.jpg)
Own the Outcome with Tyler Deveraux
Own the Outcome dives deep into the real stories of resilience and triumph that arise from the depths of failure. Join Tyler Deveraux on a journey of inspiration, growth, and authentic conversation. Within every stumble lies a valuable lesson, a chance for transformation, and a path towards success. Each episode features compelling stories from a diverse range of guests, from entrepreneurs and artists to everyday heroes—all sharing one thing in common: their ability to turn adversity into an opportunity for growth. Because in the end, it's not about avoiding failure; it's about owning the outcome.
Own the Outcome with Tyler Deveraux
The Hard Way is the Only Way with Rich Somers
What if you could transform your career and redefine success by taking bold risks? Rich Somers, a powerhouse entrepreneur and real estate investor, did just that. From air traffic controller to a prominent figure in real estate, Rich's journey is a masterclass in courage and calculated leaps. In this episode, we explore the transformative power of embracing challenges, making quick decisions, and surrounding yourself with the right partners to fuel personal and professional growth. Rich offers invaluable insights into how breaking free from stagnant relationships can lead to remarkable achievements, inspiring you to assess your own partnerships and align with those who propel you forward.
Do not miss this episode!
Follow Rich on Instagram
Subscribe to Rich's Podcast
Book Your Free Strategy Call with Rich & His Team
Thank you for listening to today's episode. If this podcast has brought a smile to your face or sparked some new ideas, I'd love to hear from you! Leaving a review would mean the world to me. Appreciate you!
Connect with Tyler on Instagram: @tyler_deveraux
Interested in multifamily investing? Attend one of our events!
All right, aloha and welcome to the Own the Outcome podcast. My name is Tyler Devereaux and today we have my good buddy, friend, entrepreneur, investor, mastermind, specialist. This dude is a beast man. I love him. He's just a great person. All those things business-wise are great, but he's an even better person, rich Summers. Welcome to the podcast, bro. Rich Summers, welcome is a beast man, I love him. He's just a great person. All those things business-wise are great, but he's an even better person. Rich Summers, welcome to the podcast, bro.
Speaker 2:Tyler, I appreciate you having me on man. Last time we connected in person was in Orlando at your event. I was speaking there and, man, what an amazing event, dude. But more importantly, when are we going to run another podcast? You said you're going to be out here in San Diego. We got to run one on my show again. You were last on a couple years ago, but, man, always a pleasure to be around you, great energy, everything. Thank you for having me.
Speaker 1:Bro, thank you for being here, man. Yeah, rich Summers Report is Rich's podcast. It is one of the top 1% of business and real estate podcasts in the space. Which, bro, I would. That's a huge accomplishment, man. You have to be pumped about that. You're crushing it on the space.
Speaker 2:Yeah, and the best part is, man is we're just, we're just getting warmed up. I don't know how this all happens, but like five years ago I was working full-time as an air traffic controller and I'm like what the heck? Now I'm a podcaster and a real estate investor. What the hell is going on, man?
Speaker 1:so let's talk about that, because I love your story. Man, your story is awesome. I remember hearing about your story from just meeting you on your podcast. This is this, for that was a long time ago, but tell me about your story because you were still there at that point, I think. Were you still working the air traffic control at that point?
Speaker 2:2020. Uh, yeah, when, when I first interviewed you on my my old podcast, the multifamily takeoff that I had with two my two old partners, uh, that was the first time we met and uh, I still had the air traffic control job. I didn't leave until December of 2020. So this December will be exactly four years from from me leaving.
Speaker 1:Congrats for let's talk about it, man. How did you end up leaving? Talk about your journey from even the last few years and just what you've been able to do, because it's pretty incredible.
Speaker 2:Yeah, man. So I grew up middle class like most people. My mom is from Taiwan, my dad is from. He grew up in Holland, and both of my parents know the value of working hard and saving your money.
