Listen to Neal’s most recent podcast guesting, an interview with Steven Pesavento of The Investor Mind
Thrive on Adversity: Difficulty Breeds Drive
Within a month of buying the properties. I knew the problems. I didn’t wait for the shooting. So, the first thing I did was I hired full-time people in the Philippines one person to create lead flow and one person to process that leads law, so we weren’t the property the day that I got there was getting roughly.
50 leads a month and there was no way that I could even keep it at 80% occupancy at 50 leads a month. I calculated and the math came out to I need 250 leads 250 leads are weak. That’s 1,000 leads a month, which is 20 x where the property was doing 20 x naught to X but 20 times as much. The only way that I could go 20x was do something radical do something different.
So I hired full-time people in the Philippines and told him, you know, I want you to look at every listing engine in America and I want you to hack them. Don’t do anything illegal. Don’t inject code. Don’t get me in trouble. I don’t want to end up in jail. But if there’s something that you can do on those engines to basically get an advantage over others do it and it took about three months for us to find those advantages.
And now I can proudly say that at the end of those three months. We had figured out how to make ourselves the most visible building in America. So, by the end of that time we had 48 Craigslist ads running for this one apartment complex all together between nine listing agents at engines. We had 300 ads running and immediately.
We went to 250 leads a week. Right. So, last year the property generated 12,700 tenant leaves now no property manager in the in the u.s. Is equipped to process 12,700 deep so they would have all been a waste of money. So, what we did was I went and hired a person the Philippines. Our name is Janice and basically said you’re going to process these twelve thousand leads and she was like, I don’t mind making a hundred fifty calls a day, but you still can’t process 12,000 leads with a hundred fifty call today.
So then what we dreamed up was that instead of making more phone calls, we would start creating text messages. So, what we did was we took these to imagine a smartphone screen that’s about five and a half inches wide right now, imagine a graphic that fits that five and a half inch screen that tells you the story of the property, you know to gives you the pictures it gives you the amenities it gives you the fees.
It tells you where the properties are where the bus stations are where the crane stations are Imagine five pictures like that that are portrait mode. Right now so we created those pictures and every time somebody would fill out a form for our property. We would send these five immediate Text Blast boom.
Boom. Boom. Boom boom to them. Right and guess what would happen Steven? They would stop filling out forms for other people’s properties and start staring at their phone. And then many of them were just tap the phone number that was at the top right the phone icon and call us back. And now instead of chasing them we were able to process the lead within 60 seconds of it coming in and this way with one full-time person in the Philippines.
We process 12 and a half thousand deaths a year.
Steven: In this process you in from taking a property that was essentially a piece of garbage. You didn’t really know all the things that you now know you realize that hey I got to be really conscious of what’s going on from a crime standpoint. I got to be conscious about.
Whether or not the things that I think are going to happen are actually going to happen and you started putting that into play. What was the outcome of this property? Do you end up being able to deliver what you had promised?
Neal: I wasn’t so the short answer is the properties on sale. Now, the investors will get their money back and they’ll make some money but it’s it is not what the the returns were.
So, for me the big the outcome was that the investors didn’t lose all their money because 30 days into that property Steven. I believe that the likelihood that the investors would lose every single time was over 95% Wow, right and my so to my investors nobody considers me to be a hero nobody that’s invested in that property is going to invest with me.
I began maybe they will. But to me that property represents a greater achievement in my life then any of my other properties not even the ones that make 30% a year, right? This property is my greatest achievement because of the learning that I had to go through right I mean. Necessity is the mother of invention.
I had to learn how to basically hack all these engines and generate tens of thousands of leads. I had to learn how to do this the Filipino Outsourcing model that now has become very popular with all of my properties and we’re that model applied to better quality properties creates insane amounts of money.
So, to me the greatest failure of my professional life, Is the greatest success of my professional life and I’m very candid and honest about it that my investors in that project didn’t benefit from it. I mean in one way they did they didn’t lose all of their money.
