Nate Adams is the president of Chassy Media, a production company that specializes in feature films and premium documentaries. He has also gotten into the real estate field, and he joins the show to discuss his journey and the similarities between being in media and real estate.
Listen in as he shares how to go about negotiating with banks the right way, as well as the importance of staying focused on what you want. You’ll learn the biggest misconception around real estate, how to determine if people are serious about their interest in you, and what it takes to become successful.
What You’ll Learn In Today’s Episode:
The biggest misconception with real estate.
How Nate got into the field.
How he negotiated with the bank the right way.
The best way to determine if people are serious about their interest in you.
Similarities between being in media and real estate.
Ideas Worth Sharing:
“Always go to the local banks and make a friend.” – Nate Adams
“If you work very, very hard, and you learn to out-work people, then you become successful.” – Nate Adams
“Are people willing to write a check?” – Nate Adams
Resources In Today’s Episode:
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Mark: Hi. My name is Mark Henteman and I’m a real estate investor. I started out in the early 2000s buying multi-family in Los Angeles with my first script payments as a writer on a new show called Family Guy. I was nervous about my prospects of pursuing a job in the entertainment business, and was looking for some kind of financial security. I found that in real estate. This is a weird thing for me to be doing, but real estate is a passion of mine. It’s been an avid side hustle for over 20 years. I thought there might be a space in the podcast universe for a show about investing in or from major expensive cities – Los Angeles, San Francisco, Seattle, New York, Denver, Austin – and for me it’s also a chance to have conversations with some of the smartest people I know in the investment space and I don’t get out much, so it’s also a chance to meet some of my heroes. I hope you’re able to get something out of this too. So with that, let’s jump in and get started.
Nate Adams. Nate is an award winning director and producer, president of Chassis Media, which he runs with Adam Corolla. Nate was born and raised in Montana, was a three-time high school state wrestling champion and will somehow be able to work that into any conversation, and he also likes Metallica and working with great people. We’d like to welcome Nate Adams.
Nate: Thanks Mark.
Mark: I didn’t realize you were a three-time state champion. That’s a big deal.
Nate: You know, I started wrestling when I was five years old and as for me, the only way I knew I was going to get out of this small town in Montana that I grew up in. It got me a college scholarship. It’s a sport that taught me the fundamentals of how to work hard also.
Mark: You and I have had coffee a bunch of times and I know you’ve dropped that you were a wrestler, but I didn’t know how accomplished you were. That’s impressive.
Nate: I’m surprised because like I said, I usually can work that into any conversation.
Mark: And I didn’t know you liked Metallica enough to put it in your bio.
Nate: Oh yeah, huge fan.
Mark: I know you just did that documentary about corn. I kind of got a sense that you were into metal.
Nate: I do like that kind of music for some reason. Strangely enough, it actually calms me down. It really does.
Mark: I have a story. When I was doing Bordertown, that show, I had this weird call one morning from the head of 20th Century Fox casting. I think he was the casting guy and he said, do you know James Hetfield? You know who he is? And I’m like, yeah, that’s the guy from Metallica. He’s like, do you want to have lunch with them? He’s really interested in getting into voice-over and so I was like, yeah, why not? We went to a restaurant and had lunch with James Hetfield.
Nate: I would barely be able to sit through that lunch without going out of my mind.
Mark: He was a really nice guy down to earth, rational, talked about his place. He lives outside the Bay area.
Nate: Most of those guys live up there, yeah.
Mark: Talked about his hard living and trying to get clean and be a good dad, but, but yeah, the whole purpose of it was to see if maybe he could do a role and he’s got a cool voice. He’s got this like warm, like a Sam Elliott voice that’s just really deep and resonant.
Nate: He has an amazing voice. It’s very interesting. Like if you listen to Metallica in the 80s, his voice was high and then at some point all of a sudden, it got much deeper.
Mark: He just trashed his voice.