Speaker 2:I was always taught from a young age to go to school, get good grades, go to college and get a job. For the most part, that's what I did, and I got a background in sales. My first sales job was when I was in college, selling cell phones out of the kiosk for singular wireless, and the manager told me I had to say hi to strangers to be successful, and that was my first taste of what it was like to sell. A couple of years later, I became top at sales and some of my coworkers went on to sell cars for Nissan and they were like hey, dude, rich, you got to come out to the car lot, you're going to make a lot more money. So I went out there. I started selling cars. Meanwhile I'm going to college and I graduate 2008. And I'm thinking I want to go sell what's going to give me the best commissions, and that's selling commercial real estate. And so I interviewed with CB Richard Ellis and Grubbin Ellis in 2008, and they were like hey, dude, we love your hustle, we think that you would crush, but this is not the right time to get into the industry. So I found myself in a car lot wondering what the heck am I going to do with my life? And I backed into a job as an air traffic controller with the FAA and they were like hey, dude, if you can take a, if you can pass a drug test, we'll hire you. And you got to be out here in Oklahoma City in two weeks. So I literally packed up a suitcase, drove out to Oklahoma City and I started a 11 year career with the government working airplanes. It was the coolest job ever. It was fun, it was fulfilling. I met so many cool co workers.
Speaker 2:Uh, about nine years into my 11 year journey, uh, I felt stuck. I didn't feel like I was growing any longer and I was like dude, is this, is this all there is to life? And um, I was looking for that next thing. And that's when I overheard a coworker in the break room talking about how he just closed on a fourplex in Cleveland and I thought it was the coolest thing ever and I was like how did you buy that fourplex in Cleveland Show me how you did it. And he goes go listen to this podcast it was the BiggerPockets podcast and go read this book. It was a blue book by Brandon Turner on real estate investing and, man, I became obsessed. Dude, literally for nine months straight, that's all I did.
Speaker 2:I started binge listening to podcasts, I started reading all these books, I started going to networking events and nine months into it I cashed out my 401k. That was my only seed money and, to make a long story short, dude, I went against what society will tell you what a lot of friends and family told me were too risky and I cashed out the 401k. I used it to buy some multifamily deals and then I started buying some short-term rentals and ran out of money and I learned how to raise money and fast forward. Today control about $80 million of real estate. A lot of this is with investors. A lot of it's buying value-add stuff boutique hotels, short-term rentals and multifamily. Now I got a fund and we're buying boutique hotels, got a property management business and you are an investor in one of our funds. So, uh, thank you for that and uh, it's been a fun ride thank you bro.
Speaker 2:Yeah, but it's. It's crazy to say this is. Is this, tyler, like? I feel like I just woke up one day and I'm like, oh my god, air traffic controller to like podcast or real estate investor? What did I do to deserve this and how the fuck did my life take us such a quick pivot? But in the day to day we forget to sit back and actually reflect and enjoy it all. I'm sure that that you know that's better than me.
Speaker 1:Oh, bro, I can relate to that. Okay, there's so much to unpack from that. Like, so much to unpack because you see, this journey, you're on this journey, you have a conversation and then you just decided to go all in and think about, like, what you just said. You cashed out your 401k and turned it into $80 million real estate portfolio in a span of how many years, bro? I mean, bro, that's incredible, man. It is incredible Like. I absolutely love the journey and it had to have taken guts, you know, or did it Like, was it just like? You're all in, you didn't give a shit about the haters and what they were saying, you were just or the naysayers, whatever you want to call them.
Speaker 2:Every step along the process I got challenged and every step. Even looking back to when I cashed out the 401k to buy that first 11 unit building in Cincinnati for $350,000 that I put 25% down on that was scary because friends, family members, coworkers, everyone told me it was too risky. And I made all the mistakes with that deal. I hired the wrong property manager I still own that deal today and then it was like you know when I went to go partner, people told me not to do it. And then when I went to go raise money, people told me not to do it. And then when I decided to start hiring out a team and get an office and a podcast studio, people told me not to do it. And when I went to start a fund, people told me not to do it. And then when I got into hotels, people told me not to do it.
Speaker 2:So like every fucking step along the way. There's going to be people that tell you not to do it, but I think, I think what. What changes is like each time you get challenged and you get outside of your comfort zone and then you figure it out. When you unlock a new level, you gain a little bit more confidence and you gain a little bit more knowledge. And so now I expect to be challenged, I expect to be smacked at every single level. I know it's coming and so I just get a little bit more. Um, I would say I gained a little bit more wisdom at each level and now I expect to be challenged, and I know that life gets challenging before the level up.
