They don’t borrow to build to rent like here in the United States.

Reed Goossens  06:03

So when I first moved here, and I saw this incredible opportunity to buy multifamily, I didn’t even really understand what it was. We have apartments in Australia, it’s all condos, right? And coupled with that was the whole debt, what sort of debt you get Freddie Fannie Mae debt with no interest only for 10 years and amortized over 30 non recourse, it blew me away, like I was like, holy crap.

Reed Goossens  06:22

But the whole perspective is that we don’t even have multifamily in Australia. And the reason is because of the population and reason is the lack of financing debt vehicles. Think of America like say they have 1000 different debt arms that you can go and lend from. In Australia, there’s like four or five. So commercial real estate in space here in the United States is, in my opinion, the number one space not just in multifamily, but all commercial in the western world for yield and appreciation.

Reed Goossens  06:50

I was just at the best ever conference last week, and there was a doctor on stage from Denver Tech University, I think it was, talking about office buildings, right? And cap rates, and how comparing that to other Western worlds. Well, in Australia, we’ve had historically low cap rates for decades, right? We’ve had, you compare New York City or LA, we have where there’s a high demand low supply.

Reed Goossens  07:11

Well, I know in Singapore, in London, like you’re talking cap rates in the 1 to 3%, right. And when someone from Singapore or London, and Australia sees an office building trading for in Boston, or LA for a 4%, it’s like, wow, I’m coming from a country which only has 2% cap rates. The reason a lot of international investments come to the United States is for the yield, but also for the affordability compared to where they’re from in the home country.

Robert Leonard  07:34

There’s so much in there that I found interesting, and I want to talk about and I guess the first thing is the debt financing. And then the second thing I want to talk about is how our cap rates here, even though they might seem low is actually high for international investors. And I think that’s so interesting, because you see a lot of investors today that think the markets, maybe not overvalued but while it’s hot, right?

Robert Leonard  07:54

And so for us, we’re used to say 6, 7, 8 cap. So things are starting to get closer to five, six cap, you’re starting to say, oh, this isn’t as attractive, and you still see people buying deals, and you can’t understand why you go and bid on a deal. And you’re like, these numbers just don’t make sense for us. So how is somebody else gonna buy this deal? Right? But like you said, international people, whether it be Australia or even Canada, a lot of people come from Canada, and Mexico, Latin America.

Reed Goossens  08:20

Here’s the other thing that a lot of people don’t talk about. I’m getting a little bit technical right now. I interviewed a gentleman on my show recently, and he was a British expat living in Colombia, but investing in the United States. You don’t know this, but when someone opens a bank account in Australia, most Western worlds is one question the United States IRS has on every single bank account form in the Western world. So you’re in France, you’re in London, you’re in Scotland, wherever you are, and you open a bank account, it’s like, are you a US citizen? And this is a whole thing that the US tracks where their citizens are and where their money is.

Reed Goossens  08:48

And so the United States asked the rest of the world is hey, can you please provide us this data? On the converse, everyone’s like, well, this is great. Now we can find our own residents in America, hey, America, can you send us that information back? And they said no. And so what essentially did was create like an offshore privacy account. So if you’re an international investor, opening an LLC here in the United States, there’s a lot of privacy around who you are. And thus, international investors view the United States as nearly offshore in terms of getting their money out of the country or wherever they’re from.

Reed Goossens  09:18

So I add that because combined with the yield, combined with the great debt, combined with all the other stuff we talked about, is also the privacy laws about in and around entity structures here in the United States, which Obama brought in and essentially, correct me if I’m wrong, but I think Obama brought it in. But he was essentially the one that said when that everyone asked, hey, can you send us that information back? They said, no.

Reed Goossens  09:38

And so you got to add that perspective to it as well of why people are coming to the United States. The whole myriad of issues I’ve just described there. But that’s why things are frothy. That’s why people are paying a four cap, when you think historically it’s been a six cap. So that’s another layer we can get into as well.

Robert Leonard  09:56

Yeah, that’s really interesting. I’ve heard of the debt obviously being better here. And then some of the rates here being higher than in other countries, but I hadn’t heard the privacy thing. So that’s really interesting.

