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Global Investors Podcast
GI62: Building a $100 Million Self-Storage Portfolio with AJ Osborne
August 26, 2020
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AJ is a real estate investor and self-described ‘Freedom Fighter’ who has built up a $100 million portfolio in real estate.

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Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast. I’m your host Charles Carillo. Today we have AJ Osborne. AJ has a very remarkable story; he built a $100 million real estate portfolio. He then became paralyzed from head to toe and his family lived off his cash flowing assets as he recovered. So thank you so much for being on the show AJ.

AJ:
Thanks for having me on. I appreciate it.

Charles:
So can you tell us a little about your background, both personally, professionally and before you start investing in real estate?

AJ:
Yeah, absolutely. You know, I was in the insurance game, so I was kind of brought up in it. My father was an insurance here. I grew up, he worked for an insurance company and then he started out as a broker and then he taught me the ways. And so I became a broker and started selling insurance. And there was a lot of things that I actually loved about that. I loved the fact that I was in charge of my own financial future as I saw it. Right. If I wanted to make money, I’d sell. The downside is, if you don’t, so you don’t make any money, it was a commission game. Right? So it was all based upon my work now getting started. That’s amazing. Because I had no problem working my brains out and I had no problem failing and looking stupid in front of client and switch. I became very proficient at. And so, you know, it was, it’s a, it’s a hard road, a lot of times for people, the sales game, but I thoroughly enjoyed it because the learning process was unlike any other. I mean, I was getting put in the position where I had to learn how to be prepared. I had to learn how to put myself out there as well as I had to learn to take the consequences for my actions. Right. So if I didn’t make a sell it wasn’t, I just couldn’t go. I’m blaming the whole world and you know, like, and stuff. I said, no, listen, you, you screwed something up. You either didn’t do your homework. You either didn’t understand, you weren’t prepared. You were a smarter whatever it was. And so then I had to do some introspection. I had to figure out what the crap am I doing wrong? And then I had changed. So a lot of my, I think I, you know, I believe my personal work experience before set me up for a lot of success in the future. Just because of that introspection process, I didn’t have a simple W2, right. That’s not how it worked. I didn’t work the nine to and then go home. And so for me, it created an inside look at how money is made and how it’s gathered. And that really helped out, but there, but there was a lot of fundamental flaws with it, obviously. One of the biggest ones that can’t go on forever, right? They’re, you know, cells has a life cycle and for most people, you know, in your thirties and forties are kind of the peak. And then after that, it’s either downhill. And then before that it’s a struggle to get up. So you have like 20 years and foremost people in that, that is really good, but afterwards you don’t have anything. So I look at it a lot like a lawyer, right. Or a doctor or somebody like that where you’re making a lot of money, but it’s only as good as you doing the action. And so I did, I got to build up a book and I got to make good money. And I felt that I was in charge of my financial life. And I felt like I was my boss. I choose man hours. But what I really learned is that I just had a lot of bosses. So I didn’t control that revenue source. I didn’t own it. And every time that it left, I had to go back and replace it. Or we just lost income. We had to low very, very low below our means because all it took was one big client to leave. And, you know, my income got cut by 30%. So for me it created some good habits, but it also, it showed me some flaws in how the business model was ran, principally the ownership of the revenue source and even business at all that control of whether it’s intellectual property, whether it’s the systems or patents on products different things like that. That’s very vital and real estate, you know, it, it acts almost as a monopoly. It really does. So, you know, it’s like you own that source. And if it’s utilized, it has to be, you have to get paid to have it be utilized and nobody can take that away from you. And so if you know, real estate at its safest, you