Speaker 1:That's so good. You expect to be challenged, and life gets challenging before the level up. Fact, and I love that. Like your confidence, your belief has to outweigh and be way bigger than anybody else's doubt. Like, if they doubt more than you believe, that's your problem, not theirs, right? Like you got to know, and doubt only comes from below, doubt more than you believe that's your problem, not theirs.
Speaker 2:Right like you gotta know. And doubt only comes from below, like how often are you gonna go out there and talk to people like pace morby or grant cardone? Or tyler, devro and these folks are gonna tell you yo rich, uh, you're fucking playing out of your, out of your fucking your your realistic realm of what you can accomplish. You're thinking too big, uh, this is too risky. What the hell are you doing? You need to play a little bit smaller. No one ahead of you is going to tell you that, so all the doubt only comes from below.
Speaker 1:That's a solid reminder. That's actually a reminder that I feel like I needed to hear right now. That's a great reminder, bro. That's it.
Speaker 2:Anyone that tells you that you can't have the life that you desire already gave up on getting it for themselves.
Speaker 1:I'm pausing, bro. I'm letting that shit sink. You're dropping like that's it. Let me tell you something, man, because you talked about your fund, and this is what's so incredible, because I just want to give you your flowers for a second, because I don't just invest with with everyone. But I'm going to tell you something I cause you said.
Speaker 1:What you said in the beginning is I just feel like I woke up and it happened. I know that. You know that that didn't happen. Like you, you put in the work, and I want to make sure that everyone knows that, because I think a lot of people could look and be like, oh yeah, just like he just caught a lucky wave. No, this dude puts in the work, and I saw that work, and that's why I wish I would have invested. Honestly, bro, I wish I would have invested more into your fund. You're one of the only passive investments that I have right now, because lots of stuff is passive in my other multifamily deals. You're one of the only funds out there that is sending me distributions on a regular basis. I should have put more into your fund, bro.
Speaker 2:Yeah, yeah, it's funny that you say a passive investment, because nothing about this game is passive. And yeah, to answer your question, man.
Speaker 1:What is up y'all Listen. If this podcast has brought joy or value at some point as you're listening to it, we would love it if you would be so kind as to leave us a review down below. That is how we keep this thing moving and finding individuals just like you to pour value into. Now let's get back to the show.
Speaker 2:Yes, it's. This game is about the reps, it's about the at bats and it's about making more and more mistakes every single week, and I make so many mistakes every single week. But I think the key is making decisions and rolling with the decisions. Win or lose, whether it's the right decision or the wrong decision, let's just make a decision. I tell the team all the time. I'm like, guys, I don't give a fuck if it's the wrong decision, let's just make a decision and roll. I don't want to get stuck taking weeks and months to make one decision, when we can just literally grow from our decisions. If it's the wrong one, I don't care, we'll pivot, we'll learn from it, we'll get better and we'll pivot. We have the ability to do that because everything that we do is really in-house. Right, we self-manage, we self-operate, everything we do is in-house. And so, um, yeah, it's about the at-bats, it's about the reps.
Speaker 2:Uh, I always say put yourself in situations where the hard way is the only way, and I think one of the reasons that I have seen a lot of growth is, like you know, from you know, let's just say the podcast, for example. Right, I'm doing three podcast episodes a week. I haven't missed a podcast since I started podcasting in 2019. I've never missed one. It's a non-negotiable. And, yes, sometimes I don't feel like waking up on a Wednesday and recording three or four podcast episodes. I got two or three guests flying in from out of town or podcasts on a Wednesday. Sometimes I'm waking up feeling under the weather, I don't feel like doing it, but guess what? I have to do it. It's a non-negotiable. And so I think, for your audience, anyone listening to this if you're struggling with seeing any growth, you're struggling with consistency.
