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Why Passive Real Estate Investing Doesn't Exist w/ John McNellis · Real Estate Investing with RealDealCrew

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Biggest lie in real estate that passive investment even exists.
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John McNellis has developed close to a hundred properties over the last forty five
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years,
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And he says every single one of them demanded daily attention,
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no exceptions. In this episode,
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you'll learn the two mistakes that wipe out most beginning developers.
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Why commercial real estate is weaker inflation hedge than most investors assume,
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and the one deal size John says nearly took his business down.
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if you want to build systems for your investing business.
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Check out RealDealCrew dot com.
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Let's get started.
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John McNollis joins me here today and I'm gonna direct everybody to his Amazon book.
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you can get that directly there.
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It's actually quite the deal right now.
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It's half off if you get the Kindle vers version,
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but making it in real estate thriving as a d developer.
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I'm gonna have that as a direct link in the show notes so it's easy
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for people to find it. Again, it is making it in real estate,
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thriving as a developer. Really appreciate your time here today,
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John.
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Jack, thank you. It's it's my pleasure to be with you.
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You've kinda had an interesting kind of journey into becoming a developer.
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You started off as a real estate attorney,
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right? Like what made you cause that jump?
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Well, actually just to possibly bore your listeners,
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I I started off as a journalist.
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I I was a journalism major in in college,
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mainly because I was a good typist and I didn't like homework.
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decided my senior year that it's one of the best decisions I ever made,
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Jack, was not to become a full time journalist.
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but I had no talent. wasn't any good at math or or science or anything else.
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So I went to law school.
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went to law school because I wanted to be,
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you like Perry Mason, you know,
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saving innocent people, going to court,
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you know, doing all that stuff.
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Joined a fancy law firm in San Francisco,
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figured out within I'd like to say two hours,
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but it was probably a few months before I realized that
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big time corporate litigation is absolutely nothing,
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nothing like TV or movies. It is soul killing.
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you're just
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You're becoming a professional paper warrior.
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Not to put too fine a point on it,
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you you're be you're becoming a professional asshole.
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and I hated it. But fortunately the firm was big enough it had
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a real estate department. So I shifted over to that after pleading with
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the managing partner. They they finally let me become a business lawyer.
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And I loved that. I loved helping guys buy,
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sell hotels, office buildings,
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shopping centers. but then I also realized.
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that I was making fifteen thousand a year and some guys who weren't that much older
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than I was, you know, the the the principals,
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the the guys that that you know my that we represented the money for,
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they they could be making a million bucks.
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And so I said, I've got to become a developer.
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So that's kind of how it happened.
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And it it was gradual but I started doing deals.
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I started doing little deals on the side.
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Like I bought my first duplex when I was twenty-four.
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And then I paid $25,000 for it,
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put down $1,500. And I was really lucky.
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This was in my let's call it crappy hometown.
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But it was a rising market in the mid 70s.
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Sold that the duplex that I bought for 25,
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sold it a year later for 60, traded the proceeds into a fourplex,
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sold that a year later for 120.
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So the 1500 bucks, which was my down payment.
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became like 90,000 in equity. And I said,
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wow, this is great. A lot more money than I was making as a lawyer.
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So that and then I teamed up how I got from doing call it rookie ball,
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you know, the house flipping and stuff like that.
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I teamed up with a a former client who was about 15 years older who
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was a shopping center developer and excellent developer,
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but he wasn't any good at at raising money.
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he was basically a poor salesman.
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and so I became his junior partner.
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I couldn't sell myself because I'm in my twenties,
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but I could point to my older grey haired partner and say,
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This guy's a great developer. Why don't you invest with us?
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Why don't you lend us money? And and we were off to the races.
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So is i what do you d work on working on today?
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What is your primary focus when it comes to development?
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All right, so we have this, because we've been doing this for the better part
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of 50 years. So we have a large portfolio of neighborhood shopping centers here
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in Northern California. Now, today,
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sorry folks, as far as I can tell,
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and I confirm this with every smart guy I know,
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from here to South Carolina, ground up development doesn't work except
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in really unique circumstances.