Robert Leonard  10:07

And so going back to the debt, I think that’s the most common thing that I’ve heard from international investors. And really all that I know is from people that listen to the show, and I connect with them, whether it be on social media, or just through the podcast, they send in emails, and I talk to them about international investing, that’s the biggest thing that I hear is, we just don’t have that debt here. You know, in the US, you can get low rate, 30 year fixed debt, and a lot of commercial debt. A lot of things. Yeah, you can’t get that in other countries in most parts. And so I hear that that’s probably like the biggest barrier when it comes to investing in real estate outside the US.

Reed Goossens  10:39

And it’s a barrier outside of US, you get it done, like these hotels is office buildings is industrial parks, and all different everyone from Australia, there’s all that stuff, and more what we’ve done have multifamily. So you can still make money in other countries, you just got to know how those local countries evaluate the debt, and how that affects a cap rate, right?

Reed Goossens  10:57

The biggest thing that I can say to everyone is, when you’re buying real estate, you’re looking for cash flow, you want to spread between what your interest rates are, and what the local market cap rate is, historically, we have been seen cap rates, it’s 5, 6, 7 percent, where interest rates at 4 and 5%.

Reed Goossens  11:12

So there’s a gap there of 200 300 basis points makes cash flow. You can still apply it as long as you still got that slight bit of spread. Today, we’re saying, oh, it’s a five cap, but you can still get interest rates at 3.5%. There’s, there’s a spread there, right, so you can still make cash flow. And if you’re going in with a value add project, you can increase that cap rate and thus the spread undoes the cash flow.

Reed Goossens  11:31

So wherever you’re investing around the world, make sure you understand what the interest rate is on the debt and understand what the in place market cap rate is. And as long as there’s a spread in your inverse, which means your cap, your market cap rates are five, your interest rate to five and your market cap rates are four, that’s a boy round. But that’s you know what I’m trying to say like you don’t want to be inverse of that, make sure you can get the cash flow to work in your favor.

Robert Leonard  11:52

And again, I don’t know about international markets, but we have hard money lenders here we have private money lenders, we have credit unions, we have banks, we have big commercial banks, and we have so many different institutions that can lend us money, I don’t think that international countries have that option.

Reed Goossens  12:06

They do have it to an extent. But also with the Dodd-Frank era 2009 came around, everyone got slapped over the wrists, and had to sort of get in line with a little bit more regulatory lending, right? And I think it was good, like Americans made the mistake, and it caused them to frickin have a meltdown. I think some of the Dodd-Frank stuff is really good in terms of just being more aligned with understanding, you know, you got to kind of have a pulse and get a loan, you need to put skin in the game, you need to have some collateral in the deal. So you don’t just walk away from these sort of things.

Reed Goossens  12:35

And I think that’s what’s been relatively good in the last 10 years since the downturns, people have learned that their mistakes, and not trying to over leverage into real estate and thus, the borrower has no skin in the game, and they, you’re not gonna is going to walk away because you still have that 20, 30% down.

Robert Leonard  12:50

This international piece is so interesting. And I could probably talk about this for hours. But let’s bring it back to the US to talk about what you’re doing here. So tell us a little bit about your portfolio now, what you’re doing today. And then let’s walk it back to when you first came into the US, how you got started.

Reed Goossens  13:05

My business partner Andrew Campbell and myself, we head up Wildhorn Capital, we’re investing in Austin and San Antonio. We have 1800 units to about a quarter billion under management. And we’ve been investing since 2015. And really, it’s just I started way back in the day in buying a triplex in upstate New York. And so I’m sure we can talk a little bit about that and how it’s so much different to compared to where I’m from in Australia.

Robert Leonard  13:28

Yeah, let’s talk about that first deal. Was that your first deal? The triplex?

Reed Goossens  13:32

Yeah, the triplex. So moving to America, moved to New York City got a job, right. And then once I go to job, I was at my first REIA event, Real Estate Investment Association. And for those people listening to this show, you got to realize America has such an awesome tapestry of education events, you know, we’re sitting here at Pod Max, but we’re also with the rear events, and all that sort of stuff. Get to those things. Because in Australia, we don’t have those things we don’t have is the plentiful that you have here in the United States.