Speaker 2:The key is to put yourself in situations where the hard way is the only way. Put yourself in situations where the hard work has to get done and I promise you, if you put yourself in situations where you set up systems and processes to where the hard work has to get done, you will look back months from now and years from now and you will be like, oh my gosh, there's so much fucking growth and it will fucking change your life in so many ways that you never thought was even possible. And that's really what's happened for me and that's why I say, yeah, it's fucking crazy. It feels like I just woke up one day and I had all this stuff and I'm like what did I do to deserve this? But no, when you break it down into the fucking hours and the grind and the day-to-day of putting out fires left and right, the at-bats, the reps, and fucking putting in the work even when I don't feel like putting in the work and not being a fucking bitch then you look back and that's where you see the fucking growth.
Speaker 1:Oh dude, everybody driving right now is like going 110, bro, 110. That is, you know. When you talked about brandon's book, immediately in my mind I was like damn rich needs to rich needs to write a freaking book, and that's your title. Man, the hard way is the only way. Like that is that line right. There is so good, and it is, though, like if you just put yourself in those situations, you will grow at a rapid, rapid pace. It's one of the things that I remember. Having dinner with you is probably about a year ago or so and you talking about this exact same thing of your your how quickly you make decisions, and it's one of the things with the podcast and interviewing high level guests and you know this from yours. I'm sure that it could probably be a theme is that decisions quicker, like the consistency of quicker decision making, because now, you, that's where you learn the most, all of that's where you learn the most. That's huge.
Speaker 2:And to to take that one step further, tyler. This is very important for your audiences, like, if you guys are talking about, or thinking about partnering with someone to buy a business, buy real estate, estate, whatever it is if you're looking at partners, the the biggest determination of finding the right partner that's aligned. And this is outside of just being a good human being, because, number one, they got to be a good human being. If they're not, then I'm not going to partner with that person, because they got to be a good representation of my brand. But the the next most important thing is what is their level of risk tolerance? And how long did this person take to make a fucking decision?
Speaker 2:Because I had a couple of partners that I was buying real estate with and we had a successful partnership.
Speaker 2:We bought a lot of real estate together. We all quit our air traffic control jobs together, but two years ago I made a tough decision and I decided to split up with them because I realized that I was no longer going to reach my full potential under that partnership. And the reason is is we had a different level of risk tolerance and because of that, every single decision that needed to be made was a grueling four, six hour, sometimes a week worth of meetings to make one decision. And you're just never going to grow in life if you take a week to make one decision and so, in the same time that I was making, maybe taking a whole week to make one decision, under that partnership, we're now making 50 decisions a week in the same amount of time and if you look at that compounded over weeks, over months, over years, that's the difference between someone making it to the college basketball level and someone becoming Kobe Bryant, becoming Michael Jordan, because this game is about the at-bats, it's about the reps.
Speaker 1:That's fact, that right there is absolute fact. And you made the hard decision to split. I remember when you made that decision, dude, and I know it was hard. I remember talking to you about it and I know it was challenging, but to see the hockey stick curve that you've experienced since is, dude, it's crazy man, it's absolutely crazy, and I respect you so much for it being able to make the hard decisions consistently.
Speaker 2:You will only grow to the level of your constraints, not your potential. And that was my biggest takeaway there you will only grow to the level of your constraints, not your potential. So if you're listening to this right now and you're like man I'm in a partnership or I'm in a relationship where I no longer feel like I am growing I challenge you to get very clear and have that tough conversation and and and potentially, go on your own, because I'm telling you right now, uh, if you got someone in your life right now that's holding you back, you are never going to reach your full potential, and this life is already short enough as it is. I always say months is the best time, the best way to measure how much time we have left. Months is the best way to measure how much time we have left, not years.
Speaker 2:And so I know average life expectancy for a male is 77 years old here in America. Well, I'm 39. So if you just take 77 minus 39, I have about 450 months left on this planet. That's going to go by like that, right. And so when I think about, hey, uh, because I'm not willing to have a tough conversation, I'm no, I'm no, I'm not gonna reach my full potential in these 450 months that I have remaining, because I am too. I don't have the fucking balls to go have a tough conversation.
Speaker 1:come on come on, yeah, exactly, because it's gonna happen eventually.
