In this episode, I chat with Ryan Stenberg to discuss the topics about deal flow, raising funds, real estate risk and using your perceived weaknesses as strengths.
Ryan Stenberg is a really smart, young hustler. He worked at Google after he graduated college. He got interested in real estate as a vehicle to invest his own money. He started by buying triplexes and quadplexes in Cincinnati. But the difficulty of scaling that model pushed him to change his direction. In January 2021, he left his job to focus on real estate. For him, working at his W2 job didn’t offer him much in terms of learning. But real estate gave him the ability to leverage money, time, and the opportunity to grow.
Key takeaways from this episode:
03:04 - Ryan’s journey and aha moments in real estate
06:52 - How Ryan shift from his W2 job to Real Estate
11:24 - When does residential real estate end and when does commercial real estate begin
12:29 - Constraints when starting a real estate business
12:18 - How to overcome the constraints in real estate
14:46 - The 2 bottlenecks at an early stage in real estate
16:19 - 2 things you need to do every day when you are in the business of Landlording
17:31 - How to convince people that real estate is powerful
19:18 - How to find deals in the commercial and multifamily space
22:41 - How to get started commercial real estate
27:22 - Ryan’s biggest obstacles in real estate and how he overcomes it
Tune in to learn more valuable information from this episode!
Subscribe, Listen to our episodes and leave us a review:
Apple: https://podcasts.apple.com/us/podcast/real-estate-investing-for-freedom/id1570870735
Spotify: https://open.spotify.com/show/2d3nMp137jfw6MDyPPsY3j
Google: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5idXp6c3Byb3V0LmNvbS8xNzkxNDk0LnJzcw==
Connect with Guest, Ryan Stenberg:
Website:Westeggrealestate.com
Email:ryanstenberg10@gmail.com
Connect with the Host, Dalyn Hazell:
Facebook: https://www.facebook.com/dalyn.hazell/
Instagram: https://www.instagram.com/dhazell24/
Email: dalyndhazell@gmail.com
In this episode, I chat with Ryan Stenberg to discuss the topics about deal flow, raising funds, real estate risk and using your perceived weaknesses as strengths.
Ryan Stenberg is a really smart, young hustler. He worked at Google after he graduated college. He got interested in real estate as a vehicle to invest his own money. He started by buying triplexes and quadplexes in Cincinnati. But the difficulty of scaling that model pushed him to change his direction. In January 2021, he left his job to focus on real estate. For him, working at his W2 job didn’t offer him much in terms of learning. But real estate gave him the ability to leverage money, time, and the opportunity to grow.
Key takeaways from this episode:
03:04 - Ryan’s journey and aha moments in real estate
06:52 - How Ryan shift from his W2 job to Real Estate
11:24 - When does residential real estate end and when does commercial real estate begin
12:29 - Constraints when starting a real estate business
12:18 - How to overcome the constraints in real estate
14:46 - The 2 bottlenecks at an early stage in real estate
16:19 - 2 things you need to do every day when you are in the business of Landlording
17:31 - How to convince people that real estate is powerful
19:18 - How to find deals in the commercial and multifamily space
22:41 - How to get started commercial real estate
27:22 - Ryan’s biggest obstacles in real estate and how he overcomes it
Tune in to learn more valuable information from this episode!
Subscribe, Listen to our episodes and leave us a review:
Apple: https://podcasts.apple.com/us/podcast/real-estate-investing-for-freedom/id1570870735
Spotify: https://open.spotify.com/show/2d3nMp137jfw6MDyPPsY3j
Google: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5idXp6c3Byb3V0LmNvbS8xNzkxNDk0LnJzcw==
Connect with Guest, Ryan Stenberg:
Website:Westeggrealestate.com
Email:ryanstenberg10@gmail.com
Connect with the Host, Dalyn Hazell:
Facebook: https://www.facebook.com/dalyn.hazell/
Instagram: https://www.instagram.com/dhazell24/
Email: dalyndhazell@gmail.com
Introduction 0:00
This is the real estate investing for Freedom podcast, where we bring on the experts to teach you the golden nuggets of real estate investing, so you can escape the rat race and start living life on your terms. Now, here's your host Dalyn Hazell.
Dalyn Hazell 0:22
What's up everybody, and welcome back to another episode of the show. Today, the weather outside is absolutely crazy. We've got like six inches of snow, which, depending on what part of the country you're in, that can be very little or a lot. So everyone reacts differently to the snow. I mean, people in Texas are probably freaking out right now with the storm we got going on. And people in Michigan are probably thinking it's just another day. So I'm trying to crank out as many episodes as possible for you guys while I'm working from home today. But today's episode is with Ryan Stenberg. He's a really smart, young hustler. And he's a former Google employee. And he broke into the scene of commercial real estate and really found his success there. And so he's got a ton of wisdom to share. But before we dive into the episode, you guys know what time it is, it's the golden nugget of the day. And today's golden nugget is to be careful when listening to episodes like this, I'll be upfront and honest with you guys. Sometimes when I hear podcasts of people doing something in other strategies, I get self-conscious, or I feel like hey, I'm not doing that, or I'm not doing as good as he is. And that makes me feel like I'm not as good as an investor. And that is the wrong feeling to have, we should be proud of our accomplishments and how far we've come. And just because, for example, I'm not investing in commercial real estate doesn't mean I'm doing something wrong. We all have to find our lane. You've heard me talk about our investor DNA find that out early as possible. Ryan is having success in an area that I'm not familiar with. But I unpack a lot of those ideas on the podcast so that maybe if you are listening to this show, you may have aspirations of getting into the same asset class as Ryan. And maybe it's not the right fit for you and you go on about your life after this episode without doing anything actionable on it. And that's okay because Ryan's in a different world than maybe I am. But that doesn't mean we're doing anything wrong. It just means that we have different investor DNA. And so that's my gold nugget. My tip of the day is just finding your investor DNA. I've said that before. But don't get this shiny object syndrome that you have to do at Ryan's doing or you to have to do it daily is doing, find out what works best for your family, and preferably brings you to financial freedom the quickest. So with all that being said, Here's today's interview with Ryan Stenberg. Welcome to the show, Ryan, how's it going today?
Ryan Stenberg 2:45
Hey, Dalyn, how are you doing?
Dalyn Hazell 2:47
Fantastic. Well, in this episode, I want to talk to you about all the stuff you're doing. But first, I want to touch on, when was your aha moment in real estate? When did the light bulb kick on for you and say this is the path for me?
Ryan Stenberg 3:04
Yeah, so I guess my journey into real estate was kind of a few years of trying to figure out what to do and when how to do it. And then there actually was very much an aha moment. For us early on. For less than two years, I've been trying to buy real estate and we kept buying and then saving than buying and saving. Again, again, it's a slow kind of rinse and repeat model where you take your W two-income and you stash it away for the next downpayment and was realized, like wanting to speed this up. And when I say we, I mean me into my new business partners, but at the time, it was part of the mastermind group that we were working on. And as we kind of honed in on like wanting real estate more and, wanting to make real estate, a part of our financial independence journey. More and more and more, we came to this conclusion that like we should dive more fully in. And at the same time, there's a guy who was actually my roommate Now out here in Venice Beach, but he was on a podcast in the BiggerPockets world. And he was one of the first people I heard that was very young, like myself. And so he was, I think 19 years old at the time. And he came on to bigger pockets. And he talked a lot about how deal flow is everything, especially in today's market, and how nothing outside of deal flow matters when you have a good deal like the lenders, the money, like the equity, the best contractors, everything else will kind of come and surround you when you have that best deal. And so for us, we were I had always kind of heard the story of people who, maybe in the 30s 40s were progressing slowly towards that financial independence. But this is a totally different story. There's someone with 19 without credibility without money in their pocket, who was doing real estate and so they were, facing a lot of the same challenges that we were facing. And so that was that realization from that podcast was actually extremely critical to us. I gave him a call and I'm on the phone with him and ask him some questions just kind of confirmed those beliefs. And about a year later when purchased around $20 million in real estate. How to in Reno, Reno, Nevada, and we I ended up calling him to say thank you. And now I'm actually out here living with him in Venice Beach. So that was the moment for us where everything kind of clicked. And we realized, what we were really missing. Was this our interpretation, the bottleneck in real estate?
Dalyn Hazell 5:15
That's super cool. And we're gonna dive into specifics on what that bottleneck is, and more about deal flow. But it's cool that your mentor became your roommate, that's, that's a good way to get experience, surrounding yourself with people like that. And that's a good tidbit of advice for anybody interested in learning more, hit up the people that are on your own podcasts because they willingly give out their contact information at the end of each episode. So feel free to reach out and, see how you all can help each other for sure. So I know that you have a history at Google, right? That was your W two job, can you kind of dive into your day-to-day what that looked like, and why you saw real estate as your way out of that?