know, you have no debt even on the property and you make it now. That’s not something I do, but that’s, you know, that’s a safe as it gets. And so I needed to find a way to start compounding my wealth. I wanted to do this upfront work, like added cells to get my sales income, right. So I do the upfront work, but then I need to be paid over time, but I didn’t want the source of it to leave. And so when I started looking at how to really diversify in what we were gonna do real estate was kind of a no brainer for us. Although there were some aspects about real estate that I didn’t like at all. And I didn’t like the ability I was so used to being able to change my income, that I wanted something that I felt I could really adjust the revenue and play with the levers that allowed me to control that revenue ie.increase it. Right. and that’s why I got into self storage. Cause I viewed self storage. There was we came out and I had kind of a theory and fundamental principles that most people own self storage as a real estate asset. And it’s not, it’s a business. And so I could walk into that business and I could change the levers and that would increase the income. And the value would also rise with that and focus on operations and revenue management. And we could turn a real estate asset into a thriving business. And so that was kind of where we went and I was like, it was, to me, it was like, I could have my cake and eat it too. Right, right. And so we went down that road. And thank goodness we did because about three we’d been in it for a while, but we went big into it about four or five years. And then out of the blue, I became paralyzed and it was completely out of the blue. I mean, it was, and it wasn’t an accident. It wasn’t, I didn’t fall. I didn’t get hurt, nothing like that. I, one day I was walking and then by night I’d had a pain in my legs. And then by night my wife was dragging me out to the car, putting me in the car to go to the hospital because my legs don’t work. And then within two days from there, I was on life support and paralyzed from head to toe. And so it was not even, I mean, it was, I didn’t even say goodbye to my children. I mean, that’s how fast it happened. I never even got to say goodbye to my kids. And so I was in a coma then when I came out of the coma, you know, paralyzed and sitting here going, you know, w I die and never even say goodbye to my kids. It just happened like that. And too, then I was stuck paralyzed from head to toe, looking at wall, kind of like, you know, how did I get here? And it, you know, it was one of those things that obviously I lost my ability to work fact. My boss came to the hospital months later when I go to speak and move my arms. And they obviously informed me by proposing to be working, which was obvious. I didn’t even know if I was going to leave the hospital anytime soon and had already been months. My employer was extremely nice. And we were very, very grateful. They kept me employed four months while I was her tubes, which obviously they didn’t need to do. And I wasn’t working and they, it was already apparent that I wasn’t, so I’m not bagging at all. All my employer were saying, in fact, I’m very grateful for them, but it is what it is and I knew it was coming. And so we lost that source of income, which that was also my sales job. And so we lost when you have a sales job and, you know, I’d spent years of my life to build up those cells. And it’s not like skill set that you learn and somebody will just hire you at a certain wage and you can come back in. Right. Like, no, I that’s knowing that. And knowing that I’d lost my job there meant I was starting from scratch again. And I didn’t even know how that would look or anything else like that. Obviously at the time, I didn’t really care. Cause I didn’t even know if I was ever going to walk, but you know, it was it, it wasn’t like I lost my job. And when I got, when I could get better, again, I’d simply go on, get a new one and make the same pay that didn’t exist for me. So self storage for me saved my financial life. It, my, my wife, she didn’t have to worry. She didn’t have to believe the kids could get a job. We didn’t have to lose the house. We didn’t have to, you know, and when I got released out of the rehab facility I was taken home and put into a bed and I just, you know, my wife had to take care of me and I was still paralyzed. And so it’s, you know, it gave us a freedom and an ability to not just live our lives, but have a future. And that is, you know, that is a gift that is obviously extremely, I’m extremely grateful for. And hence the reason why I talking about it,