Steven: Yeah. Yeah, wow, well because you know so many people would say Neil, you know, I screwed up.
I made a I made a poor decision to buy this property. It was not the right call. Maybe I should just hang it up, but it sounds like you took this from a learning perspective. And you said it’s not a failure because I was able to. Really resurrect this property from nothing. I learned an incredible amount and now I’m applying it to everything that I’m investing in moving forward.
Neal: Absolutely. I mean, honestly the truth is that apart from the fact that those investors, you know didn’t lose their money the benefit of that property. My 11 other properties all of the investors there. There’s four 500 investors in those eleven other properties are all going to benefit from what I learned there.
So yes, I definitely was able to take something that was a very adverse situation and I wish I could say to you Stephen that over four years of fighting. I did turn it around and give my investors ignore. He has 20 percent annualized return nothing like that happened because the property was.
Horrible, it was absolutely horrible in the first five days that we were there after purchase its occupancy fell from 83% 277, right? We would have been at 50 if we hadn’t turned around. Wow,
Steven: Yeah, that’s that’s, that’s incredible. So,, you know, obviously you’re kicking your kicking but you just shared a story of failure, but I know I know the tracker that you’re working with and you’re definitely one of those people who are an achiever that we should be modeling after. Why do you think you’ve succeeded in an industry where you know, so many others haven’t?
Neal: I think that the first piece of it is is I have a very positive mindset. My family always tells me this that. You know, I’ll get down like everybody else. I’ll complain oh bitch and moan when bad stuff happens, but the next day is another day, right?
I believe that there’s a way out for everything. I believe that there’s a happy ending for all of us. And I think that that mindset has to be relentlessly positive. I’m a relentlessly positive person and that’s made a huge difference to me in terms of My Success. And the other thing is that I love to apply technology.
Because I believe that technology to me data is the oil of the 21st century people that grew up in Texas in you know, let’s say 50 years from the go couldn’t help but be rich because they had oil. Well, we’ve got oil we’ve got oil that’s better. Then you know black oil and we’re not applying it and to me I have a very strong realization that it’s there.
It’s right in front of me and I apply it all the time either, you know, I could probably teach a five-day boot camp on how to apply technology and Outsourcing
Steven: So, where do you think that mindset comes from to have a Relentless positivity?
Neal: I think for my mom in. This is a person that lost two husbands, you know one in a war one through a scooter accident and she was always laughing and so she took it in her stride and brought up three wonderful kids who have all had very successful careers.
I think it was from her that she you know, I’m sure that she was crying. In you know in the other room, but she never let us see her tears right to me. Yeah some somehow I knew that if she could be positive losing two husbands in adverse circumstances and you know having to work two jobs to bring us up.
Then what right do I have to be negative?
Steven: I think that can be so inspiring to us because you’re sharing the story of how she inspired you to have this Relentless positivity, but I think what’s also so inspiring about that is that we can actually be that person for other people. So, we look at others and we see hey there being positive they’re being positive.
They’re doing with all this stuff. They’re continuing to you know, Keep On Truckin. But we can be those people even if we’re looking around or we’re not seeing any of those models. We can be those for others.
Neal: Yeah, one of the things I like to say and I encourage my own children to do this my ever seven.
I have an 18 year old he Fourth of July baby turned 18 in a couple days ago. I tell my sons. You know, there’s this very common meme that you know, you’re going to be like the five people that are around you right? So the very common right people hear that all the time actually to me. There’s something more powerful there.
What is apparent to me is that you have the greatest influence over the five people that you’re around right? Just like they have the greatest influence over you. So, have you ever sat down Steven and you thought about those five people? Who are those five people and you said, How can I help these people achieve their potential?
Maybe it’s just through praise. Maybe it’s just through pushing. There may be some of them just need to be pushed maybe some of them need to be told you need to work harder. Whatever it is. What is your contribution towards those five people because if you really want to be successful help them be successful.
