Catching Knives (eBook)

A Guide to Investing in Distressed Commercial Real Estate

Jake Harris (Autor)

eBook Download: EPUB

2021 | 1. Auflage
208 Seiten
Lioncrest Publishing (Verlag)
978-1-5445-2059-9 (ISBN)

Infos

Buy when there's blood in the streets, even when the blood is your own. -Baron Rothschild Almost every decade, in every recession, you have the chance to change your life. Big returns. Passive income. Financial freedom. Even investors with little experience in commercial real estate can learn how to seize the moment of a distressed market and create a life of freedom. In Catching Knives, twenty-year investment veteran Jake Harris helps you take the first steps to smart investing when distress makes commercial real estate a bargain buy. After becoming a millionaire before thirty, Jake found himself overextended, with massive debt, in the middle of a monumental recession. But he emerged stronger than before by building a new foundation for a different kind of portfolio-one that leveraged distressed market opportunities. Packed with practical advice and personal anecdotes, this is your guidebook for embracing the next economic downturn and navigating the risk of distressed investing. With the right strategy, you can be one of the few who lean into hard times, make the most of them, and take advantage of once-in-a-generation opportunities.

Textauszug

Introduction

My career in real estate investing began with dramatic ups and downs, from becoming a millionaire before thirty, to watching helplessly as the portfolio I built became distressed and deep in debt. I sat on the curb in front of a foreclosed property, losing everything: health, time, relationships, and least importantly, money. But with the help of others, I realized that, though painful, it was one of the best times to be investing. There was “blood in the streets.” I was scared, but the lessons I learned while hitting rock bottom allowed me to spend the next dozen-plus years investing in distressed real estate.

Today, I’m the founder of a successful private equity real estate firm that invests in commercial and residential properties on a nationwide scale. I’ve been responsible for hundreds of millions of dollars across thousands of transactions, I have traveled to a new country every year with my family, and I am in the best shape of my adult life because of the freedoms that have been afforded to me because of distressed real estate investing. But my journey started with the simplest transaction of all: someone handed me a book that changed my life forever.

A Real Estate Epiphany

Since my teenage years, I knew I wanted to get involved in business and investing. It started with buying peanut butter M&Ms at a discount grocery store at a wholesale price and selling them around my high school for a 400 percent markup. From there, I turned to “flipping” consumer electronics. I would study what price products were selling for on eBay and then buy in bulk from other competing auction websites and sell them individually back on eBay for a profit.

These activities gave me a taste of business, but I didn’t know how to make the leap to something bigger—something I could do for the rest of my life. Then, one day during my time in the army, I was lying on my cot when a friend yelled out, “Hey, Sarge! You should read this.”

He tossed me a purple-and-yellow book titled Rich Dad, Poor Dad by Robert Kiyosaki, and as I read that book, I experienced one of life’s light-bulb moments. I had an epiphany. The book explained how the rich get richer through real estate investing and how anyone can use that same path to gain wealth, even if they’re starting from nothing.

“This is the work I want to do,” I said to myself. Real estate investing tapped into my skillsets and excited me, but without mentors and with a limiting belief, I told myself it would take many more years until I could do it myself. So I focused on learning as much as I could while working other jobs.

I started bartending at a golf course, which put me in the same space as millionaires and real estate investors. As I hung around their fringe and served these people drinks, I picked up little gems of information. I talked to them, asked them questions, and made my position clear: “I’m twenty-three, and I want to work in real estate. I’m ready to grab the tiger by its tail.”

My networking paid off when one of the country club patrons suggested I get into construction. Everything in real estate involves a contractor, so what better way to get immersed in the space? It was exactly the entrance I needed.

I took a job working in commercial construction. I was unqualified and lacked the proper education, so I had to talk my way into the position. Ultimately, it was my willingness to work for free and my belief that I could learn anything that landed me a starting position as an estimator. Mind you, this was before Google and YouTube, so it was an awkward first couple of weeks trying to figure out the job I had talked myself into. But numbers are my thing, and I took to it like a fish to water. I quickly moved up to superintendent and assistant project manager. Like a sponge, I absorbed whatever experience and knowledge I could gather.