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Like you have a hospital that that that that is going to hire you to build
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it for them.
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Or you're building low income housing using public funds.
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But in my world, neighborhood shopping centers,
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retail, ground up doesn't work.
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So what we're doing today, Jack,
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we're doing much smaller deals that do work.
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We're working with quick serve restaurants,
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primarily Chick-fil-A, doing ground leases.
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So and so instead of doing a fifteen acre,
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excuse me, shopping center, we're doing one to two acre little f fast food things
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that that
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That do pencil and mainly because they're ground leases,
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so the tenants are taking the construction risk.
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Hmm. That's interesting. That's kind of a a sizable pivot then at at at some point.
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Like what made you or what you you mentioned that the the bigger development deals
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just don't pencil out anymore,
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but how did you find
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No, they don't.
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that that pivot or that niche to go after now?
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Well, the one of the great you s let's say there that depending on how you count it,
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there are five, six, seven different disciplines in commercial real estate hotel,
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office, multifamily, and so on.
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Retail is unique, Jack, in that we work with the same people year in,
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year out. You know, if you develop an office building,
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chances are you're gonna lease to its its tenants once,
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you know, it's one and done. You know,
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you you lease to a law firm, you move on.
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We on the other hand,
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We work with Walmart, we work with Ross,
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Safeway, Starbucks, same people year in,
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year out. And so y you develop a certain collegiality.
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It's in in a way it it's nicer because you're doing multiple deals,
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so you're not trying to screw somebody or or hopefully not get screwed
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on on one deal. You know, it's it's a much longer term approach.
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So it's almost like a fraternity.
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and by the way, folks, if if you're not in retail a hundred percent,
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I I wouldn't dabble in it. It's it's a little bit tricky as very much
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an insider's game. But the so as we've done these deals over the years
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and we have all these tenant contacts,
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you know, when one thing isn't working,
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you shift over and ask the tenants,
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gee, how can we work with you?
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How can we help you? and that that's
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So we started with Chick fil A,
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I know, four or five years ago,
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and now I think now we're on our fourth deal with them.
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Yeah, well I it I suppose there's a lot
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Yeah.
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of when it comes to consistency too,
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whether whether it's it's your deal flow or they know what to expect,
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they're they're likely gonna go with what's familiar and and predictable.
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That's right. and you know, each deal you deal with w with a tenant,
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it it's not a cookie cutter on the next deal,
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but it does get easier. You know,
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the lawyers get to know each other,
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you they kind of understand, you know,
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where the compromises are in a a lease or a purchase contract.
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and then if you can if you're smart,
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capable and honest and you deliver on time,
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you know, th that you get a lot more leeway,
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if you will, or a lot more acceptability.
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from the tenants. You know, they say,
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Okay, I can work with this guy.
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He's not going to embarrass me.
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You know, I'll go out on the limb with my real estate committee because
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I know McNellis is going to deliver this.
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So it it very my business pays off i if you're in a over the long time.
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So for someone trying to do their first real deal today,
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what are the biggest mistakes you see beginners make when they try to raise capital,
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pick a site or structure a project?
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Well yeah, that's funny. In the book,
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so this is the third edition of the book,
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Jack, and and and each one is it's the same book,
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it just gets longer and longer.
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In this last one, I I decided,
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hell, I'm old enough, I might as well just open the kimono,
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tell the truth and talk about my biggest mistakes.
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And so I list seven or eight of them.
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But I think by far in by far and away,
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the number one mistake that particularly beginners make is paying too much.
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You know, the
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you're starting out in the business,
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you really need to get a deal done.
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You know, you've you've left your paying job and you've you've got to close,
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you need those fees. And so what do you do?
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And you're inexperienced, you pay too much.
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And it's really hard to recover from that.
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You know, it it may be that you you paid so much that the development that
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you do will in essence just get you back to break-even that you gave away
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the development profits.