Ryan Stenberg 6:01
Yeah, sure. So I started working at Google, um, out of college career as a software engineer, and then as a program manager. And so bird management, it's kind of a very ambiguous, hard to pin down the term. But at the end of the day, what I end up doing is working kind of cross across teams, some engineers, some product managers, some, executives and trying and driving business direction. And what we were doing is we were launching products into the cloud space. So launching hardware and the software stack on top of it into data centers. And that's kind of all over the world, the US but also, lots of countries around the world. So I was helping develop these products, a lot of them were three-year lifespans here on kind of these long product lifecycle journeys, where you might start something and three years later is when you get to see the launch. So I saw the launch of pretty much none of my products because I ended up leaving before that. But real estate kind of slowly came into my life on the bus rides to and from Google. So Google's kind of famous for the buses that will take you from wherever you live, whether it's San Francisco or the South Bay, into the offices. And so that would mean for me an hour every day in the bus right in and an hour every day on the bus ride back out. And so with that hour each way, I spent a ton of time just consuming content, listening to other people, and learning what they were doing in the real estate world. And so at first, as I said earlier, that kind of transitioned or that looks like buying and then saving for the next downpayment and then buying again, saving for the next downpayment. And I got about two properties in that way. And it took about a year, and I got kind of fed up with the speed. And so I realized, there was a kind of multilayers to this entry into real estate. And that one, I realized was not the one I was very satisfied with at least. And so over time, that kind of want or realization that real estate couldn't be the answer. Because there's so much control in real estate, you can trade your effort and your time for returns. It kind of fully evolved when the pandemic started. And everyone went remotes all the, all the companies said, Hey, you can work anywhere you want, but not the office. And so the same group of, same mastermind group I talked about earlier, immediately booked a trip with the question, for a week with the trying to answer what are we going to do this year, that's different than we can do this year. That is, we couldn't do in a normal year in a non-pandemic here. Whereas you're working from home, we can pour all of those free hours into real estate. So the hours are spent on the bus before the hours I'm spending with social time and things like that. I can spend it on real estate now I can trade it for something else instead. Because that's just leaning into the constraints, the new constraints the world. And it really kind of took off from there.
Dalyn Hazell 8:39
Yeah, I think the pandemic really opened up people's minds and opportunities towards entrepreneurship, especially because you're not spending so much time at your job. Talk about for somebody that's in college or trying to get it to think about getting a degree, you probably got a four-year degree right at your university. So do you feel like that time was wasted? Or was it put to good use now that you're in commercial real estate?
Ryan Stenberg 9:07
Yeah, it's honestly really hard to decouple. For myself, I started computer science in college electrical engineering first and then transferred into computer science. And the way I think about engineering problems is the way I think about everything else in life. And so for me, I could never decouple those I could never say how valuable or invaluable it is to have gotten that degree. Because the way I break down real estate or anything else, trying to get to first principles, and then build back up from there, is grounded in what I learned in school. So for myself, there are multiple values in that four-year degree. That is definitely one of them. And if I were to go back and drop that degree and drop out earlier, I don't know that I would be in a better place because of it. From a success standpoint, there's also just, I mean, I'll be honest, college, college is a lot of fun. So there are other values out there that are about finding yourself in being more in tune with who you are, that aren't just the academics.
Dalyn Hazell 10:05
Yeah, that's a great perspective, because you may not be doing the exact technical things you learned in college today. But, those traits that you built up the relationships you built, still stick with you. So, yeah, I just wanted to throw that in there. First people who may be younger, and just don't understand may be why it's valuable to go to college. But your answer was good there. Definitely thank you for that. So what made you decide to get into commercial real estate? But actually, before I asked that, what were you doing when you started doing the 20%? Down? Were those on like single-family homes at first in the early days for you?
Ryan Stenberg 10:45
Yeah, we were buying, like triplexes, quad, plexes, stuff like that mostly out in the Midwest, and Cincinnati, Ohio. Um, and, yeah, they were, these are smaller properties. And actually, between that and moving to finally, what we'd call more commercial real estate, was kind of intermediary multifamily that we did out in Reno. So we've kind of done all ends of the spectrum and all asset classes, we try to not shy away from certain kinds of, or others just do what serves our goals best.
Dalyn Hazell 11:14
Sure. Yeah. And so for somebody who's not aware, when does residential real estate end? And when does commercial real estate begin?
Ryan Stenberg 11:24
Yeah, honestly, it's a little bit of a vague answer. And depending on what source you look up, you might get a different answer. Banks will usually draw the line at five units and plus will be a commercial, commercial real estate for multifamily. And then same with, all sizes of Office industrial, retail, things like that will fall into commercial as well. So from there, who which lender is going to take it on? Or what types of loans you can get? That's usually where the lines are drawn. But if you're talking to investors, they may have a different answer you're talking to anyone else out there, they may have a different answer. So it's really up for interpretation. Other than the kind of a lender world.
Dalyn Hazell 12:00
Yeah, I've heard, commercial real estate is everything except one to four units, as far as like, single Friday duplex quads and tries. So circling back to my earlier question, what made you decide to get into commercial real estate? I know, it was mainly the speed of increase the velocity of your, your growth? Was that the reason?
Ryan Stenberg 12:23
Yeah, it was when we were kind of looking to move faster and faster, we previously had this constraint in our head. And that constraint was, we can only use our own money. And when you can only use your own money, your only option is to buy and then save for the next one, maybe you can do a bird and you can, add value, and then refinance out, it's still your money and you recycling in the next one. So you're limited by how much money you have in your pocket, or how much money is coming in. And when we're able to kind of release that constraint at some point, and realize it's not about how much money I have, it's about how much money can I raise and safely take care of and safely be the steward of, and so that kind of once that realization clicked, it kind of opened the gates to lean into bigger and bigger properties. And so we started leaning in, we are already buying triplexes and quadplexes. The next step up was smaller multifamily five to eight units or something like that. And then we worked our way up to bigger things from there. And so we never wanted to over-stretch too far. And kind of like, jump 10 steps ahead and then have blind spots we weren't aware of and lose other people's money. But we also wanted to keep progressing upward. So it's a bigger and bigger thing where the margin, makes more sense. And your, your time is worth at this grander scales.
Dalyn Hazell 13:34
Yeah, and why exactly? Is the velocity faster? Are you just using 100% of other people's money at this point?
Ryan Stenberg 13:43
Yeah. And early, early on when we first moved to Reno, our original syndications or we would put in our own money, or we would cover the downside. So whenever there was, , an overstep on the rehab budget or something like that, we would, we would take that on with our own finances. Nowadays, we largely don't put in any money of our own. And it's kind of a function of our track record and other things. You kind of have, , a constrained world with lots of levers to pull. And as your tracker gets stronger and stronger, you can generally move away from putting the money in yourself.
Dalyn Hazell 14:16
Sure, sure. So what I'm hearing from you is the two bottlenecks in your early days in the early business were money, and then deal flow. So let's unpack those. So how did you overcome the money aspect? I mean, you said your main job was to start raising, those funds. So how did you go about raising money aggressively to take on I think you mentioned $20 million worth of acquisitions. Where do you get that kind of money?
Ryan Stenberg 14:46
So when we first moved out to Reno, we actually didn't plan to do any syndications at all. We were planning to wholesale multifamily, commercial multifamily. And we moved out there because there were a few big investors with a lot of money in their pocket looking to move there. portfolios out to Reno, maybe from the Bay Area or whatnot. And so we went out there to wholesale to them or said, No, let's be the solution to their problem. Let's find deals. And then let's wholesale to them. And we went out there and the first couple of multifamily bought for two or found at a good price for too small for them. And so we went and tried to wholesale and we had no network. So we basically failed at wholesaling. But in the meantime, we did all this due diligence for those projects. And we realized, Hey, these are good projects. Maybe what if we just did them ourselves? And so we started reaching out to just at the beginning, friends, and family and seeing how hard would it be if we went and raised the money and syndicated these instead. And so that kind of was the transition into syndication that was, not really meant to be at the beginning, and so on. That's kind of where we started when it comes to raising funds. And so our goal was never to raise funds, our goal was always to find the best deals. And what I found is that those two are kind of interchangeable, you can be really good at raising funds, or you can just be really good at finding deals, and improving on either skill set will make it easier to get the money.
