Have you ever wondered what the real estate market is going to do next? David Lindahl has seen it all. He knows how to spot a good deal, when to buy, and more importantly, when not to buy. Listen as he talks about his experience with real estate cycles and shares some of his best tips on investing. David is a seasoned multifamily real estate investor, best-selling author, and runs a real estate investing education company called RE Mentor.
Listen now! This is your chance to hear from someone who has been through 3 different real estate cycles already and knows what it takes to spot opportunities in the market for buying property or selling property as well as managing properties during these times. Don't miss out on this opportunity!
Table of Contents:
- Where To Listen To The Podcast
- Mastering the Real Estate Cycles
- The Making Of the Back-to-Back Books
- Overcoming Fears by Knowing the Real Estate Cycles
- Poor Until Mastering Real Estate Cycles
- The Mind-Body Syndrome
- Real Estate Cycles During Pandemic
- How to Reach David Lindahl
Mastering the Real Estate Cycles
Darin: David Lindahl is from the east coast in Massachusetts. He's been through three real estate cycles. He currently is invested in over 1500 units and at the height was invested in over 8000 units. And he is a best-selling author of two multifamily books, one called Multi-Family Millions and the other Emerging Real Estate Markets. He also runs a real estate investing education program called RE Mentor. Listen up. David is actually forecasting major buying opportunities to be coming in the late summer to fall.
Just a little bit on how I know David. This is the first time that David and I will be speaking, it's a great honor to have him today because when I started investing three years ago, I did what most people do. I went out and started to look for books to read and podcasts to listen to. David Lindahl had a couple of books that I read, Multi-Family Millions and Emerging Real Estate Markets.
Those two books were some of the first books I read on multifamily. When his assistant Jeannie reached out to me and said, "Hey, would you be interested in having David on?"I said, "Absolutely! " I am excited about this. David, we'll get into the books in a little bit, but I typically start by just asking, are you still an investor? And if so, how many properties and how many units are you invested in?
David: I have been investing since 1996. First and foremost, I am an investor. One time we were up over 8,000 units. We are at the precipice of a new, I shouldn't say precipice, we're at the bottom of a new cycle. As every cycle cycles out, you shed units, we shed it down to about 1500 units right now, but we are about to run again. It's been nice for the last couple of years. We've been doing one-off deals.
A Rock-N-Roll Head in the Making
David: It's a nice break to have. And it's time to have a life again, and then when this COVID opportunity hits, it's off to the races for two or three years. It's going to be great.
Darin: Let's start with the books because that's where I got to know you. Never met you before. One, thank you for writing the books. It's a lot of work to put out a book and for people that are new and looking to get in the space, it's just a great way to educate yourself. When I picked those two, I picked up Multi-Family Millions first, and then when I was done with that, I was craving more and I ended up buying your other book, Emerging Real Estate Markets and both of them were great. Talk about, why'd you even write the books?
David: I didn't plan on writing those books. A short version of my story is, I joined a rock and roll band when I was 17 years old and left home. Did that band till I was about 24.
Darin: You got the clean-cut haircut.
David: Yes. And I got a whole bunch of stories too. I had long hair. And I had tassels up to my knees, it was a lot of fun. I had a lot of fun. We almost made it big once, but we didn't. At 24, I left the band. But during that cycle of being in the band, I embarrassed my parents. I was a degenerate child. I had a lot of making up to do. When I left the band, I started a landscaping company that turned into a construction company, so I could get some money during the winter times around here.
From Rock-N-Roll to Real Estate Cycles
David: I started Carleton Sheets and I got his course. And then I saw an interview about investing in multifamily properties with Harry Helmsley. It was a biography. Harry Helmsley started in New York City, started buying and selling apartment buildings, and ended up owning the Empire State building.
When the interviewer said, "Harry, what was it about apartment buildings that got you going?" Harry said, "I always liked the idea that a group of people would give me money every month to pay off my building, pay off the mortgage. They give me money every month. So I could pay a maintenance guy to swing a hammer and take out the trash, clean the toilets. And they give me money every month so I could hire a management company to collect their rent and take their phone calls. They would give me so much money that at the end of the month after I paid those bills, I would have extra money to reinvest, to put into a savings account, or just go and have some fun with."
A light bulb went off in my head when I heard that. I thought, my God if that's true, I want in. He said, he started with no money. If that's true, I want in. I found out it was true. For the first three to six years, I would only buy small properties, three to six-unit deals, because I was afraid to buy anything bigger. It took me nine months to get into my first deal. There was nobody out there teaching multifamily back then. There was a lot of fear involved, but after I did that first deal, within three years, I had three, within six months, I had nine.
Learning About Real Estate Cycles
David: Within the first year, I had 11. Then within the first three years, I had almost 40 of those deals. I learned about real estate cycles. My market was peaking out and I had gained a lot of equity in that time. I thought I could either go and cash or find another market.
My market, Brockton, Massachusetts was where I first started. I started learning about job growth, household formations. And I went down to Montgomery, Alabama. I did a 40 unit deal, which was enormous for me at the time. I would have done three to six units in Montgomery if I could, but I had too much equity in my 1031 exchanges.
So I did a 40, I did an 80 and then I realized it was easier to do the bigger deals than it was the smaller deals. And that's because everybody that's associated with the deal gets paid off the size of the deal. They get more money and you get a better quality person, the managers, the brokers, the lending people, everybody. Then I went from there to a 350 in Jackson, Mississippi, and then I went to Texarkana, Texas.
If you get what I call a momentum play, a property that will cash flow at the closing and you buy with the right numbers, then it's an easy deal to manage. I teach and I don't manage myself. I asset manage and I have a property manager to manage. Anyway, to get to the story, I went to Texarkana, I did two deals there. And then while I was there watching my properties one night, I was inspecting them and I was eating at the local restaurant and I was sitting at the bar by myself.
Make Your Dad Proud
David: There was a guy next to me, he started chatting me up. We started talking and he asked me what I was doing down here because I didn't have a Southern accent.
I explained to him that I was buying apartments. He was like, "Why here?" So far from Boston. I explained to him my concept of emerging markets. He said, "I'm a reporter for Kiplinger's magazine. I write articles for them. Would you be interested in having an article written about you and what you're doing?" I thought to myself, my father reads Kiplinger's magazine. Here I am, the degenerate kid, trying to make up for my past. I thought my father would be amazed if all of a sudden it plopped on his doorstep and I was in it. And I said, "Absolutely!" My father was, he was like, what? By the way, he was the one that told me if I started investing in multifamily properties, I was going down. He was one of the naysayers, negative people.
I just stopped talking to him about it. So I have dinner with them every Monday night, still do. Back then I was like, "Dad, I get this big idea. I'm going to start investing in multifamily properties", and I explained the Harry Helmsley story. He was like, "Dave, you do that. You going down, kid." Because I was in the rock and roll band, the crazy kid. After that article came out, about two months later, I got a call from Richard Narramore from Wiley, the book publisher. He said, "I read the article in Kiplinger's, would you be interested in writing a book about that?" I thought, wow, that would make my mother really proud. So I did.
The Making Of the Back-to-Back Books
David: I wrote the first book, Emerging Real Estate Markets, which was the number one bestseller for a long time. The foundational information in there is still relevant today. And then after that, they did so well, they asked me to write a second book and I did, and that was Multi-Family Millions. Those were my back-to-back books back then. That was the whole reason for writing the books.
Darin: That's awesome. Were you still in your 20s back then when you wrote the book?
David: No, I was in my 30s. I had just entered my early 30s.
Darin: That's awesome. Here we are and the books are still relevant and they're still helpful. They were some of the foundations for me when I got involved three years ago. I'm 50. I was 47 when I started reading them and I wish I had started a long time ago. That's fantastic. So then you're an investor, you write an article, you write a couple of books and then you also have a mentorship program, correct?
David: Yes. About 10 years into the business, I owned about 800 units at that time. The books came out, and then I had so many people contacting me from the books. I thought, well, I might as well create another form of income and start teaching how to do this. That's what I did. Back in 2002, I started teaching how to invest in multifamily properties, started with a home study system, went to three-day live events, then to a coaching program. Now we've got a whole bunch of relevant courses, how to raise private money, how to do asset management, all of that. We take people from the very beginning.
Teaching Real Estate Cycles to Reach and Surpass Goals
David: We've had students now scale, well over 10,000 units since we've been teaching people how to do it. The thing about it is, there are some students that they just, we call it a family, they stay in the family, they keep in contact, we see them at different events and they visit us when they're in Boston, here at the office and it's great.
And then some people just learn it and go, and then you don't hear from them. For instance, there are these three brothers, they're sons of a preacher in Kansas City. The Worcester brothers. They were with us about six or seven years ago. And then all of a sudden out of the blue, one of my partners said, there's these two brothers, there's three, but one of them left the company. There are two brothers out of Kansas and they're interested in partnering some deals.
And I said, great. He said, their last name is Worcester. It's pronounced Worcester and there's Worcester, Massachusetts. Very similar people from out of the state pronounce it that way. I said, Worcester, the Worcester brothers, I said, is it Jesse Worcester? And he says, yes. I said I know them. They came to the system a few years ago. I said, how are they doing? He said they've done over 4,000 units now. And they're excited about that, possibly JV. There we go, you give them the information they go out and they just do it.
Darin: That's fantastic. I interviewed somebody a couple of weeks ago, she'll be on the show, coming up here shortly, by the name of Erin Hudson, who was in your group and learned from that. Her business partners came from your group, they formed a company called Quattro Capital.
Helping Others Is Rewarding
Darin: It's funny, that must be, I don't know, must give you a lot of joy to be able to share your knowledge and then have other people achieve success based on that.
David: The way it changes lives, it's the most rewarding thing. Here we know the system works, if you simply follow it step by step, we've seen it work for other people through the years. You have to work the system for it to work and for those people that work the system. We've had, I think Jackie Hughes whose husband was killed in Iraq and she was left with two, nine months old twins and a nine-year-old daughter in a one-bedroom apartment.
Now she's living on a 123-acre horse ranch with those kids, because of what she was able to do with multifamily. There are so many different stories like that. There was one time when I was so burnt out because I had been buying so many, we were averaging one and a half deals, a hundred plus units a month, for almost three years.
Plus this business took off. There was nobody else there teaching multifamily at the time. It just took off. I was traveling everywhere for a good five or six-year period, and I just got tired of it. Then I went on a trip to Tanzania, the government invited me and four other entrepreneurs from America to try to explain how the entrepreneurial system works here, so they could try to create one over there. It was part of the mission too. We were building a church over there that had burned down. When I came back from that trip, I thought to myself, I'm going to quit the education business.
Surviving Clinical Death
David: I'm going to focus on my properties and I'm even going to wind them down and just relax for a while. It was right about Christmas time, when I walked through the door, there were so many different cards. People know I love dark chocolate. The dark chocolates, and all these different notes about how their lives had changed. I thought this is one of the reasons I was meant to be here. I'm going to just learn how to delegate, which I wasn't doing. I was doing everything. I'm going to learn how to delegate and I'm just going to keep it going. We did, and we've got so many more success stories because of that, it's been great. I suffered a clinical death when I was a kid.
When I was four and a half years old, I had double pneumonia. Both my lungs collapsed. I had become allergic to all medication. They'd shot me everywhere with the injections through those six months. They get to the point where they rushed me to a children's hospital. And they started giving me experimental drugs and told my parents, I wasn't going to make it.
They said, “If he makes it till tomorrow, then we'll give him this, this, and this. And if he makes it till the next day, we'll give him this, this, and this.” They told my father to plan the funeral, which he did. My mother had a complete nervous breakdown. That last day I was on the operating table, as I remember, I was floating up above it. Looking back at it, seeing everybody frantically working on this four-and-a-half-year-old body, frail. I remember looking up and seeing two figures.
Finding Purpose in Learning and Teaching Real Estate Cycles
David: One was my grandfather and one was a sister that had died before I was born. It's like, how do you know that? When you cross over there, there's an all-knowledge, all-knowing. I looked at them and they were greeting me to take me. And I looked back at that body and as soon as I looked back, it was a vacuum. I went, sucked me back in, and then boom, I woke up at the post-op and my father was there. And I remember him saying, “He'll never eat that peanut butter sandwich, he's a picky eater.” It's been there all day. I woke up and I looked at it. So I must have been starved because I ate the whole thing. From that period, I had a difficult childhood, and I always figured, why was I brought back?
