September 28, 2022
To make a decision, you need to define your terms. ‘Failure’ is the moment everything falls apart, and you face a moment of truth. If faced with such a situation and you decide to walk away, you’re not a failure.
Instead, you’re choosing success by not getting involved in something that would be unproductive, at least for now. This post will discuss three multifamily deals that walked away from us and why this experience is crucial for every multifamily syndicator.
8-unit deal in Tacoma, WA.
We’ve almost closed the deal, and the contract was already signed. However, the seller defaulted after signing it. He just didn’t feel like it.
We were super disappointed but kept trying. I was trying to go for something bigger.
I scouted a 20-unit deal in Burien, WA. It was just 2 minutes away from my house, so I was really eager to close it. Now, when I travel and come back from the airport, I still pass by this property.
That 20-unit was a $3,5MM purchase price or $160K per unit. It was really expensive for Seattle three years ago. We were outbid on that apartment complex. Someone else bid exactly $3,2MM as well, and they outbid us because they had a property management company and $15MM worth of assets in Seattle. They were just a big company.
At that time, I thought that I could not compete with these folks. I needed some banker—someone with an excellent reputation who could stand behind my back and show that we can be taken seriously. If we offered $50K more, we would probably have got that deal, but why offer $50K more if I could use that money to pay for formal education in multifamily.
So the second time I went to Sumrock’s seminar, I brought my business partner Ed with me. He lived in San Francisco at that time. So I told him, “It doesn’t matter what Sumrock is talking about. I will sign up this time anyway”. I was convinced through my experience that it is necessary to attend these seminars.
We won the 75-unit Fountains of Jupiter deal. Suddenly, the seller decided to back out. We were disappointed, but, as a result, we looked for bigger deals and went from a seven-unit to the next deal that was a 172-unit.
Every failure is a lesson that shapes your future. We all fail at some point. However, failure allows you to learn and grow, which in turn makes you a stronger person. So what if it sometimes hurts? It’s only by taking risks that we get to see how far we can go and where we’re truly meant to be. So here are the lessons I’ve learned from these failures.
We fall for the right reasons. We fall forwards. We don’t fall backward. When we fall, we go on to do bigger things.
Initially, we were a bit naive. We always believed we could make it and didn’t know what failure was like. Every failure felt like a challenge – the only way to experience success was to jump over the wall ahead of us.
The truth is, we actually enjoyed sticking to our budgets and making good decisions. In the first year, I was sleeping on an air mattress in my business partner’s living room when I was in Texas. I was super frugal but also very motivated. It continued until 2019. After we won the 172-unit apartment complex, I started sleeping in hotels.
I was worried about every little cost. All we wanted was to get our first deal. This obsession is what made us successful.
When you are young, you have a lot of energy to explore new things and overcome challenges. As you age, your energy levels tend to decrease. Also, the older you get, the more everyday comfort you need. This is why it’s essential to start early. Your demands are lower, your energy levels are higher, and you are more flexible.