Dalyn Hazell 16:06
Yeah, I like to say if you're going to be in the business of landlording, whether it's homes or large apartments, there's really only two things you need to do every day. And if you're not doing those, you're kind of getting off track. And it's finding deals and finding money. So you called friends and family. Did you get enough from that? , those initial networking outreach to get enough of what you needed? Or did you have to look elsewhere and make other connections?
Ryan Stenberg 16:35
Yeah, I know that the original deals we did, were all people we already knew. It's not people, you'd expect to invest in a real estate syndication going in. So our team, which was at the time, five of us, sat down on a whiteboard and wrote every single person that we could think of who might have $50,000 or more on that board, instead, go through them all, like, can we call text, what's the best way to get in touch with them and see if they're, they're interested. And so early on, that's what it looked like. And that was multi-day, multiple hours, activity. And so nowadays, it's a lot more casual than that. A lot less sitting around a whiteboard brainstorming where we're going to come up with these funds. So it changes over time. But the first one's the hardest. And it only gets easier after that, even if the properties get larger.
Dalyn Hazell 17:19
Sure. So I mean, you're not really trying to convince this person that real estate, they already know, real estates powerful. And then they have the funds available. What's that conversation look like?
Ryan Stenberg 17:31
Yeah, the conversation is usually education, it's usually trying to educate them on the market of Reno, the asset class, kind of what key assumptions are baked in underneath, and what can go wrong. And so on our first, the first time we did a raise, we drew out a decision tree. And again, this is where my, background in school kind of comes into the way I do real estate, we drove the decision tree of everything that could go wrong. And at the time, it was like early in the pandemic. So what happens if we try to bring rents up, and there's a moratorium, people refuse to pay rent for, let's say, a year, you can't, people can't leave for another six months after that, then you raise, you may do a value add and the rehab goes wrong, and it takes six months. And then this happens. If everything were to go wrong in that decision trade, you end up in the worst-case scenario, like do you get your money back? Or what is your return? Is it 5% 10%? In that case, and people are okay with that worst-case scenario, or at least what we can imagine as the worst case, then there are grounds to kind of move forward there. And I think a lot of this conversation is about educating them on what is everything that can go wrong, let's set those expectations. And then we're not going to hope for those and we're not gonna, work towards those. But um, we start there.
Dalyn Hazell 18:41
Yeah, I think that goes a long way for your investors. If you don't just paint this rosy picture that everything's gonna go right. If you do outline from the beginning, what's going to go wrong? I think they're going to trust you more. Absolutely. And then let's flip the coin here. Your other bottleneck was finding deals. So how did you go about finding deals in the commercial and multifamily space? Because any wholesaling Guru is going to tell you, write some letters, make some calls, but that's for houses. How does that change when you are looking for these larger assets?
Ryan Stenberg 19:18
Yeah, so we've actually done both we've messaged, single-family, homeowners all the way up to $20 million, industrial deals, and things like that. So we've kind of seen all ends of the spectrum at a large scale. We took a very breadth approach to it, coming from the software and tech world, I worked at Google, as you said earlier, my partner at Amazon and others at PayPal. And so we said that's our that's one of our big advantages. And so let's use a scale to our advantage. And so we early on wrote software to use basically SMS and text messaging, or use directly to seller marketing to get in touch with sellers. And we've done as I said, all ends of that spectrum. And we've realized the responses are extremely different. So when you're contacting a single-family homeowner, it's a very different conversation. And when you're contacting someone who owns a $5 million retail building, and as you move up towards those bigger, bigger buildings, it becomes more of a business conversation. For them, it becomes more about the numbers, more about kind of, is this a good opportunity for me? And where am I going to put my money after this, that's going to be a better location. And when you're in the kind of single-family home space, a lot of the reason we actually shied away from that is it's a very emotional conversation in comparison. There's a lot more kind of tiptoeing around and making sure everyone is, feeling comfortable. And when we talk to commercial property owners, our first question is, what price would you sell for? And it's exact, like just straight to the point, because that's actually what they respond best to. You don't need to beat around the bush or, build any rapport comfortability, you kind of just go right to it. And that's what we found works for us.
Dalyn Hazell 20:48
That is interesting. , in some ways, it seems simpler, maybe not easier, but just a simpler conversation Here are the numbers. Here's what do you want for it? And that's a lot better than dealing with, a cousin, maybe a squatter in the property, like all the things you deal with, with single-family, wholesaling, which, absolutely, neither is wrong. I mean, you can make a lot of money in either asset class, but it's just much different. Where does one start if they want to get into commercial real estate? Because it just seems so overwhelming, and it seems easier just to stick with single-family houses? Where does one even start if they want to get into commercial real estate?
Ryan Stenberg 21:32
Yeah, it's a good point. I think the reason that people start in single-family homes and traditional, then, maybe move to multifamily one day, and maybe upward from there is that people I think, do what they're familiar with. Some people do what they're comfortable with, everyone has grown up in a home or lives in a home. And they understand the mechanics of a single-family home, what it's like to be a tenant, what it's like to be an owner, as an owner, whether it's your parents or, or someone else in your life, they've been around that enough to understand it. Now you move to the multifamily space, a lot of people out there maybe don't know, multifamily home or apartment owner, but they have one of them at some point in time. And so there's a familiarity there, at least on the tenant side. Now, as you move towards retail, industrial and, office space, you may have never known anybody who's been the tenant or the owner of that building. And so it gets more and more unfamiliar. The reason that like, we like to skew in that, towards that end of the spectrum, is that that uncomfortability, blocks people from moving upward. And so when we can move up and understand those asset classes, then we can kind of play in a smaller demand for a smaller pool of potential buyers. And so it kind of offsets the supply and demand there in our favor. And so what I would say is, when people are looking to get started is, as I said earlier, you kind of want to move up incrementally, where you're not stepping up from, buying a maybe a couple $100,000 single-family home to a $20 million industrial warehouse, because there's going to be blind spots that you're not aware of when the economies of scale and everything else steps up to that degree. But if you can do it in an incremental fashion, there's not that much different from a single-family home to small, small multifamily to a 12 unit, to then an office space that has three different office tenants. And so you kind of do this incrementally in a way, that's not going to introduce a massive amount of unknowns to you all at once. But keep forcing yourself to step bigger, keep forcing yourself to go one step further out of your comfort zone. And eventually, I'll just find yourself buying, whatever the best deal is, regardless of what asset class it is, or regardless of what size it is.
Dalyn Hazell 23:37
Yeah, what comes to my mind is if you started with a home, and then you get a duplex, and then a quad, and then you have to get into apartments, at least you're in residential, like you're not, buying retail spaces. And then once you're comfortable at the larger residential, then maybe you do storage, then maybe you do retail, then industrial. And so that's kind of an example, natural progression there. Any particular books that you recommend that helped you build that foundation starting out in commercial real estate?
Ryan Stenberg 24:03
I actually don't really know of any commercial real estate books. Did someone ask me this the other day? And my answer was, I can't think of one. And that's the beauty of it, is that that's why the barrier to entry is so high is because there are books out there. , don't get me wrong, but I'm just not aware of any of them. And I haven't read any of them. And that's what makes it so difficult for you to step into this space is that the Knowledge Network is between the people who have been in this space for a long time. And so it's getting connected with those people. And so I guess to go back to your previous question, I want to add one thing about how you're incrementally stepping up into a bigger and bigger asset. One thing that we like to do is bring as many expert eyes onto that project as we possibly can. And so when I'm walking into the first 10 units that I've ever done, I'm bringing two sets of contractors, I'm bringing my broker, the listing broker, I'm bringing the inspector, the appraiser, and then we actually would bring retired inspectors as well that we had met throughout the town. So we have a team of maybe like 10 different parties coming through. And at the end, we'd all walkout. And we'd huddle around. And I'd say, Tell me everything you saw that was wrong with that building. And I would write it down in a notepad and collect all the notes of everything that could be wrong and assume what's the worst case if we have to fix all of these things? What does it cost, let's bid them all out? And so I don't have to know what it looks like to have a weak foundation in a building, I just have to bring the right person that knows what that looks like. And if I can cover enough of those blind spots, then I can start to do bigger and bigger things. But I can remove the risk as I do it. And so that's been a huge asset to us is just bringing those expert eyes with you, wherever you go.
Dalyn Hazell 25:35
That's a great tip. And it also helps that you have people in your corner, I mean, your roommate, that's your business partner. So has that really helped you having those business partners around you, rather than just trying to go into every deal by yourself?