Nate: Yeah, I think you’re exactly right. It’s always amazing to me that guys like James Hatfield, who are probably one of the biggest, you know, those guys sell out arenas and all of a sudden he wants to get into voice-over work. Why do you need to get into voice-over work?
Mark: Why do you need that? I just assumed that his manager or his agent pushed him into it. Like hey, you use your voice for a living. Let’s get you some spots on some shows.
Nate: I’m always amazed cause I predominantly make documentaries. You know, I’ll meet people and they are big celebrities and they’re like, hey, I want to make a documentary, and I’m like, why do you want to make a documentary? You’re already making A-list feature films or my friend Nick Santoro. He’s Adam’s friend too and he runs a bunch of huge TV shows and he sets a meeting with me. He’s like, I want to make a documentary. I’m like, Nick, you don’t want to make a documentary. Why do you want to make a documentary?
Mark: A lot of those same people, big celebrities, they all want to do their own animated show because they think they’re easy. You don’t have to be on camera. You could record it from your house and then they all want to meet with someone who can be the show runner of their idea, but then their idea is terrible.
Nate: Well, I have to say Nick’s idea was fantastic.
Mark: Oh yeah?
Nate: And it’s a documentary that will be perfect for us that I think one day we will do. But you know, I agree with you.
Mark: And the sad thing is, is that the network will often put it on the air if a celebrity is big enough, promote it with name, but all right., Well we both happen to invest in real estate, so I thought maybe we’d talk a little bit about that.
Nate: I would love to because that’s kind of my side hustle.
Mark: Same here. Big side hustle. I’ve been doing that for 20 years. First script payment, but yeah. How did you…?
Nate: I wish I was that smart.
Mark: I don’t know that it was smart. I know I was definitely not smart at that time, but I just closed my eyes and jumped in.
Nate: You should talk about that, Mark. Explain to people what’s the freelance? What does it mean to work in the entertainment business? You know, you explain it from your end and I’ll explain it from my end.
Mark: I have been so fortunate to no longer be a freelancer. Family Guy. Who knew? Family Guy is now 21 years old and I’ve been on it pretty much since the beginning, and other than the Simpsons, that kind of longevity for any one project is unheard of. But yeah, I went through that in the early days. You know, going from project to project, always hustling, always trying to stay employed and having gaps all the time.
Nate: Yeah, that was one of my main incentives for getting into real estate. There’s two ways you can work in the entertainment business. One is you can get a job for a major studio and be a producer or work for Fox or Warner or someone like that. Or you can be a freelance person where you’re a writer or a director or a producer and that’s how I came up. But the problem with that is it’s a little bit of ‘feast or famine’ where you produce something or direct something and you make a chunk of money, and then you might not work for four months and when you’re not working for four months, you’re sweating. And I’ve worked with Adam probably for the last seven years and we’ve made a feature movie and five, six feature documentaries and we’ve done really well. But before that, it was always only ‘eat what you kill’ and that can be a scary place and that is what drove me into real estate investing.
Mark: How did that work? Did you have some buns saved up?
Nate: It’s funny because I used to rewrite scripts and I remember when I got a big check back in the early 2000s where you were smart and bought your duplex, I was really dumb because I said in my head, you know what? I’m just going to live as cheaply as possible in this one-bedroom apartment because I don’t know if I’m going to get a job in two weeks or a year, but I want to have enough money to always keep writing. My sister who’s a CPA was like buy a house and I was like, no, I’m afraid of the payment and I didn’t know what house hacking was or anything. And my friends of course were not smart enough to give me any fiscal advice at all. So I stayed in the apartment. It wasn’t until I got stable and was working where I realized I don’t have a 401k. I got in my 40s and said, I want to retire one day. I’d better have something when I do.
