How to Be a Hero (& Grow Your Wealth) Amid the Coronavirus Meltdown

How to Be a Hero (& Grow Your Wealth) Amid the Coronavirus Meltdown

9 min read
Paul Moore

Paul Moore is the managing partner of Wellings Capital, a private equity real estate firm.

Experience

After college, Paul entered the management development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner. They scaled and sold the company to a publicly traded firm five years later.

After reaching financial independence at the age of 33 and a brief “retirement,” Paul began investing in real estate in 2000 to protect and grow his own wealth. He completed over 85 real estate investments and exits, appeared on HGTV’s House Hunters, rehabbed and managed dozens of rental properties, built a number of new homes, developed a subdivision, and started two successful online real estate marketing firms.

Three successful commercial developments, including assisting with the development of a Hyatt hotel and a very successful multifamily project in 2010, convinced him of the power of commercial real estate.

Press

Paul was a finalist for Ernst & Young’s Michigan Entrepreneur of the Year two years straight (1996 & 1997). Paul is the author of The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing (2016) and has a forthcoming book on self-storage investing. Paul also co-hosts a wealth-building podcast called How to Lose Money and he’s been a featured guest on 150+ podcasts, including episode #285 of the BiggerPockets Podcast.

Education

Paul earned a B.S. in Petroleum Engineering from Marietta College (Magna Cum Laude 1986) and an M.B.A. from The Ohio State University (Magna Cum Laude 1988). Paul is a licensed real estate broker in the state of Virginia.

Follow

WellingsCapital.com
Email [email protected]
LinkedIn
Twitter @PaulMooreInvest
How to Lose Money podcast

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I don’t have to tell you that our world is in chaos. None of us could have expected what we are living through now. It didn’t take a genius to predict a recession, but who could have predicted this?

Did you see this jobless claims chart from the U.S. Department of Labor?

Initial Jobless Claims 3 20

Needless to say, we are in uncharted territory.

Ready to Be a HERO?

Though this is a tragedy for millions—or perhaps billions—I’m writing to tell you how you can be a hero.

No, I don’t mean that you’re going to invent a vaccine to stop this plague (though of course, I hope you do). And I don’t mean you’re going to show up on your elderly neighbor’s doorstep just in time to save their life (but I hope you’re loving your neighbor and checking on them).

I mean that as entrepreneurs and real estate investors, it’s (almost) time for our ingenuity to shine. It’s (almost) time to innovate, provide solutions, and to become wealthy while doing so.

If you wonder why becoming wealthy could make you a hero, look at what folks like Bill and Melinda Gates are doing to solve systemic health and poverty problems around the world. Investor Warren Buffett made the largest charitable gift in history ($37 billion) to join them on their quest.

Or check out what innovative entrepreneur Scott Harrison is doing through charity: water. Scott was a wealthy hedonist on a lifelong pleasure binge when he took a turn to love and serve others… and never looked back.

Let’s be honest, having wealth can give you opportunities to love and serve the world in ways you just can’t do without it. And being an innovative entrepreneur can help you solve other people’s problems. You really can be a hero to someone. Or to many—including your family and your heirs.

And if your focus is money and bling and building your own pride… it will likely not work for long. (See my comment on the crashing multifamily syndicator in point No. 3 below.) You were put on the planet to love and serve others. That is the way to be a real hero, and it is great if you get wealthy in the process.

Consider this meme that’s been circulating:

“When the Great Plague of London was going around in 1665, Cambridge University shut down and Isaac Newton was forced to stay home. During that time, he invented calculus, parts of optic theory and allegedly while sitting in his garden, he saw an apple fall from a tree that inspired his understanding of gravity and laws of motion.”

How Will You Become a Wealthy Hero After This Crisis?

I predict we are on the verge of the greatest real estate acquisition opportunity in modern history. And you probably know that at times like these, the most creative, innovative, outside-of-the-box thinking entrepreneurs create wealth in ways they couldn’t in normal times.

Related: Recession Prep 101: Investing in Real Estate During a Financial Crisis

For instance, Microsoft and Apple, two of the most innovative companies on the planet, were conceived in the midst of the Arab oil embargo—during years when New York City narrowly avoided bankruptcy and interest rates were over 9% and on their way to over 16%.

And John F. Kennedy’s father, Joe, made his fortune from innovating in stocks and bootlegging during Prohibition and the Great Depression. (I’m not recommending either of these vices by the way.)

Closer to home, our BiggerPockets friend Ken McElroy made the largest gains in his wealth ever by buying a billion dollars of multifamily in the last few years… right?

Heck no!

McElroy was selling the past few years. He sold four large multifamily projects recently at cap rates around 4% (very expensive!).

So, when did Ken buy the assets that made him and his investors a fortune?

He bought in the wake of 2008. He said that was the most profitable year of his career since it is when the buying opportunities started.

Ken agrees with me (I actually agree with him!): It’s not here yet, but we are on the verge of the greatest buying opportunity you may ever see.

Ken actually teaches a bit differently than Howard Marks, explaining how it’s best not to catch the knife while it’s in freefall but instead to wait until there are signs we’ve hit bottom.

I think he’s saying something similar to Marks, but real estate doesn’t react as fast as the stock market, so the knife that falls in days on Wall Street takes quarters or years in real estate—and this is your opportunity! (Hint: You still have time to prepare and assemble your team.)

Here are three photos from a webinar (shout out to our friends at The Real Estate Guys) I attended with him today. (Don’t judge me! It was all online.) Note that he sees a direct comparison between where we are TODAY and December 2007.

Ken McElroy 3 20 A

Ken McElroy 3 20 B

Ken McElroy 3 20 C

You are about to have your moment in the sun! So don’t waste it.

Before we discuss how you will get there, let’s talk about how NOT to get there, first.

  • You won’t become a wealthy hero by binge-watching “Game of Thrones.” (Or anything else.)
  • You won’t become a wealthy hero by being glued to the news and wringing your hands about the spread of the virus (though I do recommend you wash your hands a lot).
  • You won’t become a wealthy hero by replacing your social distancing with non-stop social media (though I do recommend you connect with others to build your real estate team).
  • You won’t become a wealthy hero by sitting around waiting for your government bailout check. And counting on more next month.

Here’s the thing. You’re going to have a chance to be a wealthy hero by solving other people’s problems.

Zig Ziglar said, “You can have everything in life you want, if you will just help other people get what they want.”

“You can have everything in your life you want, if you will just help other people get what they want.” —Zig Ziglar

So, my future hero friend, how will you do that?

I don’t know exactly what form it will take for you. I have a few ideas for myself, but I’ll save that for the comments (if anyone asks me). That’s not the issue.

We were each designed and developed with a different set of skills, likes, training, education, resources, and networks. So thankfully, we will all have our own niche to fill.

But wouldn’t you guess there will be people with problems to solve after this crisis?

Here are a few quick examples…

Problems Post-Pandemic (& How You Can Both Provide Value & Grow Wealth by Solving Them)

Example #1

The CEO of Marriott said their firm lived through the Great Depression, 9/11, and 2009 but has never faced a crisis like this. Revenues were running at 75% of the norm in 2009. Now they are down to about 10%.

Do you think there will be some hotels for sale after this crisis?

You may be able to get hotels at a small fraction of their value and be in a position to help a bank or an owner offload their problem at the same time. You may be positioned to build significant wealth for yourself and other investors in the process.

Please don’t criticize me for being opportunistic. These are just facts of the business cycle, and someone else will step in to buy these problems if you don’t.

Think about this… if you can acquire a hotel that would otherwise remain empty, you may be able to give a hundred people back their jobs. You might be a hero to them and your community. And to many travelers. And to your investors and family.

And the list goes on…

Example #2

I’ve been warning the BiggerPockets community over and over for years to not overpay for multifamily (or anything else). I was obviously not alone. I fear that many investors didn’t get the message.

Multifamily has been trading at far over previous record levels, sometimes even double what it has in times past (relative to income).

Do you think there may be some deals on multifamily available soon?

Again, I really hope that no one loses their property to foreclosure or a distressed sale, but that just seems incredibly unlikely. You may be in a position to help.

A famous multifamily guru who encouraged people to “buy multifamily at any price… just get in the game” at a December 2017 event in Miami just reportedly laid off 80 of his 180 employees without notice. I truly wish him and all of his employees the best, but I wonder…

Will there be opportunities to hire or partner with any of them in the near future? Will there be any asset sales on the horizon?

Example #3

Distressed mortgage notes will undoubtedly abound in the coming years. Check out this graph showing the damage from the Great Recession.

