Listen to the Podcast Here: On this week’s episode of The Real Estate Nerds Podcast, Scott sits down with fellow real estate investor Joe Fairless. You may know Joe from his incredibly popular “Best Investing Advice Ever” Podcast, or two “Best Ever” investing books. He is a wildly successful apartment complex investor. Joe has come on the show today to tell our host and real estate attorney Scott Smith about his all-time best, and earliest, apartment syndication deal. Description Useful Resources References Joel Fairless’s Best Deal: An Apartment Syndication Success Story Scott welcomes Joe onto the show and asks a bit about his background. The two investors bond over their Texas roots, then immediately dig into the details of Joe’s best deal. [1:00] Joe is a full-time investor focusing on apartment communities, specifically via partnership syndications. Originally from Texas, he now lives in Cincinnati with his wife, who is expecting their first child together at the time of this recording. Joe is here to tell us about his best deal, which also happened to be the first deal he did with his current company. The property is in Houston, TX and called Woodglen Village. [2:46] Scott observes that syndication partnerships are often the “next level” for investors: “With 1-4 single or multi-family units it’s hard to go wrong…But with apartment buildings you have to be a little more careful.” He asks Joe for more background on the deal. [3:00] Joe shares that his business partner found the deal, before the two were officially partners but just mutual friends. The partner, Frank, had found the deal but had no money to close it. Frank had failed to secure funding from private equity groups, but once he partnered with Joe, Joe was able to use his network of investors to help fund the project and eventually got on board himself. [5:00] “I didn’t want any part in the deal initially, because I hadn’t looked at it, and I just didn’t have the time,” Joe tells Scott. His mind was changed, however once Frank exhausted the options in Joe’s network and Joe finally actually laid eyes on the deal and realized its potential. [6:00] Scott asks how Joe saw the makings of this Best Deal that others had missed. Spoiler alert: Joe doesn’t have a magic wand. In retrospect, he thinks Frank was shot down so many times because of his lack of experience, although Frank certainly had professional experience from his day job. But this was his first true investment for himself. Joe speculates the other investors were also skeptical because of current events going on at the time in Houston that were making national headlines–and tarnishing the city’s reputation in the process. Investing Psychology: Joe’s Winning Approach to Challenges Closed His Best Deal [7:30] Joe shares his initial greatest challenge with this deal: “This was summer of 2015 in Houston, TX…There were headlines in all the papers about oil plummeting and Houston being in big trouble. Since this deal was in Houston, that scared off a lot of people, including our lender about a week before close.” The lender attempted to re-trade, or change the terms of the deal in their favor (in the form of more equity that Joe and Frank did not agree two). The partners, fortunately, switched lenders. [8:35] Joe’s network at this time was still developing, and he and Frank got a lot of rejection. Today, Joe’s network is massive and he rarely needs to even find his own deals But during this time, Joe had to reach out to his fellow Houston investors on LinkedIn and persuade them to get in on it: “It was incredibly challenging for the market, the location being in Houston, and the things that were happening with oil dominating all the headlines, and the lack of track record for debt and equity lenders and investors.” [10:30] Joe’s initial risk in this deal was $140,000. Scott asks about how he coped with the stress. [11:00] Scott mentions that many investors use a morning routine on the logic that, “If I can own the morning, I can own the day.” [11:12] While Joe agrees, his own stress management is more philosophical in nature: “Nothing in my life has meaning until I decide to give it meaning. That’s how I approach life.” [12:10] Joe elaborates on his business philosophy, “What I believe is that when challenges arise, it’s happening for me and not to me…It’s there so I can become a better and stronger entrepreneur and real estate investor.” [13:00] The two investors discuss their approaches to rising to challenges and working through fear, rather than falling beneath its weight and influence. Scott observes that Joe’s philosophy is a mental discipline. Joe shares how he developed this positive business mindset. He credits his current success largely to this discipline and having gratitude for what he has today. [14:45] When Joe is struggling in his personal life, he volunteers for perspective: “There’s always someone that’s worse off. Having a good mindset is necessary to being a successful entrepreneur.” [16:00] Scott asks Joe whether long-term success has more to do with strong mindset or technical knowledge of real estate investing. Joe replies: “The really successful investors are the ones who evolve over time.” He isn’t referring so much to changing classes, but to “Work harder on yourself than you do your job.” [16:50] He believes this habit brings investors to the next level. Scott agrees that failure to do internal work can hinder an investor, while a willingness to do so. [18:47] Scott asks how this deal wound up becoming Joe’s best deal despite the challenges he described. Joe explains that the biggest challenge was getting to close. He and Frank bought the $14.1M property with $1M, and a mere 16 months later in December of 2016, they were refinanced for a $26M re-revaluation. [20:00] Joe and Frank still own this Houston complex today, and Joe is grateful to have this amazing property in his portfolio still. The Takeaway: Work on Yourself, and Good Deals Will Follow Joe and Scott conclude with the greatest lesson from Joe’s Best Deal, which has much more to do on working on your internal condition than real estate skills. Here’s what Joe wants investors to learn from his success. [20:30] Scott observes that Joe’s success is dependent on his mentality: “That strong internal drive can be our biggest resource.” [21:18] Joe believes the biggest lesson investors can learn from his story is the value of working harder on yourself than the real estate. Scott agrees that putting yourself and your health/well-being first is a sure path to success. If you aren’t in top shape, your investments can’t follow. Connect with Joe Fairless Connect with Joe Fairless through his website, www.JoeFairless.com. There, you can contact him directly or enjoy his many free, downloadable materials on real estate investing, including his incredibly popular daily investing advice podcast. Listeners can also look forward to Joe’s new and third book, The Best Ever Apartment Syndication Book. It includes everything from securing financing, finding partners, getting loans if necessary. Listeners who want the book this week should email [email protected] for even more free resources surrounding the book’s launch! Listener Resources Thank you for joining us on today’s episode of the Real Estate Nerds Podcast. For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook. Don’t forget to subscribe to stay up to date and have the most current episodes of the Real Estate Nerds Podcast directly in your listening library. Every subscription helps us create new, custom content for you. What did you think of today’s episode? What would you like to hear more about in the future? Leave your thoughts and questions in the comments section below, or leave us a review in the iTunes store. We love hearing your feedback, so fire away. Join us again for a fascinating investing conversation with Matt Aitchison. Thanks for listening and joining us on our journey to become better investors! Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions. Schedule your personal consultation now. If you have questions about our content or suggestions for future episodes or guests, reach our podcast team at [email protected]. About Joe Fairless Originally from Texas, Joe Fairless now controls over $400M in real estate through apartment syndication. He also hosts the world’s longest-running daily real estate investing advice podcast, the Best Real Estate Investing Advice Ever. His website JoeFairless.com also offers many of Joe’s free educational resources for real estate investors. Joe has also authored several books of advice for real estate investors. When he’s not investing or sharing his expertise, Joe loves watching his favorite band Third Eye Blind play live and serving as the captain of his flag football team. He once appeared performing stand up comedy at New York City’s legendary Gotham comedy club.