Speaker 1:eventually it's going to happen eventually. Eventually it's going to happen. But you will have wasted years, you will have not hit your potential because of the constraint, and then you'll be bitter. You'll just be bitter. You're the youngest, most energetic right now that you'll ever be, so I want to talk about this. Actually, we're going to lead into this. This leads in perfectly. Let's talk about what's coming up in our space. By the way, listen Rich. He told you his portfolio, boutique hotels, multifamily single. He has a boutique hotel mastermind. I had a privilege of jumping on your mastermind that I was so impressed with that group. If you're interested in boutique hotels, you're out of your mind If you don't hit this dude up with his. With his boutique hotel mastermind, he also runs one of the largest, if not the largest it might be the largest meetup in San Diego. Is that true?
Speaker 2:Yeah, we get the largest real estate investment meetup here in San Diego. It's called beers and deals. We host that second Wednesday of the month. We get 300 people come out. It's sick Rooftop views, bay views, it's free. Been hosting it since 2019. Actually, started hosting it before I even owned any real estate.
Speaker 1:Okay, that's a huge takeaway too. Okay, so let's talk about the next four years and what's coming down the pipeline and what your viewpoint is. What do you, how do you feel about what's going on?
Speaker 2:I'm excited, man. In the last two weeks since the presidential election, Tyler, I have been getting blown up by lenders, by brokers, real estate investors and other asset classes that buy retail multifamily office space. People are pumped and the energy in the air has completely shifted, and they were already calling this the greatest transfer of wealth in American history prior to the election. We're talking 40 million baby boomers retiring here in the next seven years and 4.8 billion people are on social media. Let me say that again 40 million baby boomers are retiring in the next seven years and 4.8 billion people in the world use social media. The playing field is now level and we're buying hotels. 25% of the boutique hotels out there that are priced 10 million and under in terms of value are owned by these retiring boomers. A lot of their properties are tired. They haven't been renovated in decades. That gives us a massive opportunity to come in and pick up these properties at a discount and add a lot of value and force a lot of appreciation through renovation, through remote management.
Speaker 2:All of the above and now, after this presidential election, we now have a real estate investor that's taken over office in about six weeks actually five weeks. So the Republicans control the house. The Republicans are going to control the Senate and now we have a real estate investor in office and oh, by the way, there's going to be a lot of policies that are put into place that are going to favor business owners and real estate investors. 100% bonus depreciation is likely coming back retroactively. The top bracket for long-term capital gains is likely going to go from 20 to 15. For long-term capital gains is likely going to go from 20 to 15. There was talks about the other party coming in and instilling capital gains tax on unrealized gains. I don't know what the fuck that bullshit was all about, but I'll say this If this fucking next four years does not get you excited and you're listening to this fucking podcast right now this game might not be for you.
Speaker 1:Fact. Say it again for those in the back dude. Say it again, Right there.
Speaker 2:If this next four years does not get you excited as a real estate investor or a business owner, this game might not be for you.
Speaker 1:Fact, bro. Yes, and the time is now. I love that, like literally. You said that it's like I've been telling people, because I believe this last year plus, like last year and a half, has weeded people out Like people who weren't truly serious but they tried to dabble or get it. They've it's weeded them out. I've been telling people like you are. You are literally laying the foundation for exponential growth, moving forward with what's, with what is piling up and happening. But because you get so short-sighted in the moment and you either roll or get frustrated, give up whatever or don't get in at all, oh my God, you're literally your grandkids and your kids.
Speaker 1:I believe we'll look back at you and be like hold on you. You were around in 2025. You were around in 2025. You were there and you didn't do shit. What you screwed us over? That's how I feel. So I agree with you, man. I'm getting blown up left and right with brokers and all that kind of those kind of things as well, and it lights me up and anybody watching on YouTube you just watch Rich's physiology Like he's excited about it, man, and it is. It lights me up, dude. Lights me up. Biggest wealth transfer.
Speaker 2:And real quick. Think about this, guys, tyler, think about this. We've been in a high rate environment for 30 months now and the rate environment is essentially doubled more than doubled for 30 months. And to think that the real estate market has not completely crashed in 99% of markets in the country has not completely crashed. In a lot of markets the real estate pricing has maybe come back 5% to 10% over the last 30 months and the rate environment, from a cost of capital perspective, has more than doubled for 30 months. Think about the fundamentals and what that means. From a cost of capital perspective has more than doubled for 30 months. So think about the fundamentals and what that means from a macro perspective.