Reed Goossens  13:57

So when I first moved to New York, I was within two weeks, I was at the first New York REIA event, and I had to learn my, change my investing lingo about how to invest here in the United States. Subsequently, from that I realized, oh my gosh, the barriers to entry is so much lower here. And I found mark in upstate New York, I could drive there. Within four hours I used to get the Greyhound bus. It was Syracuse, New York, and I as a fresh faced Australian, who had never really understand what a ghetto is.

Reed Goossens  14:22

I bought my first property for 38,000 bucks for a triplex. And on paper. It was great, right? It looks great, and it was great for about six months and to be able to drive by shooting, I learned the value of maybe you can make money in Section Eight housing. But when you’re only invested in one deal, it makes it really hard to if half the units which was a triplex or two out of the three units sit vacant for a little while, your cash flow is lower.

Reed Goossens  14:45

And so looking back on it, the numbers are too good to be true that but I learned right and the whole message that I want to tell you, listen, is that it got me started, right? I remember sitting on the train nose in a book on the New York subway system going to work reading about how to make cashflow in the United States. And I was like, I had analysis paralysis, right.

Reed Goossens  15:04

And remember, I picked up the book Rich Dad, Poor Dad in beginning of 2010. This was mid 2012, it was two and a half years of self education through Australia, through some parts here in the United States, and it had to get going, right? You don’t get to deal number 10 without doing deal number one. And that was really the whole impetus of getting my first deal done. And I didn’t lose my shirt on it. But I had some really good learning curves along the way.

Robert Leonard  15:25

I talked about that all the time. Because I think a lot of new investors, when they’re just getting started, they see those numbers. Those are the numbers of D class areas, and then you get in there, those are the numbers on paper, everything goes perfect. Yeah, you could get that return. When you take into consideration all the repairs, the maintenance, that you’re actually going to have the vacancy, that you’ll probably have all of the things that come with a D class property, the return numbers aren’t always as good as they seem on paper. So, I do talk about that a lot here on the show.

Reed Goossens  15:54

When you see a really good return like that, like a cap rate of a 12, or whatever on a duplex or a triplex, you have to understand that’s a risk adjusted return. The reason it’s so good is because you’re not in an area that is desirable. I spoke about supply and demand before, when you have high demand and low supply, you have a lower cap rate, hence New York City, hence Boston, hence LA and San Francisco, when you have a low demand, but a high supply, you’re gonna have a higher cap rate, right? So the risk is more adjusted.

Reed Goossens  16:21

So hence why you you think on paper, wow, this is a 12 cap. But you got to understand, well, maybe it’s on the path of progress. Maybe people don’t actually want to live there. Because then if people don’t want to live there, why are you investing there? So you know, and people get too caught up on making money now. Real estate is a slow and steady wins the race.

Reed Goossens  16:38

I come from a country where if you double your money in 10 years, you don’t pretty frickin well, here in the United States, since the last recession, everyone’s like doubled triple their money in three to five years. And I think that’s the norm. I’m here to tell you guys, the next 10 years is gonna be so much different to the last 10 years, and you need to adjust your expectations.

Reed Goossens  16:53

Real estate is a long term play. And if you sit on your real estate for 5, 10, 15 years, you’re going to do just fine. Doesn’t mean out of the gate is going to be great, but it will get there eventually. And so many people are focused on that immediate out of the gate. I tell people these days, like if you want true cash flow out of the gate, go buy business. Real estate is going to be, you might come with very low cash flow out of the gate, and it might take a number of years to get to a point where you’re really happy with a 5, 6, 7 percent cash on cash return.

Reed Goossens  17:19

So I just say that because so many people are focused on the immediate and not building up to something to have a real true investment that’s going to put money in their pocket.

Robert Leonard  17:29

Yeah, to your point about the 12% cap rate, if I’m analyzing a deal, and I see numbers like that, I always go back and double check. And I said, What am I missing? This is too good to be true, right? So I always talked about that here on the show, I say if you’re running a deal, and you see those numbers like that, go back and look into that deal. Because there’s might be something that’s too good to be true. And I don’t think markets are fully efficient. But if numbers are really that good, somebody probably would have gotten the deal already. So think about that.