They’re influencing you so now you have this positive feedback loop where you’re taking them up. And they’re taking you up continuously right? Look at it. That way don’t look at it as I’m being influenced by them. You have influence over them. How are you helping them achieve, you know the goals in their life.
How are you helping them become happier because that’s in the end. That’s what matters happiness matters.
Steven: That is so true happiness is what it all comes down to and I feel like a lot of people get away from that on that on that goal towards towards achievement. You know, there’s a lot of ways that you can find that happiness.
So, from from a habit standpoint, what are some of the Keystone habits the things you do on a daily or weekly basis that help you succeed the way you do
Neal: I think one of the things that I do on an ongoing basis is I am asking myself this question. How can I do what I’m doing today better faster or cheaper?
So that’s it. Huh a question that I ask myself relentlessly and my answer to that and I’m sure there’s 50 other good answers is the use of technology in the use of Outsourcing. It’s extraordinarily heavy in my business. So, we have a business with 18 total employees using 63 different Cloud software to make us more efficient So my answer is always trying to.
Applied technology and if that doesn’t work, then apply Outsourcing and that both of those come from my daily question right my habit of constantly saying, how can I do what I’m doing here better faster cheaper. The second one is that a lot of people say, you know, the first thing you should do in your day is to plan out your day.
I do it the other way around so I plan every day as the last. Item of the day, so when I’m finishing my day and turning off my laptop. That’s what I’m planning. So, just as habit of structuring your day, your next day is something that I found to be very powerful. The other thing is that I like to schedule everything that I do.
So if you look at my calendar, it isn’t just about me talking with Stephen on a podcast or me talking with an investor. Every item that I have is scheduled into my calendar if I’m working on a presentation. It’s in there if I’m doing something different if I’m units so I schedule it all into my calendar and I follow that calendar.
It’s very frustrating to do it at the very beginning because you almost feel like you have no free will left. Right, but you are the one that’s picking the sort of things that go in there. So, absolutely you do have free will right? So in my mind, there’s always this conflict between Captain Kirk and Spock because Captain Kirk’s just wants to be you know, he just wants to be flamboyant and spontaneous writing it.
All he wants to do is get into trouble. Right and Sparks always the one dragging him away and say no. No, that’s let’s plan this out. Right? Let’s apply some logic there and I have that battle going on between Kirk and Spock all the time as well. But I think in my case Spock tends to win more often than Kirk does
Steven: I love that.
I love that. We’ve made it to the growth rapid fire round where the questions are quick, but the answers don’t need to be so starting off with the book that’s impacted your life the most or one year excited about right now.
Neal: So, impact is definitely the 4-Hour workweek from Timothy Ferriss. I happened to actually know Timothy Ferriss and all of the principles that have applied from a technology and Outsourcing perspective come from there the book that currently is making a huge impact is called traction traction is really a book about not Europe the first year of your company, but the second year.
How do you get from a full-scale startup to accompany with structure and process and and you know, all of the things that are needed to go from being a company to being a great company. You couldn’t find anything better than traction
Steven: From an inspiration standpoint who are some of your mentors and how do they influence your career?
Neal: I think my first Mentor was my CEO of 19 years. He happens to be my best friend now he’s retired and I think his influence. Was in terms of being conservative. He was very very conservative and I think that in multifamily the people in syndication that are taking other people’s money. One of the challenges is they’re not conservative enough, right?
Because what you are is a money manager, so think about people that are stock and bond money managers, right? What’s the first thing all of those people would say, I’m very conservative. I don’t see enough of that in syndication and so my conservative streak I saw half of it comes from my mom and the other half comes from this particular Mentor.
I’ve also been influenced by basically. Just great people on the internet. I like for example, Elon Musk, right? So now here is someone that you know, my I live in the city of Fremont, California, which is the headquarters of Tesla. And so, to me what he’s done what he’s achieved. Is not it is it’s not the opposite of being conservative it is it is setting high goals.