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to your sell your wily seller from day one.
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I think that's the biggest mistake.
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Second biggest, also much more common among beginners and rookies,
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is overleveraging. I mean, o you know this,
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overleveraging works great in a raging bull market,
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but the bull market always comes to a halt.
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The carousel always stops. And if you're overleveraged and and then whoops,
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I I can't sell this thing and I've got
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debt which a couple of years ago was three plus percent and now it's what,
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nearly seven percent, you get wiped out that way.
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I I and th those are the two biggest mistakes.
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but I think I list ten in in my book.
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We can go on and on about the mistakes I've made because Lord knows I've made them
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all.
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Well, out of that out of those ten mistakes,
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which one hurt the most?
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It's it's kind of like a car accident.
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It usually takes more than one you know,
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one bit of negligence. the one that hurt the most,
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let's see, we wildly overpaid.
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we we had a hundred and three percent financing,
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which means that we bought this shopping center in nineteen eighty-three
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for about all in about twenty million,
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which is about sixty million in in today's dollars,
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which
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In today's time, we've never done a deal that size again.
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so we overpaid, over leveraged,
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and then we tried to overdevelop it.
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in other words, what we should have kept this was a a a community center that
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was badly in need of a a major renovation.
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And we tried to take it too far upscale,
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yeah as opposed to just, you know,
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solving the problems and keeping it a mid-range convenience center.
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So
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That so overdeveloping was the third.
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Failing to to pivot, to recognize our mistakes,
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which is you know, you know, that try try again thing.
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I don't think that Okay, okay,
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let's stop here. If persistence is not among your like top ten character traits,
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you shouldn't be a developer, right?
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You know, it it is hard what we do,
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and you're always encountering all kinds of resistance.
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But that said, you've got to learn.
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when to stop persisting, you know,
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when to say, whoops, this isn't working,
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you know, we gotta stop climbing this mountain because we're gonna get stuck here.
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So we failed to do that. And I think those four mistakes w w took us
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all the way down on that one. And we lost the property to Fort
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Was it a situation where
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it kind of snowballed? You know,
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you're just you had you started off with a a bad foundation,
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if you will, and then you just kind of things kind of took off from there.
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Well
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l l like like like I say, if if you overpay,
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you don't have a found you know,
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you you have a broken foundation.
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It you just you can't dig yourself out of,
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you know, that hole unless you've got perhaps runaway inflation or or
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you get truly lucky.
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Mm-hmm.
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So you talked about the get rich slow business.
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What does that mean in real estate and why do so many people lose money
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by ignoring that idea?
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Well, I I think what drives me k another reason the that I I put
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in this whole section on losing money,
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or you know, I kind of joke about this here here are the ten best ways
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to lose money. So I just want to make one point clear to everybody who's listening
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to this. Jack, if you do more than a handful of deals,
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if you do say ten real estate deals,
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you are going to lose money. you're absolutely guaranteed to lose money.
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You know the
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business climate is just like the weather climate.
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There are just too many variables,
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you know, that can hit you, you know,
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and it takes three, four, five years,
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you know, to get from the time you first see a deal until the time everything
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is set. You don't know COVID is the best example.
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you and I could have been geniuses in 2019,
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bought something that we knew was just going to be a home run,
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and boom, you know, we get hit by COVID.
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So the reason
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I yeah, I just want everyone to know that you're going to lose money.
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So th the trick is to not you know,
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and the other mistake that that we made is i if you if you know you're gonna lose
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money, if you do let's say ten deals in a row and each one,
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just for to keep it simple, is a million dollar deal where you hope
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to make a hundred thousand dollars,
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that's great. So at the end at the end of and you do one a year for ten years,
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you made a million dollars, right?
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A hundred thousand on each one.