Robert Leonard  17:45

And then about the long term perspective, I couldn’t agree more. And I recommend that here again on the show all the time, because what we talked about will get you to success, it will get you to wealth, but it’s not going to happen overnight. And I think if you look on social media, just across the internet, there’s a lot of people that promise you’ll be a millionaire in 12 months, we’ll teach you to be a millionaire you will get wealthy with what we’re talking about. But it’s not going to be in 12 months. It’s gonna be 10 years.

Reed Goossens  18:14

So put these numbers back and picked up the book Rich Dad Poor Dad, in 2009. I left my corporate job in 2017. So that is eight years before financial freedom came around and financial freedom. You know, I have time flexibility right now I work for myself. I don’t work for someone else. It took eight years, right? It’s your journey takes time. Things take time. But things that are worth building take time, right?

Reed Goossens  18:36

And people who are out there spruiking are 12 months financial freedom, don’t buy into that crap, they are salesme. To do this game effectively, particularly in this market today. Right? We’ve had so much froth for the last five, six years. You have to be diligent, and you have to understand that it’s okay that it might take seven years, it’s okay it might take 10 years. It’s a journey. It’s about climbing that mountain and enjoying the journey along the way. It’s not about getting there immediately. And going oh my gosh, what the hell’s next. So take it from me guys. It will take time. And that’s okay. It’s okay to take time. It doesn’t happen overnight.

Robert Leonard  19:11

I think that’s the hardest part about everything that we’re teaching people. But I’m sure you probably have a similar thing on your podcast, with your book and all your audience is that people want it quick. You know, we live in an instant gratification. Exactly. Not even just social media. But GrabHub or Uber Eats, you can get food to your house, right in an hour. Or Amazon or in New York City, you can have it to your house in a couple hours, right? You know, it’s kind of crazy. And so we live in that world of instant gratification. It doesn’t matter if you’re going into investments or business, it all translates there and people want that so. And that’s the biggest thing.

Reed Goossens  19:40

And that’s something that like as a business owner now like being a CEO and leader of my own business is like I have to practice a bit more mindfulness and self awareness to understand to keep me in check that I need to enjoy time today. I need to enjoy the journey, because it’s not about the mountaintops we scale to, right?

Reed Goossens  19:58

You know Tony Robbins talks about us overestimate what you can achieve in a year, but you underestimate, you can get what you can achieve in a decade. Again, I pick up the book Rich Dad, Poor Dad in 2009. I’m now sitting here in about a decade later talking to you on a podcast in Trenton, New Jersey, about the journey.

Reed Goossens  20:11

I had no frickin idea that when I would move to the United States, I would be sitting here talking to you. All I wanted to do was come to United States and be an expat, right. But what the thing was, is that I backed myself and I hustled, there’s a lot of hard work in there, guys, don’t get me wrong, there’s a lot of frickin hard work. But what I’m saying is that I had no idea to be sitting here talking about 1800 units, and quote, a billion under management at all, I had no idea, which also means on the flip side that I know the next 10 years is gonna be freaking awesome, right? And it’s not about planning 10 years from now, it’s not about putting these goals out there. Well, they can be targets. It’s about working hard now, seeing what doors open and walk through those doors.

Robert Leonard  20:47

It’s hard work and patience. And one of my favorite people to follow and he can be vulgar at times is Andy for Sella, I absolutely love the guy. And he talks about this concept of aggressive patience. You have to be patient, but you have to be aggressive in pursuing. You don’t just sit there and do nothing while you’re being patient, you still work hard and put in the aggressiveness, but you’re being patient understanding, it’s going to take time.

Reed Goossens  21:09

People don’t understand how much hard work it does take to build something from nothing. I’ll say it again, people don’t understand how much it takes to build something from nothing. Literally, it takes, you’re like a rice burner, you’re putting all this energy in and you’re going one millimeter, putting all this energy, you’re going another millimeter like and you think it’s not going to work. But if you keep being consistent at it and showing up every single day, and making sure that you are putting in the hard work, you are putting in the grind, it will pay off eventually.

Reed Goossens  21:38

And does that mean when a person’s digging to the gold and he gives up too quickly. It’s about if you set yourself up to know that you’re rockin up everyday, you’re showing up every day in terms of your job, your wife, girlfriends or boyfriends, whatever, your family and you’re making sure that’s being satisfied, you putting a roof over your head through a day job. And then on the weekends or whatever in the spare time you’re hustling to try and get this side hustle to work. That’s okay, that’s your journey, right? You’re going to work hard at it. But it might take time to get there 5, 6, 7, 10 years, that’s okay. But to your point about being aggressive in the pursuit of your goals, but also having patience and persistence is the most important thing.