And I had started listening to real estate podcasts and learning a lot on my drive to work and I was in Montana where I’m from and one of my really good friends’ wife’s dad has a bunch of apartment buildings in this town in Montana I’m very familiar with. And he said, well, you know, I’m retiring and I’m going to start selling these things off. And I said, really? I’d like to buy one. This is in Great Falls, Montana. Great Falls, has a lot of blue collar, but a good size town from Montana, probably 60 to 70,000 and I’m very familiar with it and my best friend is the wrestling coach there. And he’s like, Hey, I’m a teacher. Very handy. I’ll manage these things for you. So I pay him and he manages. I trust him. And that was another thing for me is I just wanted to really trust who was taking care of these buildings.
Mark: How did you structure it between you guys? Did you all go in on it or was it mainly you?
Nate: They’re all me. I just pay him a property management fee and he takes care of it for me. And it’s nice because they actually care. He doesn’t manage 50 properties. He just manages mine.
Mark: And you’re friends so he’s got your back. Cool. What was your first deal there?
Nate: So my first deal was a seller financing deal. I bought a five-unit building from my good friend’s wife’s dad.
Mark: So you bought it straight from him?
Nate: He owned all of his properties outright, but you know, seller financing. I didn’t really know what that meant. I’d heard it on the podcast and he explained it to me very clearly. Basically he’s like, Hey, I’m the bank and we’re going to work out an interest rate and a price and very straightforward. This is a guy that I know and he’s basically like, I’m going to make this so that you make about $500 a month, and structured out the deal. And then I went to the bank and I realized I could get a better loan from the bank. So he lowered his interest rate.
Mark: What was the interest rate?
Nate: Originally he wanted 5 and I got it for 4.35.
Mark: That’s great.
Nate: Which in Montana, it’s very good to get something that low.
Mark: I hear that the market you’re in dictates the interest rate you get and the major markets tend to get the lowest rates cause they’re the most stable.
Nate: You’re exactly right. So the way this one worked out is he wanted $300,000 and then I had a guy who I still use for all the buildings that I look at do the inspections and we found a bunch of stuff that needed working on, and basically we worked it out at the 1% rule. So at the time the rents were about $2800, $2850 so I ended up paying $285,000 for the building and I knew the rents were low. Five units and they were right around $550 each. It really should be about $750 because this building, the first building I got as we were negotiating, there was a huge hailstorm which happens in Montana a lot and it damaged the roof and the siding. So I ended up getting a new roof and a free paint job on the buildings. That worked out very well for me and I didn’t realize how well until I have the second building that I have now, which needs a new roof and new siding.
Mark: This is your other five-unit, your tale of two five units?
Nate: Yes, I have a tale of two five-plexes and the first one that I bought was almost turnkey. It was very nice big units. All two bedrooms, one baths. On the second one I bought was more of a burr or a flip, very beat up. Needed a lot of renovation but significantly cheaper. So the first one I paid $285,000 and the seller financing part of it, usually you have to put 25% down, but I didn’t have to because I bought it from the owner, so I only put 50 down and I got to negotiate my rates and there were no closing costs.
Mark: That’s amazing.
Nate: We just did a very simple legal agreement. Since I’ve raised the rents, I have a ton of equity in that property. So if I want to get a second on it, I can refinance and get some equity out of it if I want to. And then the second building I bought, I just learned a lot of lessons on that one being new. I run a production company and a distribution company, so I love real estate, but I just have not a lot of time to do it.
Mark: For managing the projects.
Nate: So when I bought the building, the basement had been flooded. They basically just gutted it and it was a five unit building, but they were only renting the three upstairs units and the basement was just kind of a gutted basement with sheet rock and here’s a newbie mistake. Because I didn’t step foot in the building, I didn’t really do the square foot math. I just did the math of I know that rent values in this town very well. So I said, Oh, I can get X for two bedroom and Y for one bedroom as long as I fixed them up nicely. What I didn’t realize is that people are used to pretty big apartments.
Mark: Yeah. You just assumed that all one bedrooms were pretty much equal.
