Commercial Real Estate

Can a Dead First Lady Help You Succeed in Real Estate?

Expertise: Personal Development, Commercial Real Estate, Real Estate News & Commentary, Landlording & Rental Properties
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close up of hands holding house over american flag

Do you remember Nancy Reagan’s campaign against drugs? The first lady encouraged America’s youth to “Just Say No.”

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When peer pressure mounts, or the crowd around you urges you to say yes, or you feel compelled to compromise and give in, Mrs. Reagan told us to “just say no.”

I’ve never appreciated the former first lady’s advice more than I do today.

Recent Trends in Real Estate Investing

As the author of The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing, I studied and wrote about how the investing world has been going crazy ever since the Great Recession, with everyone chasing multifamily and other commercial investment opportunities. It has truly been an unprecedented run.

And like those who said bitcoin would be worth $1 million last winter (before it dropped by 80 percent), the allure has been real.

For instance:

  • I’ve watched several friends acquire questionable assets in risky locations. Some have refinanced or exited, pulling out millions. They continue to buy now.
  • I've stretched our underwriting as far as it made sense but have still been outbid by 20 percent by other well-funded operators who told their investors to "count on appreciation" to make up for questionable cash flow. (Didn't we hear this in 2006?)
  • My company missed out on a great self-storage opportunity last summer. We could see its potential but came to grips with the fact that we didn’t have the internal team to pull it off.

Related: 5 Reasons Self-Storage Investing Will Continue Its Incredible Run

However, I’ve also seen cracks in the ice. There are significant signs of a bubble in single family, multifamily, and many self-storage markets. All real estate is local. And not all operators, locations, and assets are created equal.

When my wife and I spent a day driving through some of the posh suburbs around Beverly Hills, Calif., last March, we saw only one or two “for sale” signs. Now—just 11 months later—there are an abundance.

What’s going on? If California is still the forerunner of all things American, we could be in for trouble.

hand holding needle near bubbles set against blue sky background

Yesterday I heard about a new self-storage facility that went up in an already overbuilt Charlotte, N.C., location. Yes, it’s been said that, “If you build it, they will come.”


This particular operator spent $9 million on the upscale facility. After a few years, he realized that its value would top out at $6.5 million once stabilized. So, he handed the keys to the bank and moved on.

In December, I was at an investor event when one of the nation’s most famous multifamily syndicators unexpectedly took the stage. I was delighted! He is a hero to 10s (or 100s!) of thousands of real estate investors.

His message was something along the lines of not worrying about overpaying for multifamily. Just get a great property in a great location, and get in the game for the long haul, he advised.

I was stunned. I waited for the punchline…

It never came. He was serious!

What’s more, one of my investors told me they actually saw a document showing that said real estate hero was apparently buying a large multifamily deal at around a 1 percent cap rate.

I returned to my hotel wondering if I was wrong. This guy has luxury cars, a private jet, and millions of followers!

But then I remembered the words of Warren Buffett.

“The difference between successful people and really successful people is that really successful people say no to almost everything.”

The Power of Saying No in Real Estate Investing

I’m on a path of learning to just say no.

I feel like my company dodged a bullet—many bullets actually—by not giving in to multifamily’s siren song. We refused to join the crowd and overpay these past several years.

Instead we launched our new funds and dug our heels in even further, committing to ourselves and our investors that we would say no to the vast majority of operators, assets, and deals.

And we have already had to do so, saying no to quite a few operators and opportunities. Some of them are friends of ours, and some are flashy and profitable.

close up of hand holding yellow post-it reading say no

For example, I was recently wrestling with myself as I considered investing in a clearly profitable apartment deal. Our fund is set up to invest in self-storage, mobile home parks, and (theoretically) multifamily. I say theoretically because we have yet to find a deal that fits all of our criteria.

Our first criterion is to solely deal with highly experienced, cohesive, internal teams that worked together through the Great Recession. Like Warren Buffett, we are betting on the jockey first and the horse second.

This apartment complex was a great asset in a nice location, and I believed it would be profitable. The team, however, was made up of loosely affiliated contractors.

But they were a great team! And here’s what made it tougher: two of the key guys on the team are trusted friends.

It was tough to say no. I struggled with it.

I expressed my frustration to another trusted friend, hedge fund manager Andy Goldberger. Andy helped remind me of our commitment.

He said, “You may be my best friend, but if I’m playing basketball with you and I’m driving for the hoop, I’ll knock you over with an elbow to the chest to get to the basket.”

I remembered that my commitment was to our investors—not my syndicator friends. And it is better to not invest at all than to compromise on a fundamental investing tenet.

It was awkward, but we said no. And I came to peace with it.

Here’s another example. We said no to a very cool ground-up opportunity offered by an experienced developer across the street from what will eventually become a theme park.

The land is currently owned by Disney, and Disney hand picked this developer for the deal. However, the projected returns were not a fit for our investors.

We also said no to a wonderful multifamily project in one of our favorite West Coast cities. The developer (another friend) has a great track record and an “in” with the difficult planning and zoning department. The location is optimal, and the project will be very profitable.

But—again—we didn’t feel that the internal team was a perfect fit for our fund.