Ryan Stenberg 25:54
100%. Yeah, when I was originally buying, the small triplexes, and quadplexes, and stuff out in Cincinnati, and it was moving slower than I was wanting to is, it was myself kind of in one of their partner that didn't know, we were always next to each other. And so real estate wasn't really kind of consuming our mental capacity or brainpower in life. And so when we moved to Reno, Nevada, we actually moved out there to change the environment. And so it was the two of us, and then three others, and we moved into a one-bedroom apartment out in Reno, Nevada, and just surrounded ourselves with only thinking about real estate pretty much with all of our free time. And so whenever we faced problems, it's a lot easier to solve problems. When you put five heads together to solve it. You can squash things that seem insurmountable to other people in 30 minutes in a 30-minute brainstorm where you just dump all the possibilities under the table and say, which route is going to give us the best results? And then you go from there? And so Absolutely, it helps to surround yourself with other people. That whether it's your partners, or brokers, or things like that, that can kind of be that sounding board for you when things start to go south or you don't really know what's happening.
Dalyn Hazell 26:59
Yeah. And if you're married, you only need one extra head because the wife is always right. That's helped me out. For sure. Well, cool, Ryan. So when you got the ball rolling, you started acquiring assets? What were some of those biggest obstacles in paving your way in that industry? Maybe one is your age? And how did you overcome them?
Ryan Stenberg 27:22
Yeah, age is a big one. But honestly, age is mostly in your head, not anyone, not anything else. Actually age. I don't think anyone whenever discriminated against, gives us money because of our age, but my brain thought that that might happen. And that's what stops you from the kind of moving forward and asking for what you're looking for, whether that's raising funds or access to certain people or, to a network or something like that. Your age is mostly in your head and what we realized early on, kind of thing like how do I have this chicken in the egg situation where I want to do this project. But in order to do this project, I need to raise funds, and I can't raise funds until I have a track record. But I can't get the track record until I raise these funds. And you get caught in this endless loop, right. And people get stuck in this all the time. And one way to kind of interrupt that loop is to do that incremental step up, we're always going a little bit bigger enough where the world is comfortable with you kind of taking one little step further. And the world I mean, your investors, your lenders, and everything else. But the other thing is, is realizing like, for me, it was realizing that my life resume is my track record. It's not about real estate exclusively, like the way I do business. Whether it's at Google when I was in college, or other things like for other projects that I've worked on, Donald translates to real estate heavily. So if I've done well, for people in other aspects of life, a lot of that translates into what they anticipate I'll do in real estate. And I might not know the technical aspects of real estate. But if I can prove that I know how to de-risk problems that I don't know, I can uncover the things that I don't know, early enough for me to save myself from them. And other, other ventures, then, why not the same in real estate. And so age then no longer becomes, our track record, for example, no longer becomes the blocker, because you're able to prove it with your life resume and other, other facets of your life.
Dalyn Hazell 29:09
Yeah, there's always something that somebody can bring to the table to build that track record, even if you are young, or you've had a rough or past, for you. It's like highlighting. Google trusted me enough to give me a job. And they're one of the world's biggest companies. So why don't, why couldn't you trust me in my example, I built up a track record of finding good deals and wholesaling. And so my lenders knew that I had the ability to get great deals, so they didn't have a problem lending on my projects. And so you got to find something that you can build that credibility upon, even if it's just your reputation of being a community leader, or a godfather, anything. Well, Ryan, this last portion of our show is called the triple threat. And these three questions I really like to ask, they're pretty general, and they really give us a good view on like mindset. And, and so forth. So the first question is what's been the biggest resource? That has been the biggest game-changer? I know you said you don't read a lot of commercial real estate books. But is there a forum or a mentor? or anything? That's been the biggest game-changer for your business?
Ryan Stenberg 30:16
Yeah, that's a great question. Honestly, in those with a forum or a person, like, it doesn't really come to mind, there's a lot of people to help us along the way, I don't know there was any one of them. But what I can say is the thing that most people don't look towards to help them in their environment. And when you are, let's say, at the office every day nine to five, and then you come home, and you come home to a house of people who, maybe they're like, Hey, let's go out, or let's go, let's go eat dinner or let's go watch Netflix or things like that. It's really hard to get yourself to align your subconscious and your conscious to do what you need to do, and or what you really want to do. So for us, changing our environment was the biggest shift in the trajectory. And saying, let me define first what I want. And let me build the environment around me, that leans into that, and allows that to be easy, every single day. And so we were, went as far as moving to a new city into a one-bedroom apartment, where we're going to surround ourselves with only real estate, each other, who all wanted to want that same real estate goal. But also, we weren't out every night, we were trying to meet brokers trying to get lenders trying to meet other people that were in the real estate world, and it was exclusively real estate for about a year. And that change in environment, just, I would attribute to almost all of the acceleration.
Dalyn Hazell 31:37
Yeah, if you're in a bad environment, maybe you're, you're surrounded by unmotivated friends, or you have people in your life that tell you can't do that. I think a complete 180 is necessary, you've got to figure out a way, maybe it means renting an office to get out of the home so that you're not as distracted, you've got to find a way to get in that environment of focus and diligence and, and accelerate that because later you can have fun when you have the financial freedom. But if you don't have financial freedom, then you shouldn't be having, endless fun right now. Because it's all about putting in the effort now so that you can reap the rewards later. bigger rewards later. Question two, what has been your biggest learning lesson in the last 12 months?
Ryan Stenberg 32:23
What I've noticed is the journey of real estate has also been a journey of consciousness and realizing more, asking why deeper and deeper and deeper about what we're looking to do and why we're looking to do it. And then you talked about, or if we look at, like the environment, for example, if you ask yourself, what do I want in life, and you say, financial independence, financial freedom, and then you're like, Why do I want that, and you go all the way down, you strengthen that wind, you strengthen that goal. And then you realize every time you're, your subconscious kind of steps in and makes you go this way, or do this action or do that action that's in conflict with that goal that you want, you recognize, like it comes into the forefront of your mind. And so what I found over the last year is that asking, like asking that, why, over and over again, and getting extreme clarity on the goal that you want, makes it really easy, like the journey is not in everyone thinks the journey is in the action and taking the action. And I've been realizing more and more and this shows up in the software world as well, is that the journey is in ironing out the goal and getting 100% clarity on what it is you want, and why you want it so badly. And once that's there, the actions just kind of come naturally. You don't fight them every day, you're not waking up saying, Oh man, today I have to go look at 100 deals, wound up saying Oh, yesterday I thought about it. And I deemed that that's the most important thing. Like that's the most important thing in my life, that's going to make me the happiest like, I'm going to go and do that action. And so action, stop becoming a battle of will against yourself and start just becoming kind of the natural state of things. So clarity towards your goals and going through that deep thought process. That's been one of the biggest lessons that I've learned over the last year.
Dalyn Hazell 34:04
Sure. And just as an aside, do you have one goal? Or do you have multiple goals, you're going for a one time.
Ryan Stenberg 34:12
Multiple, and they're always changing, and I never hit almost any of them. There are usually a few I try to keep limited to three. By the time I'm getting close to them, I usually change them and make them bigger. So I never actually hit the goal before I change it and make it bigger. But it's not so much about hitting goals that like that's not really the important part. The important part is you're striving for something bigger and greater than you've done before making yourself uncomfortable that you're growing and you're kind of expanding and whether it's your skillset your network, your knowledge, your happiness, like whatever it is is that that's expanding outwards. And so yeah, answer the there's several. But it's, they're always kind of in flux.
Dalyn Hazell 34:50
Question three, our podcast is all about helping others achieve freedom with real estate investing, whether it's financial lifestyle or otherwise. So what does freedom mean to you?
Ryan Stenberg 35:00
Yeah, for me, freedom is psychological. So a lot of people say financial freedom is a certain dollar amount. And it might be true for one person, it might be not true for another Because freedom is not about how many dollars you have in your bank account. It does you feel like do you feel like money is a constraint in your world or do you feel like, your job is a constraint in your world, or whatever it is, you feel like you have the ability to go and choose and pursue the things that you want in life. And so it's all psychological. And so for certain people, like, the fastest path to financial freedom is not by going and taking action to make more money. It's about thinking, What does financial freedom mean to me? And can I just play some mental jujitsu on myself and change the number that would make me feel free. And if you can, and like the faster path, as opposed to making, doing 30 deals, is to say, actually would only take me three to get to the point where I would feel free. And that psychological like understanding, or I guess, understanding your own psychology or psychology. That is what I'm, that's what kind of freedom sets so for myself, at least financial freedom has kind of decreased in number, the more I thought about it, and made that easier and easier to get to.