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But maybe on the eighth or ninth deal,
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you don't make money, you lose,
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but you're still doing that million dollar deal,
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you're in the game. You know, yeah,
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it's gonna hurt, you lost a hundred thousand,
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and so instead of and maybe you lose on two deals,
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maybe at the end of the time you've lost a couple hundred you've lost
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a hundred thousand on two and made a hundred thousand on eight,
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and so what you're you're six hundred thousand ahead or something like that.
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But if you do, and this is another mistake we made with that big deal.
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We went from well in the space of that twenty-five thousand dollar duplex I bought,
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that was in seventy-six, eighty-three.
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So in the space of seven years,
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we went from twenty-five thousand dollars up to a twenty million dollar deal,
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which is kind of like gambling,
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and putting you know, playing blackjack and going all in each time.
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You're just not gonna work.
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And so we we came I wouldn't say we came close to personal bankruptcy,
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but that project that was called Birdcage Walk,
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it did go into bankruptcy, and we did lose it.
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But you know, we survived. But again,
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had we taken a kind of a longer term view and stuck with instead of
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a twenty million dollar deal at that time,
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maybe one that was three or four million,
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that we would have been much better off.
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So you've cum completed eighty plus projects and kept full ownership through
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internal capital. How did you build a business model around control
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and patience instead of chasing this and chasing the scale?
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Great question. Actually, we've done close to a hundred deals over
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the last forty-five plus years.
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And we don't do a lot, Jack. So it's a a couple of deals a year.
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and you know, you s you stick around long enough,
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they add up. so in the early days,
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you know, I s if you put your thumb and forefinger together,
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this is what my net worth was.
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So you we had to start with other people's money.
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when I told you I teamed up with an older developer,
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I was the money raiser, so I would go
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on our first big shopping center deal we did,
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which we still own, I I went door to door,
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you know, to raise twenty-five thousand dollars at a pop to get the
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the the million dollars up. And then and this is what happens to everybody,
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if if you're meant for success in on a larger scale in commercial real estate,
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you start with nothing, you go with friends and family,
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but pretty soon, unless your name is Rockefeller,
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you run out of friends and family money,
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and then you move on to institutional partners.
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And that's what we did throughout the eighties.
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that project we lost, we had a big time savings and loan as our our partner on it.
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Well, by the time the nineties came around,
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and we had three or four institutional partners during the eighties.
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The nineties, the beginning was a terrible recession,
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you know right up there with the Great Recession.
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And then I came to the realization that I'd much rather have
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a hundred percent ownership of a small deal,
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a hundred percent ownership of a
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say a gas station, a million dollar deal,
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or a McDonald's, rather than ten percent of a ten million dollar deal
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or one percent of a hundred million dollar deal,
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no outside partners. So we c cobbled together what what capital we had on our own.
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So this is 35 years ago now, and decided no more financial partners,
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no more big deals and no more sixty million dollar deals that that could go awry.
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And we started doing much smaller deals,
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two, three, four, five million dollar deals.
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and how did we do those? You know,
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there's an old joke, you know,
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where the line says, We buy junk and sell antiques.
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You know, so we buy little centers,
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fix them up, just like fixing up a house,
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and then trade into the next one.
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And so and we s we basically sold two out of three.
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I think our portfolio is around thirty properties now.
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And not all the shopping centers,
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by the way, but the majority. but we would buy
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We'd sell one, you know, to buy the next and pull a little cash off the table.
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Hmm. Just to remind everybody,
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we're talking to John McNellis.
16:23
You can learn what he can help you with,
16:26
especially through his book. I'm gonna have that as a clickable link
16:29
in the show notes directly to Amazon.
16:31
Look for making it in real estate,
16:33
thriving as a developer. And if you found some value in what we're chatting about
16:37
so far, do us a favor, share this with one of your friends.
16:40
If you're watching us on YouTube,
16:41
give us a like and subscribe.
16:44
So John, I'm hoping you'll spend a little time talking about your mindset
16:48
on a couple of things. One of them is y when you had that project that went south
16:53
on you, it kind of throws people off.
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I mean, you you may not tr no longer trust your your own compass at that point.
17:00
What did you decide or how did you work through that mentally in order
17:05
to just like stay the course and keep doing what you're doing?
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Well, I'm a relatively quick study,
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Jack. So I a in hindsight, a as things were going down,
17:13
I pretty well figured out, you know,
17:15
what we had done wrong. and and part of it was in in just as
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the old expression goes, being too big for our britches,
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you know, trying to do a deal.
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In my net worth in when we bought the this shopping center on a sunny day.
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this was in nineteen eighty three,
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was maybe a million bucks. And and that was all in partnership equity
17:34
in in our handful of real estate deals that we'd finished already.
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So my liquidity was again thumb and forefinger.
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So d one thing I realized it was crazy for me to be signing twenty million dollars
17:45
worth of loan documents. You know,
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now they they were non recourse,
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but still, you know, I it was that was a a big mistake.
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So
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I think I I did learn from all that.
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And again, it was in the wake of that that of that fiasco that we decided to pivot,
18:01
do smaller deals, not have financial partners,
18:04
and be much more conservative.
18:06
so we rather than and then going for a lot of financing,
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we went the other route. so we have as prob we try to have as little debt
18:14
as we possibly can. In fact, our overall portfolio debt on the whole
18:19
30 odd properties is well below twenty percent.
18:22
You know, we just don't love debt anymore.
18:24
So taking the the the get rich slow approach,
18:27
you know, less debt, more equity,
18:29
long term approach, is how it it's worked out well for us.
18:33
Well, it's that over leverage situation again,
18:36
right? Like you you've pointed out that you it sounds like you have
18:39
a significant equity. It really allows you the benefit of weathering
18:44
any kind of storm that might be coming your way.
18:46
It does. It it does. I think Warren Buffett said,
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you know, you have to be an idiot to lose money in real estate if you
18:53
own it free and clear. It I mean it it's really hard to lose money because then
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the you know you're only even if it's empty,
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you're only paying taxes and insurance on it.
19:02
so yeah, I like the conservative approach.
19:05
What drives me crazy, it and one one reason I you know I made that
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Let's call it my public service announcement that for anybody who's serious about
19:13
investing in real estate, you know you're gonna lose money.
19:15
I'm saying that because I'm so tired of seeing these guys on TV or podcasts
19:20
or these how easy it is to get rich,
19:22
you know, get filthy rich overnight in real estate.
19:25
You know, they make it sound like it's a piece of cake.
19:27
And it it is not. commercial real estate,
19:30
all real estate, it's hard. it's lots of ways to lose money and you just have
19:34
to stick with it.
19:35
Yeah, I'm gonna age myself a little bit,
19:36
but you know, it was not uncommon to turn on late night TV and real estate
19:42
was just mailbox money. Easy, easy peasy.
19:45
Yeah. Yeah, I I think you're right.
19:47
And I I think the biggest lie in real estate,
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and and let's face it, our our business is full of lies.
19:52
The biggest lie is passive real estate investment.
19:55
there's no such thing. You know,
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I c I again, we have a f a fairly sizable portfolio every single day.
20:01
You know, there's a leaking roof,
20:03
there's a tenant moving out, there's a tenant going bankrupt,
20:06
there's landscaping people who aren't doing what they're supposed to do.
20:10
You know, it
20:11
Every single day the the the properties need attention.
20:14
and so I anyone who says, gee,
20:16
I'm I'm gonna buy this and ignore it for you know,
20:19
yeah you can do that, but you'll pay for it.
20:21
Okay. You buy a little property and if you don't stay on top of it.
20:25
You you already kind of alluded to some of this r regarding the
20:29
our our belief system as as real estate investors,
20:33
but I have heard some investors claim that commercial real estate
20:39
is the perfect inflation hedge.
20:41
Why do you think that belief is often overstated or just flat out wrong?
20:45
Yeah, it that that is absolute crap.
20:47
All right. Here here's the hard facts.