Our client was Sam Zell’s Equity Office Properties, and I managed the value-add remodel of several mid-rise office buildings. I coordinated hundreds of subcontractors, balancing relationships with city inspectors, leasing agents, architects, property managers, and more. I was making a decent amount of money and learning valuable skills. However, there was a problem. I lived and worked in the Bay Area of California, which meant the real estate there was extremely expensive. It would take me forever to save the money I needed to invest in property.

I continued to work fixing up and remodeling office buildings, but my goal seemed impossible to me, like a mountain too high.

Then an opportunity presented itself. I’d gone to Phoenix, Arizona, to buy some cars at auction for resale. Even though I had a full-time job, I was still working on the side on other deals. While in Phoenix, I happened to have some extra time in town. As I drove through subdivisions of new homes being built, what I saw shocked me. These houses cost only $100,000 to $150,000—at the time, you could not have bought an outhouse for those prices in the Bay Area. The Phoenix home prices were a quarter, or even a tenth, of the price of houses in California. This market, I realized, I can actually afford to invest in.

Becoming an Investor

I was twenty-five when I bought my first house in Glendale, Arizona: a fixer-upper across the street from the Westgate District and the soon-to-be-built Cardinal Stadium. But soon after that purchase, something occurred that made the decision feel very untimely. I was laid off from my job at the construction company. I had planned to fly down to Phoenix on the weekends to fix up the house, but with no job and nothing tying me to California, I decided instead to move into the house and work on it full time. I put a few tools in the back of my truck and headed to Arizona.

Every nickel and dime I had went into buying that house, so when I moved in, I had almost nothing left. I slept on a mattress on the floor that the realtor gave me. I kept my food in a Styrofoam cooler and every couple of days bought new bags of ice because I had no refrigerator. I utilized every last penny to renovate the property, and just before running out of money, barely making it to the finish line, I put it on the market.

The house sold quickly for a $17,000 profit. Wow! I was hooked, and intent on repeating the process, I bought another property and then made $28,000. I bought another one, which netted $35,000. In short order, I was living the process the way I’d imagined years earlier. I became myopically focused on a single goal: to become a millionaire before age thirty. Investing in real estate was the vehicle that would take me there.

Over the next several years, the market thrived. This was the run-up of the subprime bubble, and capital flowed in at an insane rate. During this time, I made a significant amount of money flipping properties with a relatively low amount of effort. I developed a portfolio of properties and regularly added more properties to it. Then, one day, I looked at my paperwork and realized that I’d done it. I’d become a millionaire. It was somewhat surreal as I sat there and realized I’d get no ticker-tape parade and no congratulations—literally nothing happened.

Losing It All

I was twenty-eight years old with a portfolio of properties and a net worth of more than a million dollars on paper. However, in hindsight, I realize now that achieving my goal so early was both a blessing and a curse. How, you might wonder, could being a millionaire be a curse?

The curse was this: Once I hit my milestone, I took my foot off the gas pedal. Without an objective driving me to hustle, I grew complacent, even lazy. I should have asked, “What’s next?” then readjusted and set another goal, but I didn’t.

I did not know it at the time, but a quote from James Clear, author of Atomic Habits, aptly applies to my life at that time: “Goals are for people who care about winning once. Systems are for people who care about winning repeatedly.”

I did a good job of setting a direction I wanted to move in and a goal, but I had failed to build a system that became repeatable. You see this often as people set a goal to lose a certain amount of weight and then quickly gain it all back plus some more. The same applies to all aspects of life and especially in investing.

At this point in my story, I’d become a millionaire before thirty and then proceeded to lose it all. “How?” you might ask.

The hard truth is, I lost the money by sitting on my laurels. The subprime bubble burst and the meltdown began. Phoenix was one of three major epicenters in which the subprime bubble burst the hardest—Vegas, Phoenix, and large parts of Florida—where home values fell faster and deeper than anywhere else because they had such an oversupply of new houses. I was too young and naive to see the big picture of what was happening, and instead of acting...

Produkt-Details

• Erscheint lt. Verlag: 6.4.2021
• Sprache: englisch
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Immobilienwirtschaft
• ISBN-10: 1-5445-2059-X / 154452059X
• ISBN-13: 978-1-5445-2059-9 / 9781544520599