Dalyn Hazell 36:10
Don't you like that when you don't have this big task of making a billion dollars, you just need? You just get past those psychological barriers and figure out how much do I really need? And then build your goals off of that? Yeah, absolutely. Well, Brian, it's been a pleasure. And it's really inspiring. , you're my exact age, and you're doing so many incredible things with your mastermind group and your friends. And I think the only way is up for you, sir. So where can listeners get a hold of you if they want to learn more about your company or the opportunities you provide?
Ryan Stenberg 36:45
Yeah, to be honest, I'm actually probably only in real estate for a couple more months. And I'm going to be looking towards, as I said, there's a lot of goals and they're in flux. And looking towards other things. Our real estate website would be West Egg real estate calm if you want to see the projects that we've done, and potentially some of the upcoming ones. If you want to reach out to me, you can reach out to Ryan at West Egg, real estate calm. And then feel free to give out phone number, email, anything else, in the show notes or whatever it is.
Dalyn Hazell 37:12
That's awesome. I'll do that. Do you mind sharing with the audience? I mean, where you're headed after your real estate chapter ends?
Ryan Stenberg 37:20
Yeah, I wish I knew the answer to that. But that's the fun part of the journey. Right is Yeah, going exploring. So I think after this, there's a reset period for myself, chemically, and, from a dopamine and neurotransmitter perspective, and also from a perspective on life, and, where I'm placing my values. So I need to go and explore that I keep coming back to health and education as things that I know I can easily build, build a passion in. So that's, that's where I'll end up most likely. But there's going to be a several-month exploration period, I think after this to figure out where I'm going to land and where I'm going to dedicate the next 1020 years.
Dalyn Hazell 37:54
That's really awesome. Well, thanks for sharing a small piece of your real estate journey with us here today. And is a pleasure having you on. Thanks.
Ryan Stenberg 38:02
Thanks Dalyn.
Outro 7:45
Thank you for listening to the real estate investing for Freedom podcast. If you enjoyed the show, please subscribe and leave us a review and tune in next week for the next episode.
Introduction 0:00
This is the real estate investing for Freedom podcast, where we bring on the experts to teach you the golden nuggets of real estate investing, so you can escape the rat race and start living life on your terms. Now, here's your host Dalyn Hazell.
Dalyn Hazell 0:22
What's up everybody, and welcome back to another episode of the show. Today, the weather outside is absolutely crazy. We've got like six inches of snow, which, depending on what part of the country you're in, that can be very little or a lot. So everyone reacts differently to the snow. I mean, people in Texas are probably freaking out right now with the storm we got going on. And people in Michigan are probably thinking it's just another day. So I'm trying to crank out as many episodes as possible for you guys while I'm working from home today. But today's episode is with Ryan Stenberg. He's a really smart, young hustler. And he's a former Google employee. And he broke into the scene of commercial real estate and really found his success there. And so he's got a ton of wisdom to share. But before we dive into the episode, you guys know what time it is, it's the golden nugget of the day. And today's golden nugget is to be careful when listening to episodes like this, I'll be upfront and honest with you guys. Sometimes when I hear podcasts of people doing something in other strategies, I get self-conscious, or I feel like hey, I'm not doing that, or I'm not doing as good as he is. And that makes me feel like I'm not as good as an investor. And that is the wrong feeling to have, we should be proud of our accomplishments and how far we've come. And just because, for example, I'm not investing in commercial real estate doesn't mean I'm doing something wrong. We all have to find our lane. You've heard me talk about our investor DNA find that out early as possible. Ryan is having success in an area that I'm not familiar with. But I unpack a lot of those ideas on the podcast so that maybe if you are listening to this show, you may have aspirations of getting into the same asset class as Ryan. And maybe it's not the right fit for you and you go on about your life after this episode without doing anything actionable on it. And that's okay because Ryan's in a different world than maybe I am. But that doesn't mean we're doing anything wrong. It just means that we have different investor DNA. And so that's my gold nugget. My tip of the day is just finding your investor DNA. I've said that before. But don't get this shiny object syndrome that you have to do at Ryan's doing or you to have to do it daily is doing, find out what works best for your family, and preferably brings you to financial freedom the quickest. So with all that being said, Here's today's interview with Ryan Stenberg. Welcome to the show, Ryan, how's it going today?
Ryan Stenberg 2:45
Hey, Dalyn, how are you doing?
Dalyn Hazell 2:47
Fantastic. Well, in this episode, I want to talk to you about all the stuff you're doing. But first, I want to touch on, when was your aha moment in real estate? When did the light bulb kick on for you and say this is the path for me?
Ryan Stenberg 3:04
Yeah, so I guess my journey into real estate was kind of a few years of trying to figure out what to do and when how to do it. And then there actually was very much an aha moment. For us early on. For less than two years, I've been trying to buy real estate and we kept buying and then saving than buying and saving. Again, again, it's a slow kind of rinse and repeat model where you take your W two-income and you stash it away for the next downpayment and was realized, like wanting to speed this up. And when I say we, I mean me into my new business partners, but at the time, it was part of the mastermind group that we were working on. And as we kind of honed in on like wanting real estate more and, wanting to make real estate, a part of our financial independence journey. More and more and more, we came to this conclusion that like we should dive more fully in. And at the same time, there's a guy who was actually my roommate Now out here in Venice Beach, but he was on a podcast in the BiggerPockets world. And he was one of the first people I heard that was very young, like myself. And so he was, I think 19 years old at the time. And he came on to bigger pockets. And he talked a lot about how deal flow is everything, especially in today's market, and how nothing outside of deal flow matters when you have a good deal like the lenders, the money, like the equity, the best contractors, everything else will kind of come and surround you when you have that best deal. And so for us, we were I had always kind of heard the story of people who, maybe in the 30s 40s were progressing slowly towards that financial independence. But this is a totally different story. There's someone with 19 without credibility without money in their pocket, who was doing real estate and so they were, facing a lot of the same challenges that we were facing. And so that was that realization from that podcast was actually extremely critical to us. I gave him a call and I'm on the phone with him and ask him some questions just kind of confirmed those beliefs. And about a year later when purchased around $20 million in real estate. How to in Reno, Reno, Nevada, and we I ended up calling him to say thank you. And now I'm actually out here living with him in Venice Beach. So that was the moment for us where everything kind of clicked. And we realized, what we were really missing. Was this our interpretation, the bottleneck in real estate?
Dalyn Hazell 5:15
That's super cool. And we're gonna dive into specifics on what that bottleneck is, and more about deal flow. But it's cool that your mentor became your roommate, that's, that's a good way to get experience, surrounding yourself with people like that. And that's a good tidbit of advice for anybody interested in learning more, hit up the people that are on your own podcasts because they willingly give out their contact information at the end of each episode. So feel free to reach out and, see how you all can help each other for sure. So I know that you have a history at Google, right? That was your W two job, can you kind of dive into your day-to-day what that looked like, and why you saw real estate as your way out of that?
Ryan Stenberg 6:01
Yeah, sure. So I started working at Google, um, out of college career as a software engineer, and then as a program manager. And so bird management, it's kind of a very ambiguous, hard to pin down the term. But at the end of the day, what I end up doing is working kind of cross across teams, some engineers, some product managers, some, executives and trying and driving business direction. And what we were doing is we were launching products into the cloud space. So launching hardware and the software stack on top of it into data centers. And that's kind of all over the world, the US but also, lots of countries around the world. So I was helping develop these products, a lot of them were three-year lifespans here on kind of these long product lifecycle journeys, where you might start something and three years later is when you get to see the launch. So I saw the launch of pretty much none of my products because I ended up leaving before that. But real estate kind of slowly came into my life on the bus rides to and from Google. So Google's kind of famous for the buses that will take you from wherever you live, whether it's San Francisco or the South Bay, into the offices. And so that would mean for me an hour every day in the bus right in and an hour every day on the bus ride back out. And so with that hour each way, I spent a ton of time just consuming content, listening to other people, and learning what they were doing in the real estate world. And so at first, as I said earlier, that kind of transitioned or that looks like buying and then saving for the next downpayment and then buying again, saving for the next downpayment. And I got about two properties in that way. And it took about a year, and I got kind of fed up with the speed. And so I realized, there was a kind of multilayers to this entry into real estate. And that one, I realized was not the one I was very satisfied with at least. And so over time, that kind of want or realization that real estate couldn't be the answer. Because there's so much control in real estate, you can trade your effort and your time for returns. It kind of fully evolved when the pandemic started. And everyone went remotes all the, all the companies said, Hey, you can work anywhere you want, but not the office. And so the same group of, same mastermind group I talked about earlier, immediately booked a trip with the question, for a week with the trying to answer what are we going to do this year, that's different than we can do this year. That is, we couldn't do in a normal year in a non-pandemic here. Whereas you're working from home, we can pour all of those free hours into real estate. So the hours are spent on the bus before the hours I'm spending with social time and things like that. I can spend it on real estate now I can trade it for something else instead. Because that's just leaning into the constraints, the new constraints the world. And it really kind of took off from there.
Dalyn Hazell 8:39
Yeah, I think the pandemic really opened up people's minds and opportunities towards entrepreneurship, especially because you're not spending so much time at your job. Talk about for somebody that's in college or trying to get it to think about getting a degree, you probably got a four-year degree right at your university. So do you feel like that time was wasted? Or was it put to good use now that you're in commercial real estate?
Ryan Stenberg 9:07
Yeah, it's honestly really hard to decouple. For myself, I started computer science in college electrical engineering first and then transferred into computer science. And the way I think about engineering problems is the way I think about everything else in life. And so for me, I could never decouple those I could never say how valuable or invaluable it is to have gotten that degree. Because the way I break down real estate or anything else, trying to get to first principles, and then build back up from there, is grounded in what I learned in school. So for myself, there are multiple values in that four-year degree. That is definitely one of them. And if I were to go back and drop that degree and drop out earlier, I don't know that I would be in a better place because of it. From a success standpoint, there's also just, I mean, I'll be honest, college, college is a lot of fun. So there are other values out there that are about finding yourself in being more in tune with who you are, that aren't just the academics.
Dalyn Hazell 10:05
Yeah, that's a great perspective, because you may not be doing the exact technical things you learned in college today. But, those traits that you built up the relationships you built, still stick with you. So, yeah, I just wanted to throw that in there. First people who may be younger, and just don't understand may be why it's valuable to go to college. But your answer was good there. Definitely thank you for that. So what made you decide to get into commercial real estate? But actually, before I asked that, what were you doing when you started doing the 20%? Down? Were those on like single-family homes at first in the early days for you?
Ryan Stenberg 10:45
Yeah, we were buying, like triplexes, quad, plexes, stuff like that mostly out in the Midwest, and Cincinnati, Ohio. Um, and, yeah, they were, these are smaller properties. And actually, between that and moving to finally, what we'd call more commercial real estate, was kind of intermediary multifamily that we did out in Reno. So we've kind of done all ends of the spectrum and all asset classes, we try to not shy away from certain kinds of, or others just do what serves our goals best.
Dalyn Hazell 11:14
Sure. Yeah. And so for somebody who's not aware, when does residential real estate end? And when does commercial real estate begin?
Ryan Stenberg 11:24
Yeah, honestly, it's a little bit of a vague answer. And depending on what source you look up, you might get a different answer. Banks will usually draw the line at five units and plus will be a commercial, commercial real estate for multifamily. And then same with, all sizes of Office industrial, retail, things like that will fall into commercial as well. So from there, who which lender is going to take it on? Or what types of loans you can get? That's usually where the lines are drawn. But if you're talking to investors, they may have a different answer you're talking to anyone else out there, they may have a different answer. So it's really up for interpretation. Other than the kind of a lender world.
Dalyn Hazell 12:00
Yeah, I've heard, commercial real estate is everything except one to four units, as far as like, single Friday duplex quads and tries. So circling back to my earlier question, what made you decide to get into commercial real estate? I know, it was mainly the speed of increase the velocity of your, your growth? Was that the reason?
Ryan Stenberg 12:23
Yeah, it was when we were kind of looking to move faster and faster, we previously had this constraint in our head. And that constraint was, we can only use our own money. And when you can only use your own money, your only option is to buy and then save for the next one, maybe you can do a bird and you can, add value, and then refinance out, it's still your money and you recycling in the next one. So you're limited by how much money you have in your pocket, or how much money is coming in. And when we're able to kind of release that constraint at some point, and realize it's not about how much money I have, it's about how much money can I raise and safely take care of and safely be the steward of, and so that kind of once that realization clicked, it kind of opened the gates to lean into bigger and bigger properties. And so we started leaning in, we are already buying triplexes and quadplexes. The next step up was smaller multifamily five to eight units or something like that. And then we worked our way up to bigger things from there. And so we never wanted to over-stretch too far. And kind of like, jump 10 steps ahead and then have blind spots we weren't aware of and lose other people's money. But we also wanted to keep progressing upward. So it's a bigger and bigger thing where the margin, makes more sense. And your, your time is worth at this grander scales.
Dalyn Hazell 13:34
Yeah, and why exactly? Is the velocity faster? Are you just using 100% of other people's money at this point?
Ryan Stenberg 13:43
Yeah. And early, early on when we first moved to Reno, our original syndications or we would put in our own money, or we would cover the downside. So whenever there was, , an overstep on the rehab budget or something like that, we would, we would take that on with our own finances. Nowadays, we largely don't put in any money of our own. And it's kind of a function of our track record and other things. You kind of have, , a constrained world with lots of levers to pull. And as your tracker gets stronger and stronger, you can generally move away from putting the money in yourself.
Dalyn Hazell 14:16
Sure, sure. So what I'm hearing from you is the two bottlenecks in your early days in the early business were money, and then deal flow. So let's unpack those. So how did you overcome the money aspect? I mean, you said your main job was to start raising, those funds. So how did you go about raising money aggressively to take on I think you mentioned $20 million worth of acquisitions. Where do you get that kind of money?
Ryan Stenberg 14:46
So when we first moved out to Reno, we actually didn't plan to do any syndications at all. We were planning to wholesale multifamily, commercial multifamily. And we moved out there because there were a few big investors with a lot of money in their pocket looking to move there. portfolios out to Reno, maybe from the Bay Area or whatnot. And so we went out there to wholesale to them or said, No, let's be the solution to their problem. Let's find deals. And then let's wholesale to them. And we went out there and the first couple of multifamily bought for two or found at a good price for too small for them. And so we went and tried to wholesale and we had no network. So we basically failed at wholesaling. But in the meantime, we did all this due diligence for those projects. And we realized, Hey, these are good projects. Maybe what if we just did them ourselves? And so we started reaching out to just at the beginning, friends, and family and seeing how hard would it be if we went and raised the money and syndicated these instead. And so that kind of was the transition into syndication that was, not really meant to be at the beginning, and so on. That's kind of where we started when it comes to raising funds. And so our goal was never to raise funds, our goal was always to find the best deals. And what I found is that those two are kind of interchangeable, you can be really good at raising funds, or you can just be really good at finding deals, and improving on either skill set will make it easier to get the money.
Dalyn Hazell 16:06
Yeah, I like to say if you're going to be in the business of landlording, whether it's homes or large apartments, there's really only two things you need to do every day. And if you're not doing those, you're kind of getting off track. And it's finding deals and finding money. So you called friends and family. Did you get enough from that? , those initial networking outreach to get enough of what you needed? Or did you have to look elsewhere and make other connections?
Ryan Stenberg 16:35
Yeah, I know that the original deals we did, were all people we already knew. It's not people, you'd expect to invest in a real estate syndication going in. So our team, which was at the time, five of us, sat down on a whiteboard and wrote every single person that we could think of who might have $50,000 or more on that board, instead, go through them all, like, can we call text, what's the best way to get in touch with them and see if they're, they're interested. And so early on, that's what it looked like. And that was multi-day, multiple hours, activity. And so nowadays, it's a lot more casual than that. A lot less sitting around a whiteboard brainstorming where we're going to come up with these funds. So it changes over time. But the first one's the hardest. And it only gets easier after that, even if the properties get larger.
Dalyn Hazell 17:19
Sure. So I mean, you're not really trying to convince this person that real estate, they already know, real estates powerful. And then they have the funds available. What's that conversation look like?
Ryan Stenberg 17:31
Yeah, the conversation is usually education, it's usually trying to educate them on the market of Reno, the asset class, kind of what key assumptions are baked in underneath, and what can go wrong. And so on our first, the first time we did a raise, we drew out a decision tree. And again, this is where my, background in school kind of comes into the way I do real estate, we drove the decision tree of everything that could go wrong. And at the time, it was like early in the pandemic. So what happens if we try to bring rents up, and there's a moratorium, people refuse to pay rent for, let's say, a year, you can't, people can't leave for another six months after that, then you raise, you may do a value add and the rehab goes wrong, and it takes six months. And then this happens. If everything were to go wrong in that decision trade, you end up in the worst-case scenario, like do you get your money back? Or what is your return? Is it 5% 10%? In that case, and people are okay with that worst-case scenario, or at least what we can imagine as the worst case, then there are grounds to kind of move forward there. And I think a lot of this conversation is about educating them on what is everything that can go wrong, let's set those expectations. And then we're not going to hope for those and we're not gonna, work towards those. But um, we start there.
Dalyn Hazell 18:41
Yeah, I think that goes a long way for your investors. If you don't just paint this rosy picture that everything's gonna go right. If you do outline from the beginning, what's going to go wrong? I think they're going to trust you more. Absolutely. And then let's flip the coin here. Your other bottleneck was finding deals. So how did you go about finding deals in the commercial and multifamily space? Because any wholesaling Guru is going to tell you, write some letters, make some calls, but that's for houses. How does that change when you are looking for these larger assets?
Ryan Stenberg 19:18
Yeah, so we've actually done both we've messaged, single-family, homeowners all the way up to $20 million, industrial deals, and things like that. So we've kind of seen all ends of the spectrum at a large scale. We took a very breadth approach to it, coming from the software and tech world, I worked at Google, as you said earlier, my partner at Amazon and others at PayPal. And so we said that's our that's one of our big advantages. And so let's use a scale to our advantage. And so we early on wrote software to use basically SMS and text messaging, or use directly to seller marketing to get in touch with sellers. And we've done as I said, all ends of that spectrum. And we've realized the responses are extremely different. So when you're contacting a single-family homeowner, it's a very different conversation. And when you're contacting someone who owns a $5 million retail building, and as you move up towards those bigger, bigger buildings, it becomes more of a business conversation. For them, it becomes more about the numbers, more about kind of, is this a good opportunity for me? And where am I going to put my money after this, that's going to be a better location. And when you're in the kind of single-family home space, a lot of the reason we actually shied away from that is it's a very emotional conversation in comparison. There's a lot more kind of tiptoeing around and making sure everyone is, feeling comfortable. And when we talk to commercial property owners, our first question is, what price would you sell for? And it's exact, like just straight to the point, because that's actually what they respond best to. You don't need to beat around the bush or, build any rapport comfortability, you kind of just go right to it. And that's what we found works for us.
Dalyn Hazell 20:48
That is interesting. , in some ways, it seems simpler, maybe not easier, but just a simpler conversation Here are the numbers. Here's what do you want for it? And that's a lot better than dealing with, a cousin, maybe a squatter in the property, like all the things you deal with, with single-family, wholesaling, which, absolutely, neither is wrong. I mean, you can make a lot of money in either asset class, but it's just much different. Where does one start if they want to get into commercial real estate? Because it just seems so overwhelming, and it seems easier just to stick with single-family houses? Where does one even start if they want to get into commercial real estate?
Ryan Stenberg 21:32
Yeah, it's a good point. I think the reason that people start in single-family homes and traditional, then, maybe move to multifamily one day, and maybe upward from there is that people I think, do what they're familiar with. Some people do what they're comfortable with, everyone has grown up in a home or lives in a home. And they understand the mechanics of a single-family home, what it's like to be a tenant, what it's like to be an owner, as an owner, whether it's your parents or, or someone else in your life, they've been around that enough to understand it. Now you move to the multifamily space, a lot of people out there maybe don't know, multifamily home or apartment owner, but they have one of them at some point in time. And so there's a familiarity there, at least on the tenant side. Now, as you move towards retail, industrial and, office space, you may have never known anybody who's been the tenant or the owner of that building. And so it gets more and more unfamiliar. The reason that like, we like to skew in that, towards that end of the spectrum, is that that uncomfortability, blocks people from moving upward. And so when we can move up and understand those asset classes, then we can kind of play in a smaller demand for a smaller pool of potential buyers. And so it kind of offsets the supply and demand there in our favor. And so what I would say is, when people are looking to get started is, as I said earlier, you kind of want to move up incrementally, where you're not stepping up from, buying a maybe a couple $100,000 single-family home to a $20 million industrial warehouse, because there's going to be blind spots that you're not aware of when the economies of scale and everything else steps up to that degree. But if you can do it in an incremental fashion, there's not that much different from a single-family home to small, small multifamily to a 12 unit, to then an office space that has three different office tenants. And so you kind of do this incrementally in a way, that's not going to introduce a massive amount of unknowns to you all at once. But keep forcing yourself to step bigger, keep forcing yourself to go one step further out of your comfort zone. And eventually, I'll just find yourself buying, whatever the best deal is, regardless of what asset class it is, or regardless of what size it is.
Dalyn Hazell 23:37
Yeah, what comes to my mind is if you started with a home, and then you get a duplex, and then a quad, and then you have to get into apartments, at least you're in residential, like you're not, buying retail spaces. And then once you're comfortable at the larger residential, then maybe you do storage, then maybe you do retail, then industrial. And so that's kind of an example, natural progression there. Any particular books that you recommend that helped you build that foundation starting out in commercial real estate?
Ryan Stenberg 24:03
I actually don't really know of any commercial real estate books. Did someone ask me this the other day? And my answer was, I can't think of one. And that's the beauty of it, is that that's why the barrier to entry is so high is because there are books out there. , don't get me wrong, but I'm just not aware of any of them. And I haven't read any of them. And that's what makes it so difficult for you to step into this space is that the Knowledge Network is between the people who have been in this space for a long time. And so it's getting connected with those people. And so I guess to go back to your previous question, I want to add one thing about how you're incrementally stepping up into a bigger and bigger asset. One thing that we like to do is bring as many expert eyes onto that project as we possibly can. And so when I'm walking into the first 10 units that I've ever done, I'm bringing two sets of contractors, I'm bringing my broker, the listing broker, I'm bringing the inspector, the appraiser, and then we actually would bring retired inspectors as well that we had met throughout the town. So we have a team of maybe like 10 different parties coming through. And at the end, we'd all walkout. And we'd huddle around. And I'd say, Tell me everything you saw that was wrong with that building. And I would write it down in a notepad and collect all the notes of everything that could be wrong and assume what's the worst case if we have to fix all of these things? What does it cost, let's bid them all out? And so I don't have to know what it looks like to have a weak foundation in a building, I just have to bring the right person that knows what that looks like. And if I can cover enough of those blind spots, then I can start to do bigger and bigger things. But I can remove the risk as I do it. And so that's been a huge asset to us is just bringing those expert eyes with you, wherever you go.
Dalyn Hazell 25:35
That's a great tip. And it also helps that you have people in your corner, I mean, your roommate, that's your business partner. So has that really helped you having those business partners around you, rather than just trying to go into every deal by yourself?
Ryan Stenberg 25:54
100%. Yeah, when I was originally buying, the small triplexes, and quadplexes, and stuff out in Cincinnati, and it was moving slower than I was wanting to is, it was myself kind of in one of their partner that didn't know, we were always next to each other. And so real estate wasn't really kind of consuming our mental capacity or brainpower in life. And so when we moved to Reno, Nevada, we actually moved out there to change the environment. And so it was the two of us, and then three others, and we moved into a one-bedroom apartment out in Reno, Nevada, and just surrounded ourselves with only thinking about real estate pretty much with all of our free time. And so whenever we faced problems, it's a lot easier to solve problems. When you put five heads together to solve it. You can squash things that seem insurmountable to other people in 30 minutes in a 30-minute brainstorm where you just dump all the possibilities under the table and say, which route is going to give us the best results? And then you go from there? And so Absolutely, it helps to surround yourself with other people. That whether it's your partners, or brokers, or things like that, that can kind of be that sounding board for you when things start to go south or you don't really know what's happening.
Dalyn Hazell 26:59
Yeah. And if you're married, you only need one extra head because the wife is always right. That's helped me out. For sure. Well, cool, Ryan. So when you got the ball rolling, you started acquiring assets? What were some of those biggest obstacles in paving your way in that industry? Maybe one is your age? And how did you overcome them?
Ryan Stenberg 27:22
Yeah, age is a big one. But honestly, age is mostly in your head, not anyone, not anything else. Actually age. I don't think anyone whenever discriminated against, gives us money because of our age, but my brain thought that that might happen. And that's what stops you from the kind of moving forward and asking for what you're looking for, whether that's raising funds or access to certain people or, to a network or something like that. Your age is mostly in your head and what we realized early on, kind of thing like how do I have this chicken in the egg situation where I want to do this project. But in order to do this project, I need to raise funds, and I can't raise funds until I have a track record. But I can't get the track record until I raise these funds. And you get caught in this endless loop, right. And people get stuck in this all the time. And one way to kind of interrupt that loop is to do that incremental step up, we're always going a little bit bigger enough where the world is comfortable with you kind of taking one little step further. And the world I mean, your investors, your lenders, and everything else. But the other thing is, is realizing like, for me, it was realizing that my life resume is my track record. It's not about real estate exclusively, like the way I do business. Whether it's at Google when I was in college, or other things like for other projects that I've worked on, Donald translates to real estate heavily. So if I've done well, for people in other aspects of life, a lot of that translates into what they anticipate I'll do in real estate. And I might not know the technical aspects of real estate. But if I can prove that I know how to de-risk problems that I don't know, I can uncover the things that I don't know, early enough for me to save myself from them. And other, other ventures, then, why not the same in real estate. And so age then no longer becomes, our track record, for example, no longer becomes the blocker, because you're able to prove it with your life resume and other, other facets of your life.