Delinquent Mortgages over Time

The profits to be made from distressed notes in good times are impressive. But the profit opportunities from buying deeply discounted distressed notes during a downturn are staggering. Just ask BiggerPockets’ own Dave Van Horn.

Even More Examples

And what about single-family rentals, furnished corporate rentals, suddenly vacant student housing, furnished Airbnbs, restaurants, hair salons, and likely dozens of other asset types?

But I don’t recommend you limit your thinking to what is currently known. This could be a time for you to dream, to innovate, to problem-solve, and to create something brand new. This is how many of the greatest ideas in history were born.

Recent examples are Uber and Airbnb—both of which are hurting at the moment, but I predict will return to health. Another innovator, Amazon, is hiring about 100,000 now.

That’s nice Paul… but what do I do right now?

Action Steps for the Immediate Future

While I don’t know what you should do exactly, I think there are some steps you should consider taking right now:

1. Get educated.

If you have any extra time on your hands now—or even if you don’t—this is the time to learn all you can about the niche you want to pursue. Scan BiggerPockets Forums and articles, read books, listen to podcasts and audiobooks, watch online training, and dust off those old conference manuals. You don’t have 10,000 hours to train for your moment of opportunity right now, but at least take a crash course to prepare.

2. Dream and innovate.

Have you been daydreaming of writing that book? Creating that course? Recording that webinar? Remodeling that basement for a rental? This could be the best time to follow your dreams. Please don’t wait ’til things return to normal. You may have missed your opportunity by then.

3. Assemble your team.

NOW is the time to put together the team that will act on the unprecedented opportunities coming in the next several months and years. (Social distancing is physical, not personal.)

networking build a team

There are many roles that need to be filled to create something big, and there are a lot of previously unavailable people who may be looking for you, too. You could be a hero to a business partner or employee and change your destinies in the process.

Your team should include a tax strategist (not just a regular CPA). It should include a banker. Get to know a variety of lenders and take their REO department managers to lunch.

Related: 4 Tips for Hiring the Right CPA for Your Real Estate Business

It should include an attorney (at least one waiting in the wings.) Of course, you need connections to investors of various types which may include IRA investors and folks from your local or regional REIAs (real estate investor associations). There are more team members, including partners, virtual and local administrators, etc., but this will get you started.

4. Harness your tribe.

The chaos on Wall Street has already caused many to look for alternatives. Do you know anyone who would be better served investing in real estate? Some of them have money languishing in an IRA, and they could self-direct it and invest with you in a debt or equity capacity.

You may want to bring them in as passive investors or partners. You may be positioned to be their hero and make them and you wealthy in the process.

If you need some help on raising capital from friends and others, there’s no better resource right now than my friend and BiggerPockets’ contributor Matt Faircloth. Matt has published the book you need to get on Raising Private Capital. It is especially appropriate in a time like this.

A Word About Timing

You may be wondering how to get started. I don’t believe the moment of launch is necessarily upon us—yet. The financial chaos of Fall 2008 brought opportunities in 2009 through 2011 and beyond (see the delinquent mortgage chart above). It’s the same here.

That’s why I’m recommending that you (quickly) decide on the course you plan to pursue and get your ducks in a row.

Please don’t delay. Delay would be insanity right now, and you know what a certain smart innovator said about that…

“The definition of insanity is doing the same thing over and over again but expecting different results.” —Albert Einstein

Einstein Sketch

You’re in the right place!

There’s no better place on the planet than BiggerPockets to get educated, dream with others, assemble your team, and harness your tribe.

In the words of our friend, Mike Dymski (per his strategic planning coach Rick Houcek), I hope this is true of you someday:

“I am so proud of myself. When that virus hit back in 2020, I didn’t just flip on the tube and veg out on reruns. I got off my duff, created an inspiring life plan, got moving, and took action. I launched a new, breath-taking, more exhilarating life during that pandemic. And I haven’t slowed down since. Look where I am today! I might never be here if I hadn’t jumped on that window of opportunity with a vengeance.” —You

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What action steps will you take today to prepare to invest tomorrow (or in the near future)?

Join the discussion below.

It didn’t take a genius to foresee a recession, but who could have predicted this? Though a tragedy for millions—or billions—you can be a hero. As entrepreneurs and real estate investors, it’s (almost) time to innovate, to provide solutions, and to do well financially while simultaneously doing good for others.