At this point, our default is to say no. Therefore, we can all rest assured that when we say yes, we feel it is a perfect fit that meets our criteria in terms of being the right asset class, operator, team, location, and asset.

How We Decide When to Say No

There are many ways to craft a fund, and we don’t claim to have a corner on the market. But we believe it makes sense to provide diversification in the following five arenas:

  • Asset Class: We elect to invest in asset classes that have stellar performance in recessions and outsized returns in almost any economy.
  • Operator: We partner with high integrity operators, those who have been in the game through one or more recessions and who offer us a premium that we can pass along to investors.
  • Team: Our experienced operators don’t rely on an array of independent contractors. Instead they have a dedicated, cohesive team with a shared history in the trenches.
  • Location: It’s not ok to go after a great asset if it’s in the wrong location. We partner with operators who share our conservative mindset and critically analyze the demographics and inherent risks of each site.
  • Asset: Our income fund only invests in assets that produce a return from day one. Our growth fund invests in assets targeting significant appreciation without regard to income. By investing in self-storage, mobile home parks, and (theoretically) multifamily that also have a value-add component, we are able to achieve outsized returns and target refinance (or sale) opportunity windows in four- to seven-year timeframes. This allows us to provide a tax-advantaged early return of principal while investors maintain ownership for years to come.

Our fund has been a long time in the making. We realize a lot of our investors have been frustrated with the lack of investment opportunities we have offered. And I’ve been frustrated, too!

But that is just part of us learning to say no, which we ultimately feel is for the best.

To quote Gary Keller, real estate pioneer and author of the bestseller The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results: “Saying yes to your one thing means saying no to a thousand other good things.”

I used to think that was an exaggeration. But now I think it could be closer to 10,000 nos!

Nancy Reagan was right, and so are Keller and Buffett. I think we would be wise to listen to them—a former first lady, the world’s most successful real estate broker, and the most successful investor of the 20th century.

Have you learned to avoid compromise? What do you say no to in order to say yes to your highest priorities?

Leave a comment below. 

After graduating with an engineering degree and then an MBA from Ohio State, Paul entered the management development track at Ford Motor Company in Detroit. After five years, he departed to start a...
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    Christopher Smith Investor from brentwood, california
    Replied over 1 year ago
    “His message was something along the lines of not worrying about overpaying for multifamily. Just get a great property in a great location, and get in the game for the long haul, he advised.” In a distinguishing manner, reminds me of Charlie Munger’s advice to Warren Buffett given many years ago on how Buffett could dramatically improve his already very impressive numbers: “Paraphrasing” Owning a Great Business that consistently generates Great Numbers will nearly always on a long term basis beat owning a Marginal Business acquired at a Fantastic Price, BUT THAT GREAT BUSINESS MUST BE ACQUIRED AT A REASONABLE PRICE. (Recognizing that a Great business is rarely if ever available at a Fantastic price, but if monitored with diligence, discipline and patience can on occasion be obtained at a reasonable price, and it only takes an interest in a few Great businesses acquired at reasonable prices to make one remarkably wealthy with time.)
    Jim M. Real Estate Investor from Mahwah, New Jersey
    Replied over 1 year ago
    “In December, I was at an investor event when one of the nation’s most famous multifamily syndicators unexpectedly took the stage. I was delighted! He is a hero to 10s (or 100s!) of thousands of real estate investors.” Argh!! Are you seriously going to leave us hanging & not tell us who it was?! My guess is Cardone.
    Jenny Moore Investor from Silverdale, WA
    Replied over 1 year ago
    It feels harder to say no when a company is trying to expand and grow. Our company is more conservative than others and passing on deals that don’t fit our criteria can get frustrating but we do find that the ones we do move forward with are typically very profitable and make up for all the marginal deals we said no to. Nicely done Paul!
    Scotty Ball Investor from Gainesville, Georgia
    Replied over 1 year ago
    Nice article and very timely. As an investor I am often surprised (and sometimes shocked) at the prices that are being paid these days for multi family properties. I know I’m probably missing out on some deals these days, but by just saying no I sure find myself sleeping better at night.
    Carlos Varum Jr from Providence, RI
    Replied over 1 year ago
    Another great quote from Warren Buffet is “Be Fearful when other are Greedy and Greedy when others are Fearful”. In my area, the Multi’s are very hot, and I have seen prices double to triple what they were 5 years ago. 5 years ago I was buying… and I still see a couple of opportunities pop up here and there, but my last buy was last year… right now I am sitting and waiting for the right one… or a bubble to burst… before I pounce… what ever comes first.
    Evan Hill from San Antonio, Texas
    Replied over 1 year ago
    Wow, that’s got to be one of the worst marketing metaphors I’ve ever seen, lol. Yes the “just say no” war on drugs was so successful and intelligent, who wouldn’t want to connect their own cause to that one? You lose me immediately when you celebrate possibly the least effective most superficial social improvement campaign in 50+ years as if it affected any positive outcome. Did your astrologer tell you this was a good idea?
    Paul Moore Investor from Lynchburg, VA
    Replied over 1 year ago
    Hi Evan. Thanks for taking the time to read this and comment. This is the first I heard this was an unsuccessful campaign. I grew up in the 80s and have been drug-free from that time on. Every time I’m tempted… I just say NO! 🙂