Robert Leonard  22:15

And you can’t be bouncing from one thing to the other. People will come in and they’ll do real estate for three months, and say it’s not gonna work. And then they’ll go to a side business drop shipping, say and they’ll do that for three months. And they’ll start to get a little bit of traction, but it’s not as fast as they want. So then they give up and then they go to something else. And if you do that, in real estate, it’s never gonna work.

Reed Goossens  22:33

What we’re talking about here guys mindset, right? We’re talking about mindset. And if people judge me at the beginning of what are you doing Ray, you know, like, go back to your job, and bla bla bla, and I was still working. But I’m sure a lot of people listening to this show have those same sort of chatter in their head, and also external chatter from their family from their friends, who don’t realize what you’re trying to build, right?

Reed Goossens  22:52

And it’s having that absolute resolve that you can do this, and you can back yourself, because the biggest thing we need to learn as human beings is to learn how to back ourselves. You know, the whole thing about me coming United States, as a freak, I don’t know what’s going to happen to worst case scenarios. I don’t make it in the United States, I move back to Australia get another engineering job. That’s the worst case scenario. And I was willing to do that, right? Because I was willing to back myself.

Reed Goossens  23:14

And the biggest thing for me that makes me drive is the fear of regret, right? Waking up when I’m 70 years of age and going, geez, I wish I’d given that a go. Right? And not given up. Right? So it’s all about mindset. It’s all about who you surround yourself with. It’s all about knowing that you can back yourself and you can make a bet on yourself in order to achieve your goals.

Robert Leonard  23:34

Yeah, and I forget where I heard this from someone on another podcast that said, your worst case scenario is everybody else’s normal day, right? Everybody goes through an engineering job. And that’s their normal day. And your worst case scenario is just going back to what normal people do on an everyday basis. And that means a lot to me. And like you said, it’s a mindset thing. Not everybody’s going to understand or know that you’re doing this for the long term. So, so important.

Robert Leonard  23:59

I could talk about the mindset, the patient’s all of this, but goes into real estate for, like I said, a couple hours, but let’s dive back into tactical. You came to the US, bought that multifamily property in upstate New York, I’m assuming you had no credit history in the US.

Reed Goossens  24:13

Well, it’s a funny story, but keep going.

Robert Leonard  24:14

So I’m assuming you had no credit. You might have had some money, but how did you purchase this? Was it all cash? What was the tactical advice because a lot of people listening to the show are new investors, they either have limited credit, no credit, maybe not as much capital. So how did you get started?

Reed Goossens  24:28

So the word credit, I had no idea what credit was. In Australia, we don’t have a credit score like you do here in the United States. 700 600 whatever it is. I had saved up my own money. I don’t I come from blue collar upbringing. My parents are both high school teachers. So the money I do come to United States with was about $40,000. And I’d save that being an engineer. So I use that to buy that first property for $38,000.

Reed Goossens  24:50

But what I did was to build that credit really quickly. It was I went to a local bank and was called first Niagara bank up in upstate New York. I don’t know if they’re even around anymore, but I made it I made a relationship with a local bank manager and started depositing rental checks into an account.

Reed Goossens  25:05

And over a period of six months, he could see that like I bought this property or cash did a bit of reno’s to it, that this was working. And so he gave me a line of credit, I think, was $30,000. And I was able to buy the deal number two. And from that, I was able to slowly put the building blocks on top of one another.

Reed Goossens  25:19

Now, not everyone just has $30,000, $40,000 laying around, I work to save that. And that’s what you know, the grant cardones of the world that you save money in order to invest. And that’s what I did, right. And so, the barrier to entry spoke about early about getting involved in a class D property was all I could afford, I could only afford a $30,000 property. That’s where I was gonna get started, right?

Reed Goossens  25:41

I wanted to be in control, yes, to learn things along the way. Yes, I did. But it was my own money that I put up at risk that I was willing to bet on. And if I lost it all, it’s my money, right? It got me started. So that was the big thing. Building credit quickly was important. But buying it all cash was how I got started.