20:50
Inflation for Jack, for the last hundred years,
20:52
you can check this, listeners,
20:53
you can check this. Inflation year year in,
20:56
year out in America has averaged 3% a year.
20:58
3%. EnCrief, which is the the the the fancy nonprofit board that
21:04
the it's a national council of real estate investment funds,
21:08
I think that's what it's called.
21:10
N.Creef did a study for the last 50 years because data didn't go back any farther.
21:14
That commercial real estate, and they were talking about the best commercial real
21:17
estate, like core office towers or core shopping centers,
21:21
averaged annual appreciation of 1.37%.
21:25
So you got 3% inflation, 1.3% in appreciation in commercial real estate.
21:30
They they make the point, which is obvious.
21:32
That commercial real estate is much more like a bond than a stock,
21:36
in that all the return is in the cash flow.
21:39
So that that same 1.37, it pushed up to a little bit over eight over
21:44
the last 50 years because of the six six plus percent cash flow on it.
21:49
So my point is that in the way this without having thought through this strategy,
21:53
the way it worked out, if you buy a
21:56
piece of dirt or an old broken down building and you rebuild it.
21:59
it's it's like a growth stock.
22:02
You know, you buy it for a million,
22:03
you put a couple of million into it,
22:05
and you hope to sell it for five million.
22:07
But on the day that it's done,
22:09
the day that it's at full market rent,
22:11
a hundred percent leased, that if you look at it,
22:13
and it's no one believes me, but you really should sell it on that day.
22:17
Because from that point forward,
22:20
what you've all you've created,
22:21
you've gone from a growth stock
22:23
but and you've grown to its peak,
22:25
you've created a bond that that it will appreciate that one make one
22:29
and a half percent a year. it'll have good cash flow.
22:32
But if you take that same money take your money no one wants to do this,
22:37
but everyone has to pay taxes,
22:38
pay the taxes and and take the net proceeds and put it in the S P five hundred,
22:43
which is averaged like eleven percent,
22:45
you know, over the last fifty years.
22:47
You'd be way better off. And no.
22:49
So in short, it's real estate is not a great inflation hedge.
22:52
We are signing leases today. you know,
22:56
that that first center that I built 45 years ago,
22:58
we still own it. We're signing leases today that are not that much greater than they
23:03
were, you know, 40 years ago or 20 years ago.
23:05
In fact, we just had a fast food hell,
23:08
I'll mention it, Carls Jr.
23:10
Just declared bankruptcy on one of our pads.
23:12
Again, no such thing as a passive investment.
23:14
And we're looking at the rents.
23:16
And the rents actually market rents will probably are lower than what this guy's
23:20
paying today. So, no, I no, I love real estate.
23:22
It's a great it's a great way to make a lot of money.
23:25
but I think once you get to a certain level of success,
23:27
you really ought to think about diversifying out of it and getting s some money into
23:32
the equities.
23:34
And the simple way to do that is just to invest in in the S P five hundred.
23:37
Well, it's it sounds like you primarily or or in this day and age,
23:41
you kind of focus on that retail space,
23:44
maybe even some mixed use. In the world where people have kind
23:48
of written off retail, what separates retail properties that thrive from ones that
23:53
become value traps?
23:54
Well, first, if you don't mind my trying to correct here,
23:57
retail along about 2005 or 2006,
24:01
in all the pundits said retail is dead.
24:04
The internet's going to kill retail.
24:06
And in fact, even a few years before that,
24:08
if you remember, there was WebVAN,
24:10
which was the first big online supermarket chain,
24:13
that came around about 1998 and it was going to
24:18
Turn my world, you know, topsy turvy,
24:20
eliminate all the bricks and mortar markets.
24:22
Well, that didn't happen. And then retail was not a darling investment among
24:27
you know the institutions, the Wall Street folks,
24:29
because of that fear that the internet was going to kill it.
24:33
What's happened, and particularly in my world,
24:34
which is neighborhood shopping centers,
24:37
and by that I mean a supermarket on one end,
24:39
used to be a drugstore on the other.
24:41
But a bank, pizza, nail, hair,
24:43
you know, what they call essential retail.
24:46
That came through COVID with flying colors.
24:49
you know, we were shut down briefly here in California for a little while
24:52
by the governor, but once we reopened,
24:54
r that retail has done really well.
24:56
So now we're back to being kind of a darling investment,
24:59
well above all of course, all the sectors are above office,
25:03
but above multifamily and so on.
25:05
So I
25:06
I I think reta retail now using the word retail is kind of a broad brush.
25:11
There at least five or six categories of retail.
25:14
I guess a little strip center,
25:15
and by that I mean a a a seven eleven and a gas station to a little bit larger,
25:21
maybe a small convenience center that has maybe ten or twenty thousand feet.
25:25
Our niche is called a neighborhood center,
25:27
and that's ten acres roughly, a hundred thousand feet,
25:30
supermarket. That I think
25:33
has been the sweet spot. Where it gets a lot diicier are the the big centers,
25:37
the the community centers, the big box centers.
25:40
they have had issues and the ones that survive there do so largely because that they
25:45
have great locations. And then everybody knows about the the problem
25:49
of enclosed malls. You know that that that's been around forever.
25:52
You know that that's you could call that a distant cousin to what I do.
25:56
The enclosed malls
25:58
I think very few of them are are are are doing brilliantly,
26:02
but you know, some are and usually the the only the ones in you know,
26:05
like the the highest income areas.
26:07
Hmm. Well, l let's give the listeners something practical to maybe kick kick
26:14
things off. Let's say somebody is listening to this and they want
26:18
to become a developer instead of the f looking for that passive route.
26:22
What should they focus on in the next twelve months that could actually lead them
26:27
to their first deal?
26:28
All right, well, when people come to see me,
26:30
which is fairly frequent, I know but I tell everybody it's this is
26:34
the age old advice, you know, there's nothing new under the sun.
26:37
I say the best way to start out as a developer is to find the archetype worst house
26:43
in the best neighborhoods you can afford.
26:45
Buy the little house, do the work yourself,
26:48
fix it up, you know, paint it,
26:50
put in the petunias, put in the the the new countertops and sell it.
26:54
You know
26:55
Well at least here in California and I think in most places in the US,
26:58
there's a pretty much a zero vacancy rate for single family residential.
27:03
So in every other discipline, hotels,
27:06
office, retail, you have a vacancy factory.
27:08
You could build something and unlike the movie,
27:12
nobody comes and you can get wiped out.
27:14
If you do a a small house, that
27:17
You may not make any money, but you know you can unload it.
27:20
You can rent it, you can sell it,
27:21
because there's just s such a pent-up housing demand.
27:24
And what I like about it, Jack,
27:26
is it has all the components. You know,
27:28
you've got to negotiate it, you've got to work with the broker,
27:31
do the contract, work with the escrow company,
27:34
work with a contractor, work with the brokers to sell it.
27:36
All the components are there that we do on much larger deals.
27:41
But it's a great training wheels deal because the the risk is considerably less.
27:45
So that's if if you're starting your own business,
27:48
that that's what I would say. If you want to go to work for somebody else,
27:50
it you're and you'll start out,
27:52
you even if you work for a development firm,
27:54
you're not going to start as a developer.
27:56
You know, no it's kind of like movie director.
27:58
Nobody starts as a developer. Even if your father owns the company,
28:02
you're going to start out as a probably an assistant property manager
28:05
or an assistant leasing agent to work your way up.
28:08
Well, one more time you can learn more by looking up John's book,
28:11
John McNillis, and it's called Making It In Real Estate Thriving as a Developer.
28:17
That's gonna be a clickable link in the show notes directly to Amazon where
28:21
you can pick it up. John, before we dive into the rapid fire and start closing
28:26
out this episode, is there anything else we should have tried to hit on today?
28:29
No, I think you've covered the waterfront.
28:31
but any questions you've got, h happy happy to s shoot it.
28:34
But thanks.
28:35
Well, if you're ready, sir, we're gonna dive into the rapid fire and close
28:38
out this episode.
28:39
Shoot.
28:40
What lie do real estate investors often tell themselves?
28:44
that the property that they're looking at,
28:46
if it just had much better management,
28:49
would be betch but you th the one of the big lies in the business is gee,
28:52
you can buy this and turn this this property around because the the seller
28:56
is just a bad property manager.
28:57
And and you know, you you could turn this around with with love and care,
29:01
and that's often not the case.
29:02
Usually the the sellers are as professional as you are,
29:05
and and whatever problem that the particular property have,
29:08
it it may be endemic to the property.
29:11
So there's one lie.
29:12
If you could go back in time and give your younger self one piece of advice,
29:16
what would it be?
29:17
Yeah, I don't date anyone named Debbie,
29:21
that that comes to to mind. No.
29:23
Ha ha ha.
29:24
I'd probably let me think about that.
29:26
You know, even that that center where it was a terrible loss,
29:30
Jack, out of that the there was a young woman there who was the then
29:34
the assistant on-site property manager,
29:36
who be gradually became the property manager of that property
29:40
and then gradually became
29:42
my full time partner. So Beth Walter's been with me f for since nineteen eighty
29:46
three, so that's forty three years.
29:47
You know, and I in her presence,
29:50
I have said that I would do that deal over again and go through all
29:54
the the the pain, the Sturmandrung,
29:57
just to get her as a partner. So I you know you know,
30:00
I th I don't know. I just tell my younger self,
30:02
just don't be such a jerk and and and stick to it.
30:05
But anyway,
30:06
Even in in deals you lose, y you you learn a lot.
30:09
That's I guess what I'm trying to say.
30:10
Was there anything in your business that you optimized,
30:14
automated, anything like that that you implemented made a significant change
30:19
and you wish you would have done sooner?
30:21
No, you the you're asking the wrong guy on that.
30:23
I I if you saw my desk, you'll see I still keep a paper calendar.
30:27
So I I'm kind of living firmly in the nineteenth century,
30:30
which makes booking things a little bit difficult.
30:32
But no, we're not that automated.
30:34
And on that, I keep listening to guys who are must say much more cutting edge than
30:39
we are. And I've yet to hear someone say that that here is a killer
30:43
AI app that really makes some part of our real estate.
30:47
a business, real estate development business easier.
30:49
I'm sure that's gonna come down the pike,
30:51
but I haven't seen it yet.
30:52
Well, leading into what single tool or process have you implemented that
30:57
has had the biggest time saving impact?
30:59
I think it's time saving. You know what I really love is Google Earth Pro.
31:03
So that really does save time because you will call me and you'll say,
31:08
Hey John, I've got this great site in this town.
31:11
And to remind you, we're pretty much limited to limit ourselves rather
31:15
to Northern California. But you'll say,
31:17
I've got th this great site in a Hollister.
31:20
And the old days, I you know
31:22
you're a good friend, I would trust you,
31:24
I'd go out and look at it and I'd say,
31:25
Whoops, Jack, you missed the fact that,
31:27
you know, there's a graveyard across the street or,
31:30
you know, that there there there's no right turn access into the property.
31:34
So now y while you call me, I just say,
31:37
What's the address? And I just type in,
31:40
go to Google Earth, put in the address,
31:41
pull up the big screen, look at it,
31:43
and I can see exactly you know,
31:45
what's going on at that site. Whether there is
31:49
good access, whether there is good good visibility.
31:51
it works brilliantly for retail.
31:54
Well, John, this was fantastic.
31:55
Again, I'm gonna have a clickable link to your book on Amazon.
31:59
It's called Making It in Real Estate,
32:01
Thriving as a Developer. And but I really appreciate your time here today.
32:05
This was great to chat with you,
32:06
great to meet you and hope you'll come come back again real soon.
32:10
Thank you, Jack. My pleasure. Hope your listeners found it useful.