Nate: Yeah. Just newbie mistake
Mark: And it was probably a good way to do it. The first one you buy just to get your feet wet, but it was a stabilized building and then the second one whether you wanted to or not, you took on a bigger project.
Nate: Yeah, well I took it on because I saw the value, so like I said, I paid $285,000 for that first one. This one had been on the market forever and it was $170,000. I started doing numbers and I offered $152,000 and they took it right away.
Mark: They were motivated.
Nate: I could tell they were motivated and I think people were very afraid of that opened basement and I thought, Oh no. No, that’s going to allow me to just build everything new from scratch.
Mark: That’s a great thing. Whenever you can find a building that has some element to it that scares everyone off, it’s often a great opportunity if you can handle what that is. I do that a lot. Look for something that’s got a blemish that’s going to scare people away.
Nate: I completely agree with you. And this one, I’m about to refinance it. I went through remodelling the entire basement. I learned a lot along the way. Rewiring the building would have been easier at the beginning of the remodel when the basement was open, but once that had already been done, it’s just easier for me to pay the electric in those three units.
Mark: So you’re just paying…? Okay, got it!
Nate: I just build it into the rent.
Mark: So you do your own version of a rental?
Nate: Pretty much. And then this was the first time I’d negotiated with the bank. So I built in… in the loan, the banker had agreed to have the bank match all of the remodelling I was doing. So the bank was going to pay 50% of my remodel. It’s pretty basic.
Mark: Yeah. And were they reliable? I found that sometimes banks, they make you jump over a bunch of hurdles to get your money.
Nate: This is a local bank and I hear this a lot. Always go to the local banks and and make a friend. And that’s what I did and this guy has been great. He’s working with me now on the total refi, but I’m only going to refinance it at $180,000 and just keep the equity in it and I’ll still finance my down payment out of it and keep most of the money that I put into it.
Mark: That’s your strategy?
Nate: Yeah. For me, I liked the idea of these 15 year loans because like I said in my 40s and I know that I’ll be in my sixties when these things are paid off and then if I want to refinance them or just have that equity or that’ll be my retirement.
Mark: Have you held onto your original five-plex? Do you plan to hold them all forever or are you going to step ladder? What I kind of do is I try to get into a unit mix that’s maybe 20-plus to get those greater economies of scale, so I 1031 exchange up to that point and then I’ll probably start holding.
Nate: This is the stuff that I’m trying to learn from you, Mark. For the people that are listening, Mark is extraordinary at investing in Los Angeles, which is a very difficult place to invest in. So we’ve had many conversations about it and so I invested passively in one of Mark’s syndications to learn about what he does to invest in Los Angeles because it’s so different from investing in Montana, and the investing in Los Angeles is looking at that. That’s something that I’d like to use to build wealth, and to allow me to buy bigger properties because I do understand what you’re talking about in economies of scale.
Mark: If you’re going to put your time and energy into it, you want to get the maximum results maximum.
Nate: And seeing what you’ve done with still having your career on Family Guy, which is an incredible amount of time that that takes. So if you’re doing that and still being able for you to manage such a large portfolio and still continue buying in the way and in the capacity that you’re doing it, I see that it’s possible.
Mark: I don’t think I’m that aggressive. I think when I listen to podcasts sometimes I see these people that are go big, that kind of motto and sometimes I think I’m kind of slow. I’m chugging along, but I have settled into a strategy similar to you is buy a building or two or three a year, and trade up to get to 20-plus units and ideally closer to the 50-plus range and then start holding at that point and just try to grow and leverage.
Nate: Exactly right. Yes, it’s difficult sometimes because it’s funny, there was a nine-unit building that I was going to buy and we basically ended up selling two of our films to Netflix at the same time and I got caught up in that whole process. I lost that deal because I was just working so much and I just didn’t write an offer and I’m kicking myself.
Mark: Just for clarification, you lost the real estate opportunity because you were closing with Netflix?