Robert Leonard  26:00

So if someone listening to the show today is thinking about how they can come up with the capital for their own deal. And they’re considering raising money from someone else, if it’s their first deal. Do you think that’s a good idea? Or should they maybe just wait till they can save up their own money, and buy that deal?

Reed Goossens  26:12

Look, I think there’s never a good time to get started, right? There’s always always I did it 20 years ago to get started. So if you find a cracking deal, and cracking means great deal. When you find a cracking deal, and you can put the equity you can raise some money from friends and family. The biggest limitation people think is all lack of experience. When that conversation comes up, you can say, hey, yes, I do have lack of experience. But this is my first deal. It’s going to get my undivided attention compared to someone else who maybe done 10 or 12 deals and they don’t get as much attention on that deal.

Reed Goossens  26:13

So there are ways around talking to investors about a first deal. I think you need to get a mentor. I think that’s the most important thing, if you can invest in a mentorship in order to have someone looking over your shoulder. So if you do go do your first deal, and you need to raise outside capital, you make sure you’re doing the right thing. I think that’s very important. But it can be done and anything can be done. So I’m sitting here today telling you yes, you can do it. Yes, you can raise money for your first deal. Make sure you have the right people around you in order to make it short successful.

Robert Leonard  27:06

Just because you can do it, does that mean you should?

Reed Goossens  27:09

Well, in my personal opinion, you challenging the status quo, right is challenging, we’ll know everyone’s telling me about like, you know, I’m not doing going to do these steps before I get to step number 10. I throw that out the window. I didn’t even have a mentor info and did my first deal.

Reed Goossens  27:24

I remember buying my flip project I spoke about a little bit earlier in Philadelphia, and I brought my dad and my uncle, he brought money to the table, my first outside investors, that deal went sideways, and I lost money. I didn’t lose my shirt. But I made sure my investors were made whole. So did I do the right thing by my investors? Yes. Did I make sure all my boxes were ticked in terms of trying to reduce the mitigate the risk, yet things still went wrong? So back to your question. I think anything is possible, as long as you got the mindset as long as you have the willpower to go out and do it again, backing yourself.

Robert Leonard  27:54

And the reason I asked that question was because I personally believe you shouldn’t raise capital for your first deal. Whether it be real estate or anything, really, I don’t think you should raise money. And this is just my personal opinion. Some people have been very successful doing it. But I don’t think you should raise money for the first thing you’re ever doing for anything.

Reed Goossens  28:08

I agree.

Robert Leonard  28:09

I did a couple rentals in my area, the Boston area where I live. And then I went long distance. And my first property when I went long distance, people had seen that I had some success where I live. And they said here, I’ll give you some money to go invest there. And I said, no, thank you. This is my first time investing out of state, I did not want to take their money to do that. And then I haven’t done any flips. But when I do my first flip, I will not take somebody else’s money to do that. It’s my first time I don’t want to put somebody else’s risk.

Reed Goossens  28:32

And you make a very good point, I think that is exactly correct. If you do just continue saving and to get that first deal done, it is really important that that means it’s your money, right? The other thing was saving money that you’ve set a goal out that I want to save X amount of money, you go and buy a deal by the end of the year. And then you can get that deal done.

Reed Goossens  28:47

You can put your toe in the water, you can see how it goes. And thus build that confidence in yourself to say, hey, I know how this is going to happen. And then I can maybe bring on a capital for the second, third, fourth, fifth deal. But I do agree with you that when you’re getting started out, or invest in a mentor, surround yourself with people and try and do your first deal on your own. I think those are the probably the three big takeaways.

Robert Leonard  29:06

If you take capital from someone and then it doesn’t go right and your reputation gets hurt, it’s just not worth it for me because in real estate that’s probably one of the biggest things I’ve learned talking to people like yourself just studying reputation is everything in real estate. It is a relationship business and if your reputation gets tarnished early on in your career, it’s gonna be hard to overcome that. So my number one focus keeping my reputation intact and if that means I can’t do a deal because I can’t bring in outside capital, then that’s fine.

Reed Goossens  29:31

Well, you know, I spoke about the the flip deal I reached in my own pocket to make sure my investors got not that they didn’t lose their money, but make sure that I promised them a return and I gave him the return but I did deep into my own pocket. And this was when I was working full time I was working for granite developer. And so I did the right thing by my investors even when things go wrong and I think that is the most important thing to remember, things will go wrong, things happen.