Speaker 2:Right, we have a lot of shifting demographics going on right now. So the baby boomers we just mentioned them. Baby boomers are living a lot longer now and so they're not selling off their homes as early as they once were and they're not going into retirement homes as early as they once were. And then you got the millennials my demographic who are starting families for the first time. They're buying houses for the first time. That's a huge tick up in demand. And then behind them you got the Gen Zers, which is even larger than millennials and they're moving out of their parents' house for the first time and looking to rent apartments.
Speaker 2:Now, on the supply standpoint, in 2020, we had a huge, major tick down in supply I'm sorry in housing starts okay, and multifamily builds and you know rightfully so, there's COVID. If I was a builder, I wouldn't want to build either. And then 2021, a lot of people realize oh my gosh, there was no recession in the world, just shut down. The Federal Reserve just printed 80% of the money supply. Well, all that money needs to go somewhere and, yes, a lot of that money is off of the playing field right now and it's in long-term government bonds shit, you can get 4% risk-free in a CD. So a lot of that money is off of the table Now. From the supply standpoint and think about this the housing starts in 2023 and 2024 are basically an all-time low because of the rate environment. There's a lot of uncertainty. There's been a lot of bad news in the marketplace over the last 30 months, so I get it. If I was a builder, I'm like maybe I don't start a new build right now. A lot of these projects take three, four years to build, especially these larger multifamily deals, and so I say all this and that housing charts are at an all time low.
Speaker 2:There's already a five to 6 million housing unit shortage in supply to meet the demand right now. This is countrywide. I've read a lot of articles. Most of them say five to 6 million housing units short. Now Pace Morby and Grant Cardone talk about this all the time. This does not include the 25 to 30 million dilapidated homes in America that are not rentable. They're not bankable. You can't get a home loan on that. No one can even live in.
Speaker 2:So if you really take into account all of these houses that are not livable or rentable, really about 30 million housing units short to meet the demand, and that's why, even though the rate environment has more than doubled in the last 30 months, we did not really see a tick down in pricing, and so this bodes really really well as you look at the next four years and as you look at the Fed.
Speaker 2:They just came out and announced that they're going to do a couple rate cuts. That's big. I think these rate cuts are going to continue over the next 12, 18, 24 months, and so I'm actually really excited. I think we're going to continue to see more inflation. The government's just going to continue to print money in the longterm and, like I said, do not forget, the federal reserve has printed 80% of the money supply, guys, in the last four years. Okay, that money's going to come back into the playing field and that money needs to trickle down and needs to go somewhere. It needs to find a home, and so if you're out there thinking we're going to see this big real estate crash, guys, I'm telling you it ain't going to happen.
Speaker 2:And I'm telling you right now, in 10 years, 12 years, 15 years from now, you're going to look back and be like, oh my gosh, I should have bought that good deal. The bad news in the marketplace is going to be gone and there's going to be a lot more buyers that are on the sidelines over the last 30 months, that are going to be in the marketplace. And so, if you're out there right now and you're wondering why you don't have a good deal, or if you're out there looking to buy your first real estate deal, I'm telling you guys, right now, this is the time, because right now there's still bad news in the marketplace. There, there's still bad news in the marketplace. There's not a ton of buyer demand. You can go out there and negotiate good deals in good locations, and there's still some sellers out there that need to get out of deals.
Speaker 2:And so I'm putting this out there right now, tyler, and I'm always speculating, I'm always willing to be wrong, always willing to be wrong but I'm putting this out there right now. I think these next three to six months I know, fuck it, I'm going to say these next three to four months if you're looking to buy a good deal. This is the time to strike because in nine months, 12 months from now even summer of 2025, I'm telling you it's going to be fucking crazy out there and you're going to have a lot of competition. You're going to wish that you locked up a good deal back in November, back in December of 2024.