Nate: Yes, I was closing the Netflix deal.
Mark: I get that too. I love the real estate. It’s the one thing that I’m going to do for the rest of my life, but I also love writing. I love producing, I love creating shows, movies and I don’t want the real estate to blow that up so it can’t interfere in a huge way. I got to really kind of focus on systems and efficiencies and ways to manage it.
Nate: That’s an interesting part of all of it is is just there’s a lot of people it seems like who want to quit their day job, and you and I are a little different because I love my day job. I love making things and doing what I’m doing. I love the creative part of my job a little more than the business part, but I still like the business part. I like making the deals with Netflix. I like the channel we have on Pluto TV. I like structuring all of those deals and acquiring content.
Mark: And you know I’m from Ohio, you’re from Montana. When I came out to LA, I thought it would all be a bunch of sharks in a cynical world. Maybe you have a different experience of that cause you’re on a different side. You’re on the money side of the business partially, but I didn’t find that at all. I found the people to be great. They’re inspiring, they’re all kind of chasing their dreams. You know, the writers, I find the writers to be great, and so I just look forward to going to work.
Nate: To me, the writers are always the best people, so I think you’re a little bit sheltered that way. This is the business where you can go broke with people being kind and complimentary to you. Nobody’s ever going to tell you your script sucks or your stuff sucks. They’re just not going to buy it and they’re not going to take it and they’re going to tell you you’re fantastic and your writing is fantastic and what you do is fantastic.
Mark: And they’ll say, you know, we read your script. We love it. Could you do another draft for us?
Nate: Can you do as much free work as humanly possible, and tell we’ll see? Yeah, that’s always my barometer and this is true in real estate. My barometer is, are people willing to write a check? Then that’s how I look at everything. When I’m getting investors for a project or I’m talking to people seriously about something, it’s are you willing to write a check? And that’s why when I came to you to talk about LA real estate, I was like, Hey Mark, I don’t have a ton of money but I’m willing to write you a check because I want to learn how you invest in Los Angeles cause I have no idea.
Mark: You and I were talking a little bit ago about this. LA scares 95% of investors cause it’s this intimidating coastal city market. I got into it. I didn’t know any better. It was just ignorance that caused me to invest in LA and a little bit of fear of going out of state and not being able to have eyes and ears on the property. But one of the things about LA is that there’s 3 million properties in the County of LA. That’s one thing that I’ve always found is when I hear on podcasts, the market’s impossible. The market’s gone crazy, it’s too high. You can’t find any deal in LA with 3 million properties. At any given time, there’s probably 200,000 properties on the market, or say you estimate that at any given time, 5% of the total inventory is for sale. Maybe what is that? 600,000? I kind of think that if anyone were to tell me there’s no deals, you can’t find anything worth buying in LA, I would say I’ll find something in one hour.
I’ll look online. There’s thousands if not tens of thousands of properties for sale. I would put down my filters criteria, screen down to a cap rate that I want, which would be a five cap or above, and screen for a cost per square foot which I want, say $250 is what I would shoot for, and that would eliminate most of the properties. That would get you down to maybe a few hundred because the replacement cost in LA, the cost to build is roughly around $500 a square foot, depending on what part of the city you’re in. And if I can buy at $250 a square foot, I know I’m buying it for half of replacement cost, and that means I’m getting a really cheap building that’s being purchased for about the cost of the land, so the property is pretty much free.