Reed Goossens  29:53

You know you underwrite a deal, looks great in a spreadsheet. In reality, it might go wrong, it might go sideways, and that’s okay. But as long as you’re transparent with your investors, and you’re willing to dip into your own pocket to make sure they either made hole or they got their or their money back. Or you promised to pay all their money back. The thing with having a bit of a few those hiccups along the way in the beginning is that it makes you a better investor moving forward.

Reed Goossens  30:14

Those mistakes you do make on the front end, we all make mistakes, will help you be a better investor in the long term and more people want to invest with you. Because the other thing is, you know, the stories like my dad, my uncle hopeless, I gave them money and never returned back. They said, wow, that’s awesome. Thank you so much, even though we know how bad the deal went. It’s like, no, you’re welcome. Because I promised you this return, and I was gonna reach into my pocket to make sure you guys were happy with the service I provided. I had to go back and look at what I did wrong, and then make sure I’ve learned from those mistakes in terms of taking to the next deal on the third deal and fifth deal and sixth deal. And now deal number 12.

Robert Leonard  30:45

Yeah, that is so so important. If you do take on capital, you need to make sure that your investors get made whole, are taken care of in the way that you promised. And even if that means taking money out of your pocket, like you had to do, that amount of money that’s out of your pocket is not worth as much as the reputation that you would have lost if you didn’t make them whole. So I think the relationship is so important. So awesome that you did that. And they were aware of how bad the deal went?

Reed Goossens  31:07

Yeah, to an extent. And it wasn’t necessarily how about the deal went. With flipping it took longer? Well, we thought it takes eight months did end up taking 18 months. And that just burnt into our interest in all that sort of stuff. But it sold really quickly. And our ARV on the back end wasn’t as high as cost us more to get what we thought to get it done. And we had a bad contractor, and all those sorts of things. But we got it done at the end, we grinded, we’ve got the city on board, a lot of mistakes that the GC did, but we made sure we got it over line and we got it solved.

Robert Leonard  31:33

Now let’s go back to your deal in upstate New York. You had section eight with that, right?

Reed Goossens  31:38

Yeah, I learned Section Eight very quickly.

Robert Leonard  31:40

So, so talk to us a bit about that. I think some people might want to go section eight. So tell us a bit about what that process was, like, what you liked about it, what you didn’t like about it, if you continue to do it after?

Reed Goossens  31:50

No, so I did for the second deal. But what I found out was that section eight housing is a bit of a ball and a beast in its own right, if you’re going to be successful in that world. The reason houses are so cheap is for a reason, right? If you’re going to go and do that, I would go and try and mitigate the risk over more than one property, right?

Reed Goossens  32:08

And what I mean by that is I went bought that first deal, all my eggs in that basket. And I was like when a tenant moved out, when the tenants started fighting, when there was that drop by shooting in, I had one tenant, I couldn’t even you know, I wasn’t making any cash flow.

Reed Goossens  32:20

So understanding section eight housing is you also got to understand your property management game, right? If you’re going to have a property manager come in and say, Okay, well, I’m going to only going to take five or 6% or 7%, on $1,000 a month in rental, do you think they really going to have all your attention on that one property? Probably not, right. But if you had three or four or five of them a little portfolio of small section eight housing, then you mitigate the risk if one house does bad, but the other for doing well, you can mitigate the risk over a wider base.

Reed Goossens  32:50

And so if you are going to get started in the cheaper end of the market, understand why would a property manager want to make sure your little portfolio is going to be taken care of? And two, how do you make sure that you’re mitigating the risk over more deals?

Robert Leonard  33:04

Now that you’ve done as many deals have you done, and you have 1800 units, I’m sure that you’ve just started to do a lot bigger deals than just that small multifamily. A lot of new investors grapple with this idea of should I go big to start? Or should I start small? What do you think?

Reed Goossens  33:18

Start small, always start small. Back to the point of like not taking on outside capital first, how you believe in that, I also believe in that. If you’re going to go out and test yourself, go out and do a small deal first. You know, go out and you’re not just going to go run a marathon straightaway, right, you’re going to train, you’re going to go run two miles first, and then you know, work up to a marathon.