Dalyn Hazell 29:09
Yeah, there's always something that somebody can bring to the table to build that track record, even if you are young, or you've had a rough or past, for you. It's like highlighting. Google trusted me enough to give me a job. And they're one of the world's biggest companies. So why don't, why couldn't you trust me in my example, I built up a track record of finding good deals and wholesaling. And so my lenders knew that I had the ability to get great deals, so they didn't have a problem lending on my projects. And so you got to find something that you can build that credibility upon, even if it's just your reputation of being a community leader, or a godfather, anything. Well, Ryan, this last portion of our show is called the triple threat. And these three questions I really like to ask, they're pretty general, and they really give us a good view on like mindset. And, and so forth. So the first question is what's been the biggest resource? That has been the biggest game-changer? I know you said you don't read a lot of commercial real estate books. But is there a forum or a mentor? or anything? That's been the biggest game-changer for your business?
Ryan Stenberg 30:16
Yeah, that's a great question. Honestly, in those with a forum or a person, like, it doesn't really come to mind, there's a lot of people to help us along the way, I don't know there was any one of them. But what I can say is the thing that most people don't look towards to help them in their environment. And when you are, let's say, at the office every day nine to five, and then you come home, and you come home to a house of people who, maybe they're like, Hey, let's go out, or let's go, let's go eat dinner or let's go watch Netflix or things like that. It's really hard to get yourself to align your subconscious and your conscious to do what you need to do, and or what you really want to do. So for us, changing our environment was the biggest shift in the trajectory. And saying, let me define first what I want. And let me build the environment around me, that leans into that, and allows that to be easy, every single day. And so we were, went as far as moving to a new city into a one-bedroom apartment, where we're going to surround ourselves with only real estate, each other, who all wanted to want that same real estate goal. But also, we weren't out every night, we were trying to meet brokers trying to get lenders trying to meet other people that were in the real estate world, and it was exclusively real estate for about a year. And that change in environment, just, I would attribute to almost all of the acceleration.
Dalyn Hazell 31:37
Yeah, if you're in a bad environment, maybe you're, you're surrounded by unmotivated friends, or you have people in your life that tell you can't do that. I think a complete 180 is necessary, you've got to figure out a way, maybe it means renting an office to get out of the home so that you're not as distracted, you've got to find a way to get in that environment of focus and diligence and, and accelerate that because later you can have fun when you have the financial freedom. But if you don't have financial freedom, then you shouldn't be having, endless fun right now. Because it's all about putting in the effort now so that you can reap the rewards later. bigger rewards later. Question two, what has been your biggest learning lesson in the last 12 months?
Ryan Stenberg 32:23
What I've noticed is the journey of real estate has also been a journey of consciousness and realizing more, asking why deeper and deeper and deeper about what we're looking to do and why we're looking to do it. And then you talked about, or if we look at, like the environment, for example, if you ask yourself, what do I want in life, and you say, financial independence, financial freedom, and then you're like, Why do I want that, and you go all the way down, you strengthen that wind, you strengthen that goal. And then you realize every time you're, your subconscious kind of steps in and makes you go this way, or do this action or do that action that's in conflict with that goal that you want, you recognize, like it comes into the forefront of your mind. And so what I found over the last year is that asking, like asking that, why, over and over again, and getting extreme clarity on the goal that you want, makes it really easy, like the journey is not in everyone thinks the journey is in the action and taking the action. And I've been realizing more and more and this shows up in the software world as well, is that the journey is in ironing out the goal and getting 100% clarity on what it is you want, and why you want it so badly. And once that's there, the actions just kind of come naturally. You don't fight them every day, you're not waking up saying, Oh man, today I have to go look at 100 deals, wound up saying Oh, yesterday I thought about it. And I deemed that that's the most important thing. Like that's the most important thing in my life, that's going to make me the happiest like, I'm going to go and do that action. And so action, stop becoming a battle of will against yourself and start just becoming kind of the natural state of things. So clarity towards your goals and going through that deep thought process. That's been one of the biggest lessons that I've learned over the last year.
Dalyn Hazell 34:04
Sure. And just as an aside, do you have one goal? Or do you have multiple goals, you're going for a one time.
Ryan Stenberg 34:12
Multiple, and they're always changing, and I never hit almost any of them. There are usually a few I try to keep limited to three. By the time I'm getting close to them, I usually change them and make them bigger. So I never actually hit the goal before I change it and make it bigger. But it's not so much about hitting goals that like that's not really the important part. The important part is you're striving for something bigger and greater than you've done before making yourself uncomfortable that you're growing and you're kind of expanding and whether it's your skillset your network, your knowledge, your happiness, like whatever it is is that that's expanding outwards. And so yeah, answer the there's several. But it's, they're always kind of in flux.
Dalyn Hazell 34:50
Question three, our podcast is all about helping others achieve freedom with real estate investing, whether it's financial lifestyle or otherwise. So what does freedom mean to you?
Ryan Stenberg 35:00
Yeah, for me, freedom is psychological. So a lot of people say financial freedom is a certain dollar amount. And it might be true for one person, it might be not true for another Because freedom is not about how many dollars you have in your bank account. It does you feel like do you feel like money is a constraint in your world or do you feel like, your job is a constraint in your world, or whatever it is, you feel like you have the ability to go and choose and pursue the things that you want in life. And so it's all psychological. And so for certain people, like, the fastest path to financial freedom is not by going and taking action to make more money. It's about thinking, What does financial freedom mean to me? And can I just play some mental jujitsu on myself and change the number that would make me feel free. And if you can, and like the faster path, as opposed to making, doing 30 deals, is to say, actually would only take me three to get to the point where I would feel free. And that psychological like understanding, or I guess, understanding your own psychology or psychology. That is what I'm, that's what kind of freedom sets so for myself, at least financial freedom has kind of decreased in number, the more I thought about it, and made that easier and easier to get to.
Dalyn Hazell 36:10
Don't you like that when you don't have this big task of making a billion dollars, you just need? You just get past those psychological barriers and figure out how much do I really need? And then build your goals off of that? Yeah, absolutely. Well, Brian, it's been a pleasure. And it's really inspiring. , you're my exact age, and you're doing so many incredible things with your mastermind group and your friends. And I think the only way is up for you, sir. So where can listeners get a hold of you if they want to learn more about your company or the opportunities you provide?
Ryan Stenberg 36:45
Yeah, to be honest, I'm actually probably only in real estate for a couple more months. And I'm going to be looking towards, as I said, there's a lot of goals and they're in flux. And looking towards other things. Our real estate website would be West Egg real estate calm if you want to see the projects that we've done, and potentially some of the upcoming ones. If you want to reach out to me, you can reach out to Ryan at West Egg, real estate calm. And then feel free to give out phone number, email, anything else, in the show notes or whatever it is.
Dalyn Hazell 37:12
That's awesome. I'll do that. Do you mind sharing with the audience? I mean, where you're headed after your real estate chapter ends?
Ryan Stenberg 37:20
Yeah, I wish I knew the answer to that. But that's the fun part of the journey. Right is Yeah, going exploring. So I think after this, there's a reset period for myself, chemically, and, from a dopamine and neurotransmitter perspective, and also from a perspective on life, and, where I'm placing my values. So I need to go and explore that I keep coming back to health and education as things that I know I can easily build, build a passion in. So that's, that's where I'll end up most likely. But there's going to be a several-month exploration period, I think after this to figure out where I'm going to land and where I'm going to dedicate the next 1020 years.
Dalyn Hazell 37:54
That's really awesome. Well, thanks for sharing a small piece of your real estate journey with us here today. And is a pleasure having you on. Thanks.
Ryan Stenberg 38:02
Thanks, Dalyn.
Outro 38:0
Thank you for listening to the real estate investing for Freedom podcast. If you enjoyed the show, please subscribe and leave us a review and tune in next week for the next episode.