And so I’ll renovate. I want to make that property nice and it’ll weather any kind of downturn because you’re so far below the median of what everyone else has spent. I’ll pick the pockets and I always have maybe about five or six of the I would say, 50 neighbourhoods that are off the radar now but you can see all the trends are there. The beauty of it is that because new construction and development takes so long, you could go online and hunt down and find which pockets are going to be great in three to five years. And right now if some of those aren’t on anyone’s radar and you can start buying because you know the big players are going to make those areas hot. But one thing we could talk about is similarities between the entertainment business, the media business and real estate investing. But I think you were going through a rehab and you were saying it has scary similarities to seeding a movie,
Nate: I mean what I was noticing is, as I was doing this flip of this second five unit building that I bought, it’s super interesting in terms of when you have a movie, you have all these departments. In each of these departments, if you sort of mess up any of these, you kind of mess up your whole film. So you as the producer, you have to talk to all the department heads and they’re all doing different things, but you’ve got to sort of be the intermediary between them and it’s like when you’re running a flip. You’ve got the plumbers and the electricians and you’ve got the roofer, and I mean for me I did it all kind of separately.
Mark: You got your team and the interesting thing is probably similar to a movie. Like you’ve got your lifelong team, you’ve got your key players that you always use those key players on every deal you do in real estate, and then you have a bunch of people you’ll just one off. I’m sure movies are the same way.
Nate: You know for me, I have that as well. When I shoot all of our docs, I always try to use the same DPs and guys that I know so that I know the look is going to be done well. And it’s the same with a person who does plumbing or tiling or electric that’s really good and you know they’re always going to do very well for you. Then even if they have different workers, it doesn’t matter. You just make sure that you have that main person.
Mark: And similar to a flip or rehab, everything is time sensitive. You got your schedule, you work on your schedule, fine tune it for a long time.
Nate: Yeah. And you have your AD, that’s the assistant director who kind of runs the schedule and keeps everything going every day. And sometimes like on the flip, that has to be me. You know, you’ve got to keep these guys in line and keep it going.
Mark: Also the money. Often you don’t get to say go until you get the financing lined up.
Nate: Yeah. As a producer, it’s your job to raise the money and it’s your job to get the finance and it’s your job to make sure that the art department does not overspend. It’s your job to make sure that plumber stays within his budget. Got to keep all the departments on budget and keep track of all the money, and if you go over, it’s on you. In a movie if you’re the producer, if you go over, you’re the investor on your flip, it’s on you.
Mark: And then when all is said and done, when you’re finished, you hope it’s something that people will want to come see.
Nate: You’ve got a different audience in a way, but you are making it for an audience. And when you’re doing your flip, you’re making it for renters. If everyone wants to rent it and it’s easy to rent and you have no problems, you know you’ve done a good job with your flip and you have a good product. Same with your film. When you make a film, if you take it out to the market to sell it, if everyone wants to buy it or license it and it does well on Rotten Tomatoes and you can go out and see how you’re doing, checking it.
Mark: And if it’s a disaster, it could the end of your career.
Nate: Yes, but definitely in the film space, and I have friends who are extraordinary directors and they got put in director jail because they did a bad movie that was out of their hands. But you get blamed if you’re the director or the producer and it doesn’t do well. It’s like if you’re a syndicator and you lose a bunch of money on a deal and the word gets out in the market, people are not going to invest in your syndication.
Mark: A lot of people seem to be syndicating now.
Nate: Yeah, you’re right.
Mark: You know, we’re at the very, very late stages of the market. If there was an ideal time for the market to be flooded with syndicators, it would have been like 2011, nine years ago. It’s a little late in the process for new syndicators.
Nate: It really is becoming flooded with syndicators. I am a little curious to see how this is going to shake out because most of these syndicators have never been through a down market.
Mark: It’s very eerily similar to 2006, 2007. There was a huge rush of new investors jumping in. Everybody has short memories. Nobody could remember the last time real estate was difficult.
Nate: That’s something I think people need to understand a little bit too is that it is a long game. There’s always going to be things that come up in your investments. Like even the one I bought that was turnkey. I think I’ve renovated three of the five completely and I’ve just used the cash flow from the units to do that.
Mark: Okay. Sure. That’s nice.
Nate: I don’t take a ton of money out of it, but I don’t need it either. So just on the note alone, it’s paid 20% of itself down and I haven’t done anything. Just from really not doing much. Like I said, that building requires very little of my attention.