Reed Goossens  33:33

So start with some more small runs on the board. So you know, we call them in Australia, runs meaning you know, running between the wickets for cricket. Get a few runs on the board and then start going for hitting for the fences and swinging for the fences to get those base hits and those home runs.

Robert Leonard  33:48

Yeah, I agree completely in but and the reason I asked that is because you hear a lot of people on the internet or just either even other podcast a lot of the big names and I won’t name any specific, but I’m sure you know what I’m talking about. He always says go big, you know?

Reed Goossens  34:00

Yeah. It’s the mindset going big, right? It’s not necessarily you go and actually go big because going big for someone could be buying their first triplex for 30,000 bucks, right? That could be going big, right? But the goal might be I want to get to 500 units. My goal was to get 1000 So what surpass that now I’m looking to double the portfolio next three to five years.

Reed Goossens  34:17

So I know who talking about, it’s more what it’s worth setting those big goals for the future, but maybe for that first stepping stone, get that first deal and be built to feel the confidence to go out and do more.

Robert Leonard  34:28

Yeah, I love that. It’s the mindset of thinking big, which I believe in wholeheartedly, but you don’t have to do a big deal. And for me when I went long distance, like I said, the first property I bought I did it with as little risk as possible. I bought a small single family. The mortgage was $300 a month and I said absolute worst case scenario, if this goes bad, I can buy I can pay that $300 a month if I have to, right?

Robert Leonard  34:48

But if I had bought 100 unit apartment complex, I’d be screwed. I couldn’t pay for that. And so I think starting small whether it’s local or long distance, I think that’s a great way to start, but still having that long term, big mindset and so yeah, that is so important.

Robert Leonard  35:03

As we wrap up the show, let’s talk about the number one piece of advice you’d give to an investor. What is a piece of advice that you hear given on other podcasts or just on the web that you don’t think is good advice? And how would you change that to make it good advice?

Reed Goossens  35:17

I’m not gonna, I don’t think any advice is bad. It’s all in the beholder. Who takes on the advice, but the number one piece of advice that I got growing up was from my dad, and he said, a fool in their money are easily parted. So what does that mean? A fool means don’t be uneducated, go out and invest in your education, first and foremost in terms of whatever that might be. Whether it be real estate, investing, or starting a business or getting involved in a certain career, go out and invest in your education.

Reed Goossens  35:41

Surround yourself with people that are like minded and you aspire to be because you are the average of the five people you hang around with. But also understand that it takes time we’re talking about persistence in the beginning, but get a mentor. I think it’s really, really important. It’s education, surround yourself with like minded people and get a mentor in order to be not that fool. Because if you are that fool, your money is going to come easy. Come easy go, as I say.

Robert Leonard  36:03

Reed, thanks so much for your time, I’m glad we were able to connect today at the Pod Max event. Where can the audience that’s listening today go connect with you learn more about all that you got going on?

Reed Goossens  36:11

You can jump over to my website at reedgoossens.com. That’s R-E-E-D-G-O-O-S-S-E-N-S. There you can find the two books, the both best selling books on Amazon, Investing in the US and 10,000 Miles American Dream. You can also check out my podcast called Investing in the US.

Reed Goossens  36:27

If anyone is coming through LA, I can offer your listeners. If anyone comes through li I’m more than happy to meet up for lunch, hit me up, just let me know when you’re coming. We can catch up and talk about real estate, go to info at reedgoossens.com Just say they heard me on your show at the Pod Max event or whatever. And we can link up.

Robert Leonard  36:44

I know we have a lot of listeners out in California. So if you are in the LA area, definitely take him up on that opportunity. I know a lot of people are looking for mentors, looking to connect with people who’ve been successful. So that’s an amazing opportunity. He just gave everyone listening to the show. So definitely take advantage of that.

Robert Leonard  36:58

And I’ll be sure to put links to all your resources, his books, everything in the show notes. And as always, I’ll put a couple other books that are related to different topics that we talked about in the show. You guys can go read more about it. They’re free. Thanks so much for your time. I really appreciate it.

Reed Goossens  37:11

Robert, you’re crushing it might keep it going. And I really really enjoyed being on the show today.

Robert Leonard  37:15

Alright guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro  37:22

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