Some of it was so difficult and I would think of it. I did a lot of drugs when I joined that rock and roll band because I was a complete degenerate. And I was crazy and I was self-medicating myself with alcohol and booze and all that. I would think to myself, why am I here? What was the purpose? And then I started investing in multifamily properties. I started making money. And I come from a very middle-class family. I taught my brothers and sisters how to do it. We all started doing better. I thought, this is it, that's why I'm here. And then when the opportunity came to teach, I started teaching and I started changing lives. I thought, this is it. That's why I'm here. I think there's even a bigger purpose, I haven't figured it out yet, but it's one of them.
Overcoming Fears by Knowing the Real Estate Cycles
Darin: That's huge. Look, I have a family, two kids. One, my son is a sophomore in Texas, and my daughter is a senior in high school. As a dad and as a husband, I'm trying to have an impact on my family, but in life, I think that people just want to have an impact on so many more people. And so, what platform can you use to do that? You're very blessed that you were successful and wrote two books, creating a mentorship group where you've touched the lives of so many people. I think that's bigger than just pure financial success for you. Helping others is just a true joy. That's fantastic.
David: It’s the best business to be in.
Darin: Best business to be in. Yes, absolutely. You talked about fear. In the beginning, you were afraid. Talk about that a little bit, because I think there's a lot of listeners, and I'm sure you've run across this with your mentorship program. I have people reach out to me on Instagram and otherwise, at Meet Up groups. They want to get in, but there are some people that either don't feel they're worthy or just can't get over the hump and do it. And so talk about how you were able to press on, even though you were scared.
David: You're right. All the years that we've been teaching too, I see the same thing in most of the students, is that fear barrier, getting into that first deal. It's fear of the numbers. It's fear of, am I making a mistake? Will I be able to raise the money? Will I be able to close the deal? A big one is, am I worthy?
Abolish Your Limiting Beliefs
David: All these limiting beliefs that come from early on in life. People carry with them and a lot of people don't even realize they have them. My biggest one was, "Am I worthy?" I would look at these buildings and think, who am I to own this? Who am I to be successful? I'll tell you in my teaching, it took me three years to understand this. I just thought I didn't even think of myself as an example. But when I learned that you could do 100 unit deals and it was so much easier and you'd make so much more money, that's what I taught the first three years, do 100 unit deals.
And then my student base wasn't as successful as I thought they should be, with the system step-by-step. I started going back and calling people and saying, "How come you’re not doing deals? What is it? What's difficult about this?" And they're like, "You know this, and you know that". I finally figured out, it was the mindset.
So I was teaching them to do 100 unit deals and subconsciously they didn't think they were ready to do 100 unit deals, even though they were trained to do it and they couldn't do it, but they weren't ready for it.
Their subconscious was sabotaging them. I shifted that around to how 100 unit deals will make you more money and they're easier, but start where you're comfortable. The most important deal that you do is that very first one because a lot of people don't get that first one done. It's also your most difficult deal. But what I've discovered is, once you get that first deal done, to do that deal, you've had to put your team together.
Build Confidence in Knowing Real Estate Cycles
David: You've had to put your systems in place, and after you do it, now you realize it does work. You have all the confidence in the world. The system is in place, your teams together, and the deal flow starts coming in behind it. That's why we see, for me, I wasn't an anomaly where it took me nine months to do my first deal, and then within three months I had three more and six, I had nine. We see that all the time here.
After that first one gets done, it's like flowers blooming over and over again. How did I get over my fear? It was, I got a partner, my best friend to do it because I figured I was going to go down, I better take somebody with me. We were both broke, so we didn't have much farther to go down anyway.
Darin: Was he one of your band members?
David: No, he wasn't. He was just my best friend since we were 10 years old. He lived across the railroad tracks. I took him with me, and we were bird-dogging for other people. We knew we were able to recognize good deals, but we were just too afraid to pull the trigger. So we were bird-dogging for two to 4,000 per deal. And then finally nine months into it, there are three families with four bedrooms on each floor, the more bedrooms you have on each floor, the more money you're going to make. They came on the market. We tried to bird-dog it to two or three different people. And it was almost like, the hand of God came through the clouds and just slapped us both.
Take the Risk and Start Investing
David: It's like I put a lot of good deals in front of you, take this one, and we bit the bullet. We took that one, and that was the start of it. I'll tell you, I don't know what we look like, but it was a bank deal. We closed that deal with credit cards because we didn't have any money. So we went to a seminar that said, get as many credit cards as you can. Get them with nonrecurring fees, use those for your down payment. And we did.
It was a bank deal. The bank wasn't there at the closing, the attorney was. He comes in, he looks at the paperwork and he looks at us, he looks at the paperwork again and he looks at us, I don't know what we looked like back then, but he leaned forward and said, "Do you guys know what you're doing?" I was like, "What?" He goes, "Do you have any idea what you're getting into?"
And I'm like, all these people have told me, don't do it, you're crazy. All these bad things are going to happen. And now the attorneys at the closing are trying to tell us not to do it. So I said, please just give me the paperwork. I got to sign it, give me the keys I got to get out of here. And we did, but that was the start of it.
Darin: That was the start of it. I think that that's important for people to hear, is that I've had a lot of people on that, to your point, they got the first deal done and now they have two, 3000 units, but they were scared on their first deal.
The Largest Multifamily Transaction
Darin: Some of them came from the single family world where they were buying single family and then they started scaling up into multifamily. They'll talk about how buying that first house was when you said, start where you're comfortable. Look, some people say that buying that first house was the scariest thing. It's a matter of being able to pull the trigger on something. I'm in that camp, I bought a new construction duplex about three years ago, it was going to take a year to build and I was scared signing the contract for that thing.
I had the capital, I was 47 years old. It wasn't like I didn't have the capital. But it was still something I had never done before. I'd always invested in stocks and ETFs, and what everybody trains you to do. It was scary. But once I did that, I was like, man, I'm glad I did it. But it's going to take forever to build any wealth. I want to go bigger. That's when I started looking for ways to go bigger. I joined a mentorship group here in Dallas and met a ton of other people.
When you start surrounding yourself with a bunch of other people that have done it, then all of a sudden it gives you that courage, and that, look, if they can do it, I can do it.
David: I used to have an office on 17 Seventeen McKinney. We owned so many units in the Southwest, 4,000 plus in Dallas. We did the largest multifamily transaction in 214 in the state of Dallas, where we sold off, I think it was 4,200 units in one transaction.
Darin: One transaction? Now you live in Boston.
David: I do. Just South of Boston.
David Before Knowing Real Estate Cycles
Darin: I'm originally from Connecticut, I'm pretty familiar with the East Coast. I went to the school University of Rhode Island, and you don't have a team. I was a Red Sox fan.
David: Good. I was just about to ask you, Red Sox or Yankees? So you were on the right side of the fence.
Darin: I was. Unfortunately, my son wanted to go against me growing up, so he picked the Yankees.
David: Well now we have the last laugh, right? We've won more championships in the century than the Yankees have.
Darin: Fenway is a very cool spot, and I love Boston. Talk about you. You brought up your childhood a bit in a couple of stories. One, you brought up the near-death experience, which is crazy. You also brought up that you were, look, you had a rebellious side, you were out there in a rock band and you were self-medicating and you were partying. How many brothers and sisters and where'd you fall into the mix?
David: Two brothers and a sister. My oldest brother was the oldest, I came second. My sister was the only girl and my younger brother was the youngest. I was in the middle. And I didn't have a title. I had to be a little loud to get some attention.
Darin: Your dad was a naysayer in terms of getting into the investment world. How'd you grow up?
David: Two jobs to support us. My mother was a fish cutter on the fish crews of Boston. My father was Swedish in heritage. Sweden is known for being very, very frugal. My father was very frugal. We never ate out at a restaurant. And I remember I was the one that's always yelling, "Hey, there’s an ice cream stand. Let's go get some ice cream!"
Poor Until Mastering Real Estate Cycles
David: His response would be, we got some at home. He would say, you have to wait until Saturday when my mother went shopping to get more. We self rationed each other when we were growing up as kids. If we saw somebody taking too much food, it was like, "Hey, that's going to last until Saturday, put some back."
I grew up in a big family of love, but my mother was an envelope lady. She did her budget with the money going into envelopes. I think I first realized that we didn't have a lot of money when I walked into the kitchen one day and she had all the envelopes out. So I was like, mom, what are you doing? She goes, I'm doing my budgets. This is the money I get in for the week. And this envelope goes for the clothes and this envelope goes for food. This one goes for the heat. And this one goes for the gas for the car and this and that. I was like, hey, you got $2 leftover there, where does that go? She goes, that's my spending money.
I’m like, "I think we're poor." But to go back to the story about not eating at restaurants. I remember going to school one day, I think I was seven or eight years old. One of the kids says "We went out and had Chinese food last night." I was like, you went out to a Chinese restaurant? And they said, "Yes, I'm part of this dance group and that's what you do after the recital. They take everybody out to a Chinese restaurant." I went home that day and I said, mom, I want to learn how to dance.
The Strangest Secret
David: I told my brother and sister, my younger brother was too young. But I told my brother and sister, I said, "Hey, if we go to this dance group, they'll take us out to a Chinese restaurant." At the end, I get Chinese food. And they're like, mom, we want to dance too. We did the thing called, we were on stage doing three blind mice, tap dancing, the three blind mice, just so we could go to a Chinese restaurant.
Darin: That's funny. Well, you know what, I think part of the times were a little different too when we grew up. I don't remember going out to eat very much either. My parents had more money, but it was just, it wasn't as commonplace as it is today, I think, but who knows. When you were a kid and you saw all that, was there a time when you thought to yourself, look, when I grow up, I'm going to be different. I'm going to find success.
Darin: You did not have that at all.
David: It was ingrained into me that other people get the good stuff. Other people get nice things, isn't it great that they can do that. Isn't it too bad that we can't? That was just over and over again. My mother would say that. And my father was very quiet and he wasn't around that much. That's the way I grew up. It wasn't until I started. I left the band, I started doing the landscaping company. So I found a tape called, The Strangest Secret by Earl Nightingale. He talked about that, that's a 45 minute CD.
Feed Yourself with Information
David: You can listen to it on YouTube now. But that just basically talked about how, if you think differently, your life could be different. Then the next thing I got was a cassette, a series called, Lead the Field by Earl Nightingale.
I went through that, that was about goal setting. So I started doing what it said, and I started realizing that my life was changing when I was doing it. I went out and got books, The Magic of Thinking Big. Tony Robbins, Awaken the Giant Within, raised the bar, I started feeding myself all of that stuff. That's how my life changed. I remember one time, I started a bunch of different businesses. It was construction, real estate. When I started doing a lot of real estate, I was flipping single-family houses so I could get more multifamily properties. And then I started a brokerage company, because, since I was flipping so many for myself, I thought, well, I could probably start a business, doing it for other people, and have agents.
When I brought all the companies together for a Christmas party, one year, my mother and father were famous for telling my degenerate stories, all the things that caught me doing, and all that. They would love to tell those stories. One of the guys comes over and he says, "Hey, I was just talking to your parents." And I was like, oh yeah, what story did they tell you? He said, "They said, you were adopted." I said, what? I said I'm not adopted. And they said, that's all they can figure, somebody switched the babies at the hospital because you're not like the other kids. You think differently than everybody else.
Have a Little Faith
David: The reason that I thought differently, was because I was feeding myself all of that mindset stuff, and I continue to.
Darin: That's huge. I think that it impacts so many people. What you tell yourself in your own head, is so important. I think that people get caught up in, all right, well, how do I underwrite? How do I get this deal? In all that stuff, look, you need to learn how to do all of that stuff. But if you don't believe in yourself and you don't have confidence in yourself, it's going to be very difficult for you to take that leap of faith, because of all those steps, you've never done it before. There has to be a little bit of faith that you're going to figure it out along the way.
David: There's a couple of things with that.
Number one, it's what you're telling yourself, but it's the ability to catch yourself. Telling yourself something negative and spinning it into something either neutral or positive. That's an acquired skill, nobody has it.
There's a book called, Super Brain. It's written by a Harvard MD. It explains why your brain is wired to go to the negative. And then it tells you what you can do to catch that and go to the positive.
Darin: Give an example.
David: Just when you're thinking about something, just when you're talking to yourself maybe about getting up in the morning to work out. I don't need to work out today because, or I don't feel working out today because. Well, that's a negative thought and you've got to turn that around. Or I can't stop eating sugar, which is my problem, but I work on it constantly.
No One Can Stop You in Learning Real Estate Cycles
David: When you look at a property, I can't do that deal, but why can't you do that deal? Well, I can't do that deal because it's too big for me. If you catch that and you spin it around to I can't do that deal too, how can I do that deal? It's a big difference in how I think. That's a key phrase right there too, is when you catch yourself saying you can't, you spin it around to how can I, but you got to catch yourself first.
The book that I've read recently is a lifelong thing, this mindset thing because your brain is wired to develop a negative. I read a book by Dr. Joe Dispenza called Superhuman. That book is amazing. That just talks about, meditation is involved and it goes into seeing yourself into what you want to be. Not only that, it gets really deep. It talks about going into a quantum field where all knowledge begins putting thought into that quantum field and spinning it off and then creating what you want. When I was reading that book and I started doing what it said, I thought to myself, I wonder if he's the same guy that read The Science of Getting Rich because I see the same similarities.
The Science of Getting Rich, I have in my top drawer, I highlighted it and I read the highlights every week. I opened up the beginning and it wasn't written by Dr. Joe Dispenza. It was written by some other guy in 1910. I was like, wow. And then just recently I read, Think and Grow Rich like three times. This is when I first started back in 1996. I just recently started reading, Think and Grow Rich again.
Don't Let the Anxiety of the Unknown Stop You
David: This is the same as Joe's book, The Science of Getting Rich. It's all the same stuff. And it's all about what you manifest inside of your mind, that's what you're going to become. It's so important.
Darin: Look, you've accomplished so much. But then once you hit, one goal, you look back in two, three years ago, that goal would have seemed insurmountable. It seemed so big, but now you look back and you're like, I wrote a book and now I'm writing my second book because you've done it. And then you set another goal, but you still have to learn and build and focus on that mindset stuff to achieve that next goal that you haven't done.
David: Yes. Because in multifamily investing and most things in life, there's anxiety for doing something that you haven't done before. There's always anxiety there. First, you set your goal, then you set your steps to get that goal. And then you have to learn how to harness the anxiety to get that goal in the negative mindset, that's going to happen when you're going after that goal.
You know how I used to describe it when I was younger, and I was first starting to become successful, is that it's like a gopher borrowing out of the ground. It borrows out, it reaches its goal and it sees the sunshine, it's a bright sunny day, and it's like, wow, I made it, right? And all of a sudden it realized it's just not outside, there's another top to the world that he's just discovered. He looks at the top of that and then he starts borrowing his way up again. And then he breaks through, it's like, wow, I made it. He looks around again, the sun is shining.
Celebrate the Wins In Your Life
David: But all of a sudden he's realized it's not the sun, there's actually another top. Because every time you reach a goal, you've accomplished that goal, now you start looking around. It's like, all right, what else can I do? And that's the way, you live the life that and before you know it, you look back. A lot of times you don't even take the time to look back and see all you've accomplished. I think a lot of us, the type A personalities, the entrepreneurs, we're always looking ahead, what can I do next? Instead of just resting for a bit, looking back and going, wow, I came from that and I've done all of that, wow.
Darin: Absolutely. Celebrate some of the wins along the way for sure. What about, and I haven't asked this question too, I don't think any of the guests so far. Where you came from, what you achieved, all the letters and dark chocolate that you've gotten at your house, have you ever had what they call the imposter syndrome? Like holy cow, I have all these people that are reading my book, looking at me as a teacher, a mentor, I have these programs and these study courses, and I know I've helped touch the lives of so many people, but I'm just a man.
David: Early on when I first started teaching and I was going up on stage and I was teaching at a three-day event when I first started teaching, I had 800 units. And then as I was teaching and going through the years, I was accumulating and I got up to over 8,000, and what I was doing, I was actually teaching the people that we're learning from me how to do it along the way.
Imposter Syndrome Is Real
David: At the very beginning I had imposter syndrome to the max. I would think to myself, why are these people listening to me? I can see that guy over there, he thinks it's all BS. People would ask me questions from the mic and they get really intricate, and they try to stump me, to prove that I didn't know what I was talking about.
But then I realized it wasn't so much that I didn't know the questions that they asked me were based on. It wasn't that I didn't know what I was talking about. And It was more based on what was the flaw in their rationale in asking that question? At first, it would stump me, I'd be like, everybody now thinks it's BS because this person caught something that they think isn't real. And after a couple of times of being flustered on stage and thinking about it after, I was like, wait a minute, what they asked me really wasn't relevant to, their conclusion wasn't true. Why wasn't it true? And then I figured it out and then I got good at actually figuring it out from the stage.
When they would ask me these things, I would be like, well, the reason that your reasoning is flawed is because of this. And then after you get on stage a number of times, and you keep getting different questions, then you start teaching that, then you realize that people are perceiving what I'm teaching wrong. So therefore I need to teach it in a different way, so they get it the right way. And then, I've done what I teach. I've gotten past well over 8,000 units.
Real Estate Cycles Include Helping Others
David: I'm certainly not an imposter anymore inside of my head, and to see so many people use it and become successful themselves, we just know it works. One of the things, if I'm doing a presentation, I'll say, this system has been proven since 2002, we know it works. The question is, will you work the system? Because if you work the system you'll get the same results.
Darin: Right. Absolutely. The way I look at it is, look, those people that reach out on Instagram and otherwise, everybody has value to offer. There are people that I bring on the show that have 3000 units, and there are some listeners that can't relate to that person because they haven't gotten their first deal yet. And so, a person that may have just got their first deal, or is close to getting their first deal, maybe a better person to relate to that, that listener just needs to get over the hump.
We all are at different stages of our lives. We all have value to provide, and it doesn't mean that we have all have to know it all. Just help the next guy do what you did. That's what you've done. And then you invested, you've invested your time and your money into writing books and building courses. Of course, you earn income off of that. There's a return.
David: It's a business. Providing value for value.
Darin: Exactly. You're helping other people achieve something they want to achieve by teaching them how you did it. And so I applaud people like you that spend the time to do it because it's not easy. It's one layer after another layer, and as you said, you traveled all over the place.
The Mind-Body Syndrome
David: I traveled so much that I actually got into it, have you ever heard of the mind-body syndrome? My body went into a pain period for about two years where I got to a point where I was totally disabled. The pain which I thought was coming from my spine, I had a couple of herniated discs and bone spurs and miscellaneous things like that. I was still teaching on stage three-day events, I would just work my way through it. I got to a point where I just really couldn't anymore.
The audience would say, what's wrong with you? I could tell there's something wrong. They would give me all types of prescriptions and different things to do. The best thing that I did was a 10-day green juice fast. I would've done anything to get out of pain back then. They were giving me pills and I was taking them. I just needed to get out of pain. I found out, somebody handed me a book called, Mind Over Back Pain, mind over back pain by Dr. John Sarno.
He said, "Hey, read this short book. If you think this book was written for you, then read his next book." I read the book and I was like, every page describes me. I read his next book, it was all about how your subconscious actually really puts pain, anger, and pain and things that you don't want to deal with really, really deep. So when that starts to bubble up into the surface, your mind creates pain, so you won't deal with the pain that's actually in your subconscious. For me, traveling all that time, trying to run a business, having all these different properties was really stressful.
Getting Structured Education
David: It got to a point where my mind stopped talking to my calf. And so I was walking, I was actually dragging my leg. My right foot felt like the heel was full of glass. The whole right side of my foot was numb.
I just had pain circulating around my body, and it was really intense. So I read that, I did what it said. I actually went to a writing campaign. If anybody's in pain, by the way, get that book. If the book was written for you go to a website called, TMS Wiki.
On the left-hand side, there's what's called structured education. This is all free structured education. Don't click the therapy, go through the structured education. It's a 40-day writing program, they tell you specifically what to write about, different stresses in your life, for each day. A lot of people get cured just within the first 10, 12 days. I was what they call a hard healer. It actually took me 60 days.
But after 60 days of writing and doing other things that it would say to do, like yell at your mind, because it's a battle between you and your mind. The only thing I could do back then was a bike, on a stationary bike, I didn't trust myself outside. I would be on that bike in the morning, yelling at my mind, I'm going to beat you. I'm going to beat you. Actually one of the guys, I read all the books on the mind-body syndrome. There was a guy up in New Hampshire who was a doctor. I called to see if he was still practicing. He was. I called him up and I got an appointment with him.
Push Yourself to Get Through Fear
David: He said, "So you think you'd get the mind-body syndrome?" I said, yup. He said, "Are you 100% sure?" I said I'm 99% sure. He said, "What's that other 1%?" I said I saw the MRI of my spine. The bottom third is black from the degenerated disc. I got a herniated disc and I've got bone spurs on the top.
He says, "Okay, call me back when you're 100% sure. I was like, what, aren't you going to help me? He's like, "No, this is not going to work unless you're 100% sure you get it." I went another week and I thought, I've tried everything. I'm not sleeping. I was sleeping for three half hours a night, not continuous. So I thought, I just got to give in wholeheartedly. I called him back and I said, I'm 100% sure. He said, "What do you fear most physically?"
I said, well, I love to run. I love to work out, but I can't because it causes so much pain. He says, "I want you to run a half-mile today. And I want you to start a weight training program and then call me, call me next week and give me your progress." I thought I couldn't even run. But I thought if I'm 100%, I'm running. I went outside and I did what I called the hobble. So I was dragging that right leg around. I don't know what the neighbors thought, but I went from telephone pole to telephone pole, until I got that half mile in. So I started the P90X program, which is a bodyweight program. I've done it before. So I knew what it was like. That was the start of my progress back.
Realizing When You Won the Battle
David: The real thing when I realized I had won was, all the training tells you that, your mind is going to give you pain and known pain past. Places in your past where you've had pain, because you'll think, oh yeah, that's from my old injury, the body only takes six weeks to heal. He said, "When it starts giving you pain in a place where you've never had pain before, that's when it's run out of options and you know you've won if you recognize that. Back then when I would wake up in the morning, I would determine how much pain I was going to be in that day from how much pain I was in, going from a lying position to sitting on the end of my bed, because that was so painful.
It would tell me, it would reaffirm that pain on my first two steps. I would know how much pain I would be in my first two steps for that day. And I got from a seated position one morning and I sat up and I was like, oh my God. I had all this pain up here behind my shoulder. So I was sitting there just thinking. I was about to take that first step, and then it hit me. And I had never had pain behind the shoulder before, ever in my life. I thought I won.
And I won. I jumped up in the air. Then I had an armoire with a big mirror there. I started screaming at that mirror. So I beat you, me, I beat you. I won. But the book tells you, that once you realize you've won and the brain realizes that it's going to lose, it throws all kinds of pain at you.
Emerging Real Estate Markets
David: So be ready, you'll get pain everywhere. For the rest of that week, I was in so much pain, but while I was in so much pain, I was like, I know I won.
And then I was in Washington, D.C. doing a three-day event. The night of the second day, I was in my hotel room. I never went out because I was in so much pain. And all of a sudden I was watching football, eating pizza, and I realized I'm not in pain anymore. I'm not in pain. Should I go out and meet the rest of the crew, and go out to a restaurant with them? I was like, no, I'm just going to enjoy this. That was about five years ago. That was the last time I was in pain, even though my back is still screwed up. My spine was still screwed up. Haven't been in pain since. That's just an example of how life is just one big mind game.
Darin: You had all this success, financial success, and visibly success from having your company grow and grow. But you're still dealing with something. You're still dealing with life issues and you still had to go out and find a way to learn from other people. That's what this is all about. Let me go back to one of your books. Let's do the Emerging Real Estate Markets. When I think of multifamily markets, the syndicators that I've been around, and the education that I've gotten was, look for markets that are growing in population, growing in income, job growth, that type of thing. It's been a while since I read your book. Is that the focus of that book?
Recognizing Phases of Real Estate Cycles
Darin: Talk about, what was involved in that book and what you put together in that book.
David: The focus of that particular book is the four phases of a market cycle. So knowing how to recognize each particular phase, knowing how to invest in each particular phase. But most importantly, how to recognize the transition of each phase, because that's where most investors will lose money, is in the transitions. So that you could be making money in your own backyard, if you can recognize which particular cycle you're in and how they're transitioning, for the rest of your life.
I go into emerging markets, which are markets that appreciate a lot faster than other markets. In multifamily investing, the cash flow is great. The cash flow gives you better choices in life, but it's the appreciation that makes you wealthy. You can get appreciation through what's called forced appreciation, value-adds in your properties, correcting mistakes that the property has and management, and, or you can get it in emerging markets, markets that for the reason of job growth, and that's really the primary factor, job growth. That market is moving forward and it moves forward rapidly.
David: You mentioned population, actually, the population isn't really a good guide, it's household formations. Because populations can be a difference between deaths and births and all that. But when you look at household formations and when they're increasing, you know people are migrating into the area. We look for markets that have 500 or more jobs coming in. As soon as that pops up on our radar, we'll call over to the economic development committee of that particular market. We'll ask them, what are you doing? What are you doing to attract jobs? Typically they're doing one of four things.
Changing Real Estate Cycles
David: They are giving away free money in terms of grants, for businesses to come in, to build multifamily or just businesses themselves. They're giving away free land to build on, for instance, the Toyota plant in San Antonio many years ago, they gave away all that land, so Toyota would come down there and build. They did and that changed that market.
They're giving tax abatements, tax abatements are where you can come in and you get 10 years of no taxes if you invest in multifamily properties in a particular area. We're looking for incentives like that, and then if there's one good, if there's a multiple of incentives to bring in, we want to see how aggressive they are.
If they're really aggressive, that makes for a better market. And then also we look at the leadership, how strong is the leadership? How dedicated are they to bringing more? I get lucky. I started investing in Brockton, Massachusetts, an old shoe city, most of the industries had moved out, moved to Europe. It was blighted. The people that moved into the empty properties were drug dealers and pushers and all that.
And then a guy by the name of Jack Yunits comes in, strong leadership, and just takes the city by the horns and gets the MBTA from Boston to come down there. So now you don't have to have a car to work in Boston. Five new schools, new sidewalks, new infrastructure. He changed that city. I was lucky enough to start investing when he first came into office. I didn't know anything about emerging markets at the time. But when I started learning about it, I started recognizing all the smart things that Mayor Yunits did in order to change that city around.
Finding Multipliers Effect
David: Yes, he led this huge way for Brockton. And then we look at the multiplier effect. For every one job that's created, how many additional ancillary jobs are going to be created as well? Some cities have strong multiplier effects, like the city of Montgomery has the most white-collar jobs per capita in the United States.
And it has a multiplier effect for every new job coming in of 11. For one job coming in, it creates 11 more. When I started investing in Montgomery, Alabama, it had a multiplier effect of three. I knew that when the KIA plant was being brought in there and they were going to create 5,000 new jobs, that meant there were actually 20,000 new jobs coming in. But what made that market so good back then, was the fact that it was surrounded by floodplains and that you can't build in a flood plain.
So now we've got 20,000 new people migrating into the area, in a city surrounded by floodplains, which means the supply of multifamilies is going to be constrained. Demand is going to increase. Supply is going to be a constrained. That means the value is going to go up. We love areas with higher multipliers, but also areas with barriers to entry. Other barriers to entry are the oceans on the Eastern West coast, a major body of water, a mountain like the city of Phoenix. Sometimes it's just simple as railroad tracks, but barriers to entries are good for markets.
Darin: That's smart. Early on in the conversation, you said you were at 8,000 units at one point, you went down to 1500 and you're about to ramp up. I'm interested in hearing your view on the economic cycle, on where we're at.
Real Estate Cycles During Pandemic
Darin: With COVID we took a dive in the stock market for two or three weeks. Everybody was scared, and then it just took off. Now the Fed has pumped, the government has pumped a ton of money into the economy. The Fed is talking about keeping interest rates low through 2022. People still don't really know whether to believe that we're going to be in an uptrend or do we have a second leg down.
Here's the deal with multifamily. Now, we're in a correction. We were supposed to be in a correction right now. It actually started a year ago, February. We assumed it was going to happen right after the election because they would pump the economy yet, but it actually started below, nobody just heard about it.
But then the coronavirus hit. First, as operators, we have to survive it, and then once we figure out how to survive it, then we figure where the opportunity is because in every crisis there's an opportunity. All of a sudden we realize there's going to be a bunch of properties coming onto the marketplace. And the reason there's going to be a bunch of properties coming onto the marketplace is because we've just been through almost a 10 year upcycle.
That 10 years upcycle created a lot of sloppy investors. The reason it did is that people start investing, okay? They don't either analyze right or they don't buy properly. But yet that mistake is never exposed because as the market rises, the rent increases, and the value increases. The market actually corrects their mistakes. They don't learn from their mistakes and they continue as a sloppy investor and they continue to do it and continue to do it.
Learning Asset Manage Properly
David: The market continues to correct them until something happens like a pandemic. A naked man at the beach at low tide, they became exposed. See, it was so sexy to go out and do deals. It was so sexy to go out and raise funds for these deals. And it was so sexy to get these acquisition fees, but it wasn't sexy to learn how to asset manage properly.
There's a lot of people out there that never really learned how to asset manage properly. They didn't have to, because they weren't getting any negative consequences from it, because of the market increasing. And now, when you really need those asset management skills, they didn't have them.
They've been through a period of time, some have already lost their properties. Those are the deals that are trickling onto the market, but there's a huge wave coming out to the market. CoStar Analytics predicted that 14% of all commercial loans were going to come back onto the market within a three to four-month period of time. We think that's going to happen right around the summertime, early fall for this cycle. So just for a three to the four-month period of time, they're going to all hit at the same time.
That's just CoStar, and they were talking about CMBS, Commercial Mortgage-Backed Securities. We also have Freddie Mac, we have Fannie Mae and we have the FHA, which also have these types of deals that are going to be hitting the marketplace. CoStar predicted that these deals that get foreclosed on, now, the smart investors that realized they weren't good operators, that weren't trying to hang on, they've already sold into the market, and they've got good prices.
David: They didn't have to sell at a discount, because at the same time of what's going on, we have people that had invested in an office and retail, they got hammered by the COVID crisis. They're flooding to safety. They're going into multifamily properties where their funds. So therefore we didn't see the downturn happen as soon as we expected it because of this reason.