Mark: I love the fact… you never see that. So you often might have a building that has zero cash flow, but it may have $6,000 of principal getting paid down or even $10,000 worth of principal being paid down every month. If you do that across a number of buildings, basically you’re getting that while you sleep and it’s not even on your radar.
Nate: I just think of it as a retirement that I didn’t have. I go, Oh, I’m just putting that money away. I’m paying, you know, $1500 on this building and $1500 on the other building or something. Well, someone’s paying it for me. I’m not paying it.
Mark: And it’s forcing you to save that money. You can’t touch it. You can’t go spend it.
Nate: And I don’t even know exists. I don’t even know it’s there.
Mark: Yeah. I used to have this thing before I got into investing in real estate. When I was in my mid-20s I was convinced I’d grown up, entered the adult world. I was convinced everything in the world, especially the things that are off your radar that you couldn’t see was working against you. The gas bills, the utility bills were always going up faster than my income. All my investments had loads either on the front or the back or some kind of hidden fees. So many hidden fees just siphoning your money away from you at every aspect of your financial world and it would bum me out. I was like, there’s a massive financial conspiracy to get in my pocket and take my money away. But then I got into real estate sceptically and I found that that’s the opposite. I put up this large amount of money to throw down a down payment on a building. It was $40,000 when I got in, but then I was kind of concerned about this building and would I survive? It was a duplex, but all the things that were off my radar was working in my favour and I kind of gradually discovered that. The building was appreciating because the area was improving where I bought that building. I wasn’t paying attention to the financials that closely so my loan was getting paid down every month and then the rent next door was going up each year, but my loan payment stayed the same. So there were multiple aspects of it that were making me money while I slept or while I wasn’t paying attention and I had never experienced that, and it was the exact opposite of what I had experienced up to then.
Nate: Yeah, it’s really amazing. The same as for me where there’s so many great things about it, you know the tax savings, especially because of, I don’t know about you, but the way that I get paid through a corporation, it saves me a ton of money and I pay less taxes because of my real estate that I didn’t even realize that.
Mark: It’s like the benevolent aspect of the financial world that’s there for you to help you as opposed to predatory. It’s like a good friend, not a predatory financial advisor or someone that’s going make the bulk of the money off of your investments, not you. So let’s jump to a couple other questions. What do you think the biggest misperception or myth is that’s perpetuated in real estate nowadays?
Nate: It’s a little bit of what we were talking about with where the market is. You’re not always going to make money in real estate, so you want to be careful. Well, I think there’s two for me personally. I think you know people who tell you you can make money in real estate with no money down unless you’re going to be a wholesaler.
Mark: I never understood that. My question is walk me through that because I think that’s either a hugely risky or non-existent. Invest your own money. Put your own money at risk before you put others at risk.
Nate: And I’m with you on that. I’ve kind of felt like now if I got someone involved in a rental where I invest, I would feel comfortable because I’ve learned so much the hard way. I’m a lot more comfortable about saying, Oh I think I might do one of these, get a buddy, because I had a few buddies say, Hey dude, get me in one of those, and now I’d be more comfortable doing that. But the other thing is you’re always going to make money in real estate through appreciation. And I think that because of where we are and if you’re buying right now, you’ve got to make sure that the property that you’re investing in is safeguarded for the market to take a hit and the economy. Can you endure if your rents have to go down? Can you endure if you have some vacancy for longer than you anticipated when you do your analysis? I think that that’s something that we’re probably going to have some issues with the next couple of years.
Mark: I think there is going to be a lot of issues. I mean, it was Armageddon in 2008. So many real estate investors lost their buildings and not just new investors, but some veterans had a domino effect. Even in LA, you hear about it all the time is some people lost one building after the next because one got behind and they had to pull money from every other building. So I agree. I think there’s probably going to be a bit of a reckoning. Also on that, next question I was going to ask you is when is our next recession? I thought I would ask everyone to make a prediction and we’ll give the winner some kind of award, but it’ll be cool to see who can pick it.