Speaker 1:Okay, I totally agree with that. I absolutely agree with that, because as soon as people, as soon as the good news starts to be get even and I want to drill home on something but as soon as the good news starts to outweigh the bad news, then you have people flood in. Well, you already want to be in the market when that happens, because then it compresses cap rates, which drives up your values. And if you notice something about Rich, rich is very confident in what he's saying, even though everything you know, the news and all these things can be so negative, rich is confident in what he's saying. He's confident in his execution because he's actually done the research, he's actually looked at the facts, instead of just being fed into whatever story somebody else tells him. He actually does his research.
Speaker 1:And that's where I wanted to lead this question. If there's somebody listening to this, they're in the game, or maybe they've been in the game, they're on the sidelines, or they're thinking about getting in the game but they're on the sidelines. Or, let's say that they haven't even started and they're wondering should I? Where would you tell them to start? Like, what's the knowing, what you know? Now, what would you? What would you tell them an actionable that you would give them.
Speaker 2:Uh, you know, if you're starting out right now and you're looking to buy your first real estate deal, uh, first educate yourself, um, and and and see what asset classes or what types of real estate uh are going to be aligned with your real estate investment goals. There's a hundred ways to make money in real estate Now. Where I see the most potential as I look out through 2025, if you want to make a million dollars through real estate, the three investments or areas of real estate that I would get into if I want to make a million dollars in 2025 and become a real estate millionaire either by adding a million dollars in 2025 and become a real estate millionaire, either by adding a million dollars to your net worth or making a million dollars cash through real estate would be these three things. I would say number one and this is probably the easiest path for the everyday person to make a million bucks in real estate and I would say is get into ADUs.
Speaker 2:Adus right now in expensive markets, especially in the West Coast Seattle Thatch Game, which is on the podcast. He's talking about it. This is a big play right now in California, especially Los Angeles and San Diego, in these big expensive markets, because there's a shortage of housing and because it's very, very hard to build in areas like California and shoot, hawaii has got a lot of bureaucracy and red tape as well, and so maybe Hawaii, there's a play there. But I know in California right now, no-transcript Southern California and Seattle and the Bay area are so expensive $7, $800 a foot. You can build at $300 a foot and you can pocket on that spread, you can pocket on that Delta and that's a way to force a lot of appreciation with the ADU space. That's number one. Number two I would say get into value add commercial real estate. You don't need to do a big, massive 100 unit, 200 unit deal. But I'm telling you you can go buy a fucking A-plex and and multifamily side that's underperforming and you can renovate the units, reposition the property and force a lot of appreciation.
Speaker 2:I've done it on the multifamily side and you don't need to do big properties Shit. My first deal was 11 units. I bought that for three 50. Today it's worth about eight, 50. My second deal I bought was a 32 unit complex out in Indianapolis. I bought that in 2019 for 1.1. Out in Indianapolis, I bought that in 2019 for 1.1. We renovated 50% of the units.
Speaker 1:We sold it 24 months later for 3.1.
Speaker 2:We almost had 3X on the value right. That was my first big win as a real estate investor and that was in a relatively short amount of time. And so we're doing that with the hotel stuff right now. So the first hotel I bought, 10 units beachfront up in Northern California, bought that for 1.5 seller finance. The seller had owned it for 18 years mom and pop and they never exceeded $180,000. In 12 months we took the 180 to 600. We took the value from 1.5 to 4.5. We tripled the value of the property in 12 months. We did a cash out refi. Now, look, we're doing that with all the stuff right now. The 44 unit I'm sorry, the 44 unit boutique hotel that we bought last in April that you're a part of Tyler, the Bodega Coast Inn and Suites, now going to be Hotel Dega, sonoma Coast waterfront wine country.
Speaker 2:That property was built in 1988. And this is when I talk about hey, baby boomers are retiring. This is a perfect example. That property was built in 1988. And this is when I talk about hey, baby boomers are retiring. This is a perfect example. That property was built in 1988. It had never traded.
Speaker 2:The son took it over. The father had passed away two years ago. The things started spiraling out of control, had poor management and the son said, hey, let's list this thing, but I don't want anyone to know that we're selling it. The broker shopped it off market with just a couple of buyers. We got in there. We were able to lock this thing up, bought it. We stole this thing. We bought it for 6.9 and a quarter. This thing appraised as is a 10.6 million. It has a stabilized value. We're putting $2.2 million into a renovation right now. It has a stabilized value of about 15 million. So think about that. We bought it for 6.9 and in 12 months or less it's going to be worth $15 million.
Speaker 2:And this is why I say value-add. Commercial real estate is the play. Once you learn how these things are valued right and this is why I skipped residential real estate I went straight to commercial. The income approach, noi, divided by cap rate, equals value. Once you understand that formula and you realize the more I can increase the income, the more I can decrease the expenses, the more I can control and force my appreciation, the sooner you can learn that, the sooner you're going to probably get out of the residential stuff and get into the commercial stuff. That's really where the play is.
Speaker 2:And then the third way, which is going to be residential. If you guys don't want to jump in the commercial side, I would say find some underperforming, higher end properties in high growth areas like Scottsdale, arizona, and you can buy these properties that are tired, do a nice renovation. But these got to be inexpensive areas and you got to buy them right. And if you do it right with the renovation, you can add a lot of value in these nice higher end flips. We're hosting our holiday event this December 12th at a 12,000 square foot mansion. My buddy bought that property for three and a half.
Speaker 1:I saw some posts on this. This thing looked awesome.
Speaker 2:My buddy bought the property for three and a half million. He put three and a half million into it. He's all in for seven. He's got an appraisal for $12 million. So think about that. He added $5 million of equity to a property in about 12 months. And so I did it with my Scottsdale luxury rental and I was just looking at this deal. I'm going to put out a piece of content on this thing, probably tonight or tomorrow.
Speaker 2:Tyler, I was just looking at the freaking P&Ls. I'm like this luxury short-term rental that I 1031 exchanged into in early 2022, this is one fucking property. This thing has $731,000 of gross revenue on the books in this year. I'm going to hit 750K by the time the year is over. I'm like I need to talk about that.
Speaker 2:People are talking about oh, Airbnb is dead, and I agree that Airbnb is dead in a lot of markets and that's why I'm buying hotels. But if you can buy the right fucking Airbnb, especially on the luxury end, in the right market, you can crush right now. So that property at 1031 exchanged into $2.4 million in early 2022. I put 800 in, I was all in for 3.2. And that being appraised 12 months later for 4.89.
Speaker 2:And this is the other way that you guys can add a lot of value is get into a nice luxury property and add a lot of value, but it's got to be in the right neighborhood, you got to buy it right, you got to have the right contractors. But if you can do all those things, you can either flip it and get out of it and make a million dollars cash, or you do what I did and you refi and hold it into a long-term, short-term rental and it's a way to get a lot of depreciation and a lot of tax flow. But you but I would say, if you've never done it before, get with someone that's done it before.
Speaker 1:So good, dude, I asked this question to give some actionables and you just go wax poetic on them, bro, like those, are anybody listening to this? Like, go take notes, man. Those are the actionables. And how do you know which one to dive into? Well, dude, do exactly what he said Go get. How do you know which one to dive into? Well, dude, do exactly what he said go get educated, figure out which one resonates like, and then make a decision and know that the decision is never it's. That's not the finite thing, that's just the beginning. Then you're going to make a million micro decisions after that and you can always pivot and move but you can move.
Speaker 2:And that, but you can move, you can move, you can move. So, to recap, adu, I think, is one of my top three favorites value add commercial real estate, and then flipping or refinancing and holding a luxury residential property in a high growth, good, good neighborhood. Those are probably my three favorite players for 2025. And I think anyone could get into any of those three. The key is, you know we can give you all the secrets, we can give you all the information, but it's on you to take action, and those who take action play the game. You can't win the game from the sidelines.
Speaker 1:That's it. Okay, let me give you an example of this. There's a lady who I just talked to when I was out in Fiji, and she was telling me that she took some of Pace's Pace Morby's stuff, talking about creative financing I love Pace too and he talked about some ADUs briefly, but she was familiar with it. She went, but she didn't have her own money to go or her own property, and so she was struggling to find properties that would be willing to sell. So she pivoted and she would start pitching to these sellers hey, I'll come in, I'll build this additional dwelling unit on your property, we'll rent it out, split the cashflow, drive equity up and then when you, whenever you do-