I think you can be conservative and set very high very aggressive goals for your company. Now, you noticed you at the very beginning of this podcast you read off expected to be in at three thousand and twelve months. Don’t you think that’s it is ridiculously ambitious goal to go from 1800 Unis took 3,000 units in 12 months.
That’s a year, right? What’s nice is I’m on track. That’s because I made sure that in everything that I do that goal is there so every podcast I’m doing every event. I’m going to I’m seeing it over and over again. So, mentally my mind is already adjusting to 1200 new units. Over the next 12 months and I see Elon doing that the fact that sometimes it takes longer and the fact that sometimes he fails doesn’t seem to stop him.
It only makes him stronger and and he’s one of these magic people that can run SpaceX and the boring company and Tesla all at the same time and it shows me how much is possible how much is possible for an individual and so he inspires me every single day even on the days that he’s fighting with the SEC or doing stupid tweets.
He still inspires me.
Steven: Absolutely. I love that you can find mentors all over the place and they can have completely different views or mindsets because you know, you’ll you take what you need from each of them. So, finally for a purpose perspective what drives you to live your best life everyday,
Neal: The pursuit of happiness is to me.
I think it’s more about it’s not about you know, the Liberty party. It’s really about happiness and I think. I am always trying to Envision a life. That is more perfect than the one I live and because I’ve been doing this for 20 25 years. I have to say I live a live a hundred out of a hundred life already.
But each year. I keep thinking of the next thing so, you know, you might think that the next thing is objective or a boat. Bright, but in OneNote, which is my note taking software where I write down my thoughts and I have my vision board. Do you know what’s next for me like to the one thing that would make my life more perfect.
It’s not a car. It’s not a plane. It’s not a vacation. It’s the fact that I can now pay for a massage therapist to come to my home. Each Saturday for the whole year and give me and my wife massages so that we are more relaxed and be a better blood flow. So, to me those sorts of things make my life more perfect because you know, it has a long-term impact on my wellness and those sorts of things to be able to add that in that was driving me to make my life. Just that one bit better.
Steven: I love it. I am a big Tim Ferriss fan as well and I can hear so much of him in in everything that you do. This has been amazing. This has been so much fun. Where can people find out more about you and get in
Neal: Touch. So, the best place to start is a portal called multifamily you.com.
That’s meant multifamily followed by the letter you.com where we host over 50. Deep dive knowledge webinars are all free that the whole website is free. For example. Tomorrow night is the number one company in real estate. This is a biggest company in real estate in the u.s. Called co-star is telling us about the Metro of Atlanta.
So, they’re going to do a deep dive on Atlanta. Where does it land to stand today? How does it compare with the other 49 metros? Is it a good place to invest in? Is it a bad place to invest in that’s tomorrow night and then day after tomorrow night? We have one of the nation’s top experts on how.
You can take 1031 money and I sure you roll it into a syndication. Most people know that 1031 money can be rolled into other homes and you know, you can save taxes but he’s going to actually teach you how to do it into a syndication. So, that’s Tuesday and Wednesday for us to free webinars. We usually do fifty to a hundred events a year about a dozen of those are mine.
And as you can tell is, they’re very interesting and data-driven sort of Concepts. So, multifamily you.com is the best place to engage with me. And also, I am very active on. So, just look me up, you know, this is both good and bad, but I happen to be the only needle bow on the internet. So, if you just type in any L, bah-bah-ba-wa on the internet pretty much everything that you’re looking at is connected back to me and will allow you to come in and connect with me.
I love talking with people. So, so feel free to connect
Steven: One-on-one. Absolutely what will include links to all of that in the show notes. So, Neil, thank you so much for sharing some of your investor mindset with us. And I look forward to next time we get a hangout
Neal: Awesome. Thanks for having me on the show Steven. Thank you.