Nate: Okay. Now how are you judging? Like with the bottom? What’s the …?
Mark: I would say when does it start? I think the definition of a recession is two consecutive quarters of negative GDP growth. Say there is a measure, a specific measure that tells you when you’ve gone into recession.
Nate: I’m going to say June of 2021.
Mark: June of 2021. All right. I like it. You could be right. Let’s see, which trait do you possess that has served you best both in real estate and in life?
Nate: Probably, we talked about wrestling in the beginning and for me the thing that I really loved about wrestling was it was a very equal playing field. You wrestle some guy that you both got to weigh in at the same weight, whether you’re a guy or girl and women’s wrestling is becoming very popular now. I might be doing a doc on that, but it’s the same weight, same size. You are out on the mat, just got your shoes and your singlet and you do it. Whatever happens, happens. So hard work really made a difference. There are different people that come into it with different physical abilities, but for the most part if you work very, very hard and you learn to outwork people, then you become successful. And I think for me that has always carried through, just that habit of outworking people. Putting the time in and understanding that you’re not going to learn this move if you do it a hundred times in a row. You’re going to learn it if you do it a thousand times in a row. When I started analyzing properties, I was like I don’t know if this is right or not, and then you start doing more and then when you actually do your analysis and then you put it to practical use on a building and you see, Oh I was wrong there. I had no idea that I should have had that electrical guy there and that would have been this much more money. I should have factored that in. And also being able to learn from your mistakes and being willing to admit that you make mistakes cause I make them all the time.
Mark: The best investors are always humble. Once you get arrogant, you’re going to get burned.
Nate: And a sense of humour. That for me, the other thing is I try to keep a sense of humour.
Mark: Understand that it’s the process. I think you can maintain a sense of humor if you realize you’re just working the process. If you get too married to outcomes, then your failures will be more devastating. But if you realize this is just a practice that I’m going to do every year and I’m going to keep doing it until I’m 90 or 100
Nate: And I always remember like the worst things that ever happened to me in my life are the funniest stories that I have now. The most horrible things that ever happened to me, while it was happening it’s like you can barely function because it’s so terrible.
Mark: But those are the best stories, the funniest stories. There’s this thing that’s in our writer’s room. It’s an observation after decades of working in comedy rooms is that when new writers join the group, there’s this truism that you’re not really funny until life has punched you in the face.
Mark: All the funniest people have gone through hell.
Nate: It’s exactly true. The more times you’ve had to pick yourself up and the harder you’ve been knocked down, and the ability. What I find too, I mean, you spend a lot of time with comedians and my partner is Adam Corolla and we do a lot of comedy stuff. I spend a lot of times with comedians. When you talk to them when they’re not doing their sets, they have some incredible lives. They talk and you’re like, wow, comedy is the only thing that must have saved your life. So I think that there’s something to be able to look at those horrible stories of when you’re in the third grade and you pooped your pants in class and thought you’re going to die, and now it’s the funniest thing that you’ve ever done.
Mark: And it demonstrates resilience. You know, you bounced back. You came back swinging the next day.
Nate: That’s the part. Same with real estate. You getting up. I’m always learning things and I’m like, Oh, I should’ve known that.
Mark: Right. Well, cool. This has been great. How can listeners reach out to you?
Nate: I’m on Instagram and Twitter @NateAdams26 N-A-T-E-A-D-A-M-S 26. My company is Chassy Media C-H-A-S-S-Y. You can find firstname.lastname@example.org or chassy.com C-H-A-S-S-Y.com if you want to see our docs and stuff.
Mark: And we’ll put that in the show notes.
Mark: Nate, this has been great. Thank you so much for doing one of my very first podcasts, being my guinea pig.