But there's going to be so many properties coming onto the marketplace, come summertime, fall, that those people can't adjust the market as they have. There's just going to be this opportunity. It's going to be for a short window, three to four months, but it's going to be there. And those that are prepared, you want to back up the pickup truck and fill it up to the brim, because that is life-changing wealth.
Darin: Do you believe that it will include all asset classes or mainly in the hospitality and office and retail sectors?
David: I'm just talking about multifamily.
Darin: You believe in multifamily that later part of this year, late part of summer, going into fall, you're going to have people that are having to put their properties up.
David: It's already happening. Those deals are trickling in. We're getting one-off deals now, but there's going to be a point now when I'm an emerging markets investor, what we do is look at the optimal markets to invest in. I do what we call staking a flag. We'll stake a flag in that market, and we'll buy three to five to seven deals in that market because we know based on all the analytics that the market's going to appreciate, and it's going to appreciate rapidly.
Importance of Learning Real Estate Cycles
David: But the last three or four years, there hasn't been a market where you can buy three, five, seven deals in. You've only been able to do one-off deals. But when this wave hits, there are already markets, I can tell you, Dallas, Las Vegas, Orlando, these markets are going to be good markets to get into. These markets are going to see a huge amount of these foreclosures, even though, actually in everybody's backyard, it's not going to be discriminatory as to whether it's going to be an emerging market or not.
There are so many bad managers for lack of a better phrase, that these are going to pop up in everybody's backyard. That's why it's great. If you ever thought about investing in multifamily, get your feet wet in your own backyard, learn about emerging market investing, and then take the knowledge from there and then start really exploding your wealth and appreciation.
Darin: That's interesting. I'm in the Dallas market and it's still hot and hot and hot. It's interesting to hear your perspective that, come six months from now, it's probably going to be a different market.
David: It will, all things cycle, all things change. Dallas has been such a great market because there's so much great opportunity there. And then when there's a downturn, it only goes down for a little bit, and then the government steps in, it's a great business government there. It recovers quicker than most markets, actually the best two states to do business in the long-term are Texas and Utah, because the governments are so business-friendly.
Darin: That makes sense. What do you do from here? What's your next big stretch goal?
Next Big Stretch for David
David: Hanging out and waiting for this market to turn, I'm relaxing. Actually, I've got three kids now. I've got twins, about four and a half, and I've got one that's two and a half. I'm spending a lot of time with them. They're keeping me really, really busy. We're training people here at RE Mentor on how to take advantage of this next opportunity that's about to hit. I'm really relaxing. This will be my third market cycle. I know what's coming, I know how busy I'm going to be.
I've got a partner and he's like, we got to do a deal, we got to do a deal. Like, no, we don't have to do a deal. There are going to be so many deals coming in. We want to do the right deal. Then we don't want to do a deal. We want to do the right deal. There's going to be a lot of right deals coming in soon.
Darin: That's interesting. Now, what about outside of work and outside of the family? What do you enjoy doing?
David: I do triathletes. I did an iron man back in 2013.
Darin: Do you really? You had all that back pain and you're doing triathlons?
David: No, that came after. I thought it was because of the triathlon. I actually was a powerlifter too, I won the New Hampshire AAUs back in 2000. So I said to the back doctor that I went to, I was going to have that operation, where they fused everything. I said you know what? And I trained for that iron man and I did all that powerlifting, that's the reason I got such a bad back. He said, "No." He said, "That's the reason you have a good back.
David Outside Real Estate Cycles
David: That's the reason that your back is the way it is. If you didn't do those things, you'd be a lot worse off." He actually told me, he said, "If you can bear with this pain for the next year, the chances of you being better from the operation are about two or 3%." He said, "If you can deal with the pain, then I suggest you not take the operation." This is the guy that was going to make money giving me the operation. I was like, wow. And that's reiterated, I hadn't met Dr. Sarno at that point, but in the future readings, that was reiterated again in those books too. Don't do the operation if you can stand it.
Darin: Do you still do the triathlons now?
David: Yes. We're training for, because of COVID, they haven't been having any events. I and my brother and a couple of friends created our own event. We're doing it on April 10th. We're going to swim a mile at the local pool. We did a 14-mile bike route. And we've got a five-mile run behind that. That's an Olympic-sized triathlon. We're going to do that. We got ourselves our own medals for that. We've already signed up for a couple during the year as well. We really like those obstacle races, Spartan races, Savage races.
Darin: I've done Tough Mudder. I've done a little sprint on Spartan, but I haven't done the big time.
David: The beast?
Darin: Do you know a guy by the name of Ivan Barratt, out of Indi? I had him on the show, he's a big multifamily guy. He's doing some Spartan race, that's a 39-hour deal. You hike up the top of the mountain in Utah.
Darin: Then you come back down on the tram, then you go back up. I forget how many times, but crazy.
David: I can tell you, I did the beast and we did it at Killington ski area in Vermont. We had the climb up and down that mountain three times, it took us 14 hours to do the entire race. That was a beast. Once is enough. Some of these things you do are like, once is enough.
Darin: I used to ski because I grew up in Connecticut and we used to go to Killington to ski down. I can't imagine going up. Hey, how do people reach out and get to know you better and everything that you guys have to offer if a listener wants to get to know you better?
David: They can reach us at RE Mentor, RE as in real estate rementor.com. You can call the office (781) 878-7114 or I've got a free book offer. It's my Multi-Family Millions. This has started so many different investors off in their careers. Pay shipping and handling, it’s 7.95, it's cheaper than to get it from Amazon. We'd be happy to send you this plus a bunch of bonuses as well that you wouldn't get from Amazon. You can get that davetoday.com.
Just go in there and fill it out. We’ll be happy to send you the bonuses. One of the bonuses is an Emerging Market poster. It gives you the four phases of the market cycle, gives you the key characteristics and key strategies.
Darin: That's awesome. I paid the full boat for that. Listeners, take advantage of that. It was one of the books that I read early on and it was a great book. I actually opened it up, took it off my bookshelf today and I was looking through it, I have all kinds of scribble marks in their highlighting stuff. Take advantage of that. That was davetoday.com, and get your free copy of that and really appreciate you coming on. it Great to know you.