Charles:
So, how has your business looking prior to your life changing event, your emergency that you had? Well, how did it, how was it structured? How was, how did you have it set up? Cause obviously, I mean, very few people, even in real estate have their business set up, like as a straight system where everything runs flawlessly without them, obviously you weren’t planning on this happening. So you, you didn’t have that. You weren’t working toward that at that point. So how was it set up prior to what happened? And and how did it run while you were in this state?

AJ:
Great question. So, one of the things that we did when we started out is I’m a ginormous believer on systematizing, everything we need processes when you procedures. And one of the major reasons is if you don’t have a setup that can be transferred, you can’t get out of your business. And that’s like a death nail. And so I knew I needed in order for my business, need to grow. I needed to get out of its way and I needed to be able to work on the business, not in the business. So I had two partners and when we were starting unfortunately my partners were also family. So my father is also my partner. We started where we started the company together. Then my brother in law is a partner and he’s CFO. But so when this happened, it was, we were Mia, like my employees one day, me and my dad didn’t show up and neither of my brother-in-law for whatever was like weak than my brother-in-law started showing up. And nobody was talking, nobody would even tell him what was going on, because we didn’t know if I was going to die at that point or not. So we didn’t know if they were going to pull the plug. So they really, it was one of those things where it was like nobody was talking. And so me and my dad just banished, we disappeared and they’re like, what’s going on? But what we did is we set up the company. So as we went through, it was got a funny, when we first set it up, I went and hired a friend of mine. So I had a friend that lived next to me and he worked and ran franchises. So he ran like, it was like 15 franchises across our state. And so I hired him right when we were starting and buying up facilities, everything. And I said, Hey, I want you to come in and we want a franchise system. And so I go, we want to say, look, the same field. There needs to be reasons for why we’re doing everything. There needs to be procedures, how they execute and we need to have a full fledged man. So we literally went in and for like a week, we went, took, you know, those sticky notes, you have the little ones, and then they have the ginormous sticky notes over a weekend, me and him took all our knowledge and everything we were doing. And we plastered the entire office and these ginormous sticky notes where we’d say, okay, so four rate increases X. And we had all these reasons to do all these things. So the fewer boys gay men into their, like, what the heck? And then we hired someone who was extremely attention to detail. And what we did is we took all of this and we started breaking it down and we broke it down to everything from, we had our customers’ experience. We call it the Rogers experience. I think I read that somewhere, but that was, we had the policies and procedures down to the point of how the customer views it. So we said, okay, we’re going to reverse this. How’s the customer interact with us. And how does our policies and procedures affect that? So that changed the way our our managers looked that changed the way they interacted with people, our communication to them. We took it from the perspective of a customer, not us. And so we outlined all of this and we made this huge policy and procedure manual, and then we digitized it. So we created training manuals for people to come, right in said, when a customer comes in, here’s how we do. Here’s how you do lock covers. Here’s how you do everything. So in that, from there, we set in three positions in our organization, as we were growing to analyze it. Now this was taking the entire profit of the company. Let me make this very clear. We were, we weren’t making anything. I was still working a full time job as we were buying, because what we set up is we set up someone that focused on let’s call it our managers. Then we had someone that focused purely on policy procedures and training. So quality assurance efficiency, right? They were making sure everything was done correctly. And then we had someone that focused on the hard assets and maintenance and all our people. There’s these three pillars that they would all go up to. Right? And then it would filter up through them and any emergencies and things like that would then come to us at the top. And then we would make those decisions. We had this all set up and everything. I kid you not like seven months before I went into the hospital. And so when I went in the hospital, they all knew what they were supposed to do, and they knew how to execute. Now, the one thing that stopped is we stopped obviously growing. I don’t think we didn’t, we weren’t purchasing a lot during that time, but it was our business ran efficiently and everyone knew their job. They knew the role role. They, if there was any questions, they went back to everything that we had taught and told and put down in writing. And then too, we had a communication strategy that was an online communication strategy. So it would document all their communications and we had a filter, a process to solve them. So when we disappeared, problems were still being solved. Decisions were still being made. And we had a trusted partner who was my brother in law, who would step in if any major things needed decisions. And I’ve done this with other partners and friends in their businesses where they didn’t have someone to step in and make major decisions. And they actually coordinated with me that I would understand their business model and how everything was running. And then if something happened to them, I would step in. And so it’s really important to look at your business as a its own entity, right. Without you. And if it can’t work without you, it’s hard to even call it a business, right? It’s like, well, no, then this is just you. And you’re making the money.

Charles:
Yeah. It’s, it’s really important to document everything in that system document, the operating procedures document, what happens when you’re going through that flow chart. And if this happens, it goes here. If this goes here, and then at the end, like you were saying, it goes to the top, the issues, right. Something that needs to, so you can set up with your property manager, even if you own some multifamily or smaller properties, and you say, Hey, everything under a thousand dollars, you take care of your best decision, right. Or anything over a thousand dollars, give me a call, whatever it is that you set up in place, but you have some sort of procedure and you can document. So at some point with the goals of just handing that off to someone, you guys set that all up beforehand, which is great because most people wait down the road and then they’re super busy. And then they’re trying to dot, well, what do I do? I don’t even know what I do when I do this. And then.

AJ:
We forget what I did at the first. I don’t remember now, but those smaller things that were so important to the first, I have nothing to do with those things in my business anymore. And I don’t want to, if I had to do those and people are like, I don’t want to get my hands off my business. I don’t want to lose control. And I’m like, it’s not about losing control. It’s not about getting your hands on, off your business. It’s about you focusing on what needs to be focused on. And I focus this zone, high impact decisions. And so for me, I needed to make high impact decisions on my company to protect my employees, my revenue. And I don’t care if you’re doing the property management. If you’re not, if you’re investing in duplexes, this doesn’t matter. This is in a lot of people. I go, I’m not big like that. So it doesn’t matter. Okay. Well, when you’re big, when you get big, if you didn’t focus on it, when you were small, now it’s too late. It’s not too late. It’s never too late. But what I mean is now you’ve got this huge mess on your hand, you are probably missing so much. You’re making problems, mistakes, you’re missing money. You’re leaving money on the table and you don’t know how to get out of it. At that point, you’re just like, I don’t even know what to do because I don’t have time. I can’t focus on everything. And too, everybody gets into this point where they’re like, I don’t even have time to train somebody. And I’m like, you shouldn’t be, you should have all had that documented. This should be done. Our training process is online with tests. So they go online and they have to take courses before they can get, and then we have an onsite trainer that goes down from there. So documenting everything. I just cannot stress when you’re starting out that, okay, let me use an example here. If you’re starting out and you’re saying, I’m going to get into real estate investing and you say, I’m going to go and I’m going to house hack. Awesome. When you house hack, you need to look at, first of all, you need to be documenting. How did you find the deal? So when you get the deal and everything, how’d you find it. Who did you work with? What was needed? What did the bank need from you? What did you need? How did you underwrite that deal? What made that deal? A good deal? What made that deal? A bad deal? And this should all be written down because after that, then the next time you go to do it, you now have a playbook. How to repeat that simple thing. Right? But you can adjust it. So then you can look for other deals. You can line it up with what you did last time, which I don’t care who you are. You’re going to forget this stuff. Right. And too, when it’s small, it’s really important because we don’t think it’s important, right? You don’t think that stuff’s important. But if you’re going to repeat an action, you have to not only document it, but you have to understand what’s working and what’s not, and be able to adjust it. And so you do that, then you know how to get another one. Then you know how to get another one. Then when you need to hire somebody, because you, now you have five duplexes and you’re going to buy an apartment building. You don’t want to run those. Somebody comes in to just manage your duplexes. You say, here’s what we’re doing. Here’s how we’re doing it. Right. Here’s the contracts. Here’s what we do. So if you get another tenant in, here’s the contract that I want them under, here’s how it needs to work. Here’s, who’s handing landscaping, who’s handed painting. Here’s our contractors, which you have, you know, you have the names, the dates, everything, that’s all set up. And so it allows you to grow.

Charles:
Yeah, no, it’s perfect. It’s perfect. Then it’s something that you can actually duplicate and you can repeat, and you can scale when you have that. It’s also something where even if you’re smaller, document everything, if you ever bringing someone that’s an executive assistant to help you with any part of your business, what are they doing? You know what I mean? Well, I people say, Oh, I don’t have enough. I don’t have enough room or enough time to do anything. Or I don’t have enough business for them to take care of. Well, if you document everything from what you’re doing every day, and you can hand it off to them. And obviously that was the first thing. When I brought in third party management years and years ago, it was all, I could do everything myself and I spent so much time collecting rent. And I was like, one day I was like, this is like, I spent like a day a month collecting rent, right. For these properties. It’s, it’s a complete waste of time where it could be. And I outsource it all, get it all set up. But it was like, you, you didn’t get a small stuff like that. You don’t realize that you’re like you’re spending so much time on these things that aren’t high level, like you were saying, high level decisions, high level actions that are going to be actually for the lifetime. You know what I mean, lifetime value for what you’re trying to do.

AJ:
Well, and this is it. This point is just awesome because you know, I, I need to make this very clear. First of all, I am the most unorganized person, not attention to details. Okay. So anyone that knows me knows that I, the, the small things get by me and that’s dangerous, right? So for me, I’ve had to put things in place to make sure that I do things right. I hate doing that stuff. I hate it. It’s, it’s annoying to me. It takes time, everything else. So what I, what I had to do is I had to audit my day. So when I go through, I need to seriously break down and introspect and say, what am I spending time on? And then what are the high impact things during my day and what are not. And then for me, I was spending a lot of time doing things that not only I wasn’t good at, I shouldn’t have been doing. And those things were starting to show weakness. And so for me, then I said, okay, we need to replace this, or we need to do and get somebody in to do it. Or we need to automate this one of those three, right? I need to replace, I need to find somebody else or I need to automate. So which one of these three are the best way to do it. And then what’s the cost to reward for that. And then when we looked at it, it allowed because we were documenting things that allowed us to do that. These can be very small things, but what happens is all these small things during your day, like you’ve talked about correcting, rent, different things like that. They add up, then all of a sudden you’re doing nonessential things for half your time. And you’re going, if I could double your time to make better high impact decisions and grow your business, what could you do with that? So auditing your day and figuring out which is something I have to do all the time. I literally have to audit my day quarterly because all of our day fills up with crap does now, like, even just speaking to this, I’m not even kidding. I’m like, I need to go back. I need to audit my day today. Because I know that I get buried down and I need to get that stuff off. Get better people, set systems in place automate so that I can continue continue growth. So this isn’t one thing you set it up and then it’s just done. We do this in our business. We restructure lots of things in our business about every two, three years. Cause we grow and then you need to, we have other problems. We have other things that need to be taken care of. I’m now bogged down. I need to work on the business, not in it. And we have to add in people we have to grow. So this is a continual process.

Charles:
So whatever have you change in your business since since your emergency and you’re in regards to your business and your team, have you done anything, have you taken to another level? Have you changed?

AJ:
Absolutely. Yeah. We one of the things that I came and I was like, alright. I have, you know, a second chance here and I’m not wasting it. So this stuff that we’re talking about right now became extremely important to me because money became less important. Time became very important to me. So for me to get rid of some of my income, cause I need to hire somebody that can do it better or, and free me up to grow my business. The opportunity cost is what I really started to focus on and care about. So when I looked at it, I said, there are things that I could be doing and it could make me more money, right? So let’s say I could be doing this. And if I had to replace that, it take $30,000 out of my income, right. But if I went out and I hired somebody and did that, I could potentially get another facility that could make us a hundred thousand more dollars. So the opportunity cost is what I focus on and understanding that if I’m working, it needs to be on progress. And so I really focus on that. Where, how are we going to progress? Where are we going to do it? And then I fill in and then to, I focus on doing things that are not only just high impact, but are things that I want to do. So I’m not I’m always deal hungry cause I’m a real estate investor. We’re always deal hungry, but I don’t do things that are even close. So I I’m, I’m very rigid on my criteria on the people that I work with and quality has become extremely important to me. So quality in our projects are more important quality in everything’s more important because I understand if it’s not, it’s going to take up time and it too will slower progress down. So a lot of people think that they’re progressing, but they’re confusing. Action with progress. Those two things are not the same. And so I’ve really, really tried to focus on what’s taking us to the next level and that’s more important than money. That’s more important than anything else. And that’s the best use of my time. So I got very short of patients when I came out and I think that was due to a lot of things, including things like call ICU delirium and different things like that, that happens in the ICU. And it actually had helped me a lot because I’m like, I shouldn’t be doing this. It was like, you kidding me? I got voted things to do. It was just like, I just lost patience with things that I, I felt were non-essential and weren’t good. And that, that helped everybody out because they’re like, yeah, no kidding engineer. You obviously shouldn’t be doing this, let us do this. Right. And I had no problem, like do it. So that focus and the things that we’re talking about that was the big, big change of much more longterm focused, not short term. We buy, I buy diversify by business. We understand our own weaknesses. We understand that we need to do home runs. We need to it was, it, there was a lot of clarity, which is strange, but I didn’t go back and get my job. I didn’t do that. I said, no. Instead I’m going to control my rides revenue, which I started another company. I bought two more and we expanded our real estate business and they’ve been buying more projects. We also set up a Cedar Creek wealth, which is a syndication. So we decided we’re going to pair our money with other people’s money, which we’d never done. We built all of this off our own. So we were just doing a value, add strategy, redeploying capital and growing, which we said, our capital can go farther aligning arm with our aligning us with other people. So we started that. And then I wrote and launched my book two weeks ago, which is a best seller. As of this week. Nice. I didn’t know. There was that many nerds that cared about self storage. I was very surprised about that. But you know, and I launched that because I made a promise to myself in the hospital. I was literally sitting there. So when I went into the hospital, it was sunny, right. I was out planting trees and everything else. When I got into the rehab facility you know, I’m looking at the windows, the snow’s coming down and I was like, you know, this is really important. And so I made decisions to focus on being very transparent, open. And I said, if I, if I get out of this and can work again or anything, I’m going to share this information and give it back. So I started up my podcasts, self storage income, and I focused a lot more on giving to others and doing it in a way that is not like, you know, Oh, you get in and you know, there’s a hundred thousand dollar, you know, upsells, you know, it’s just like, I literally am like, here’s everything we do. And the book is literally a playbook. Like here’s everything we do. Here’s how we look at it. Here’s our facilities, here’s our case study. So becoming more transparent and open and focus on giving to others and that’s benefited substantially to the way we do business.

Charles:
Yeah. And that’s definitely something that’s missing in the whole, especially with so many real estate gurus or coaches out there and you kind of want to learn what this person’s strategy is. And it’s like going down a rabbit hole where it’s like, Hey, get on this email webinar, upsell that. And you’re like, I just sell me the book. Some of the course, you know what I mean? I don’t have time to go through the whole thing, but it’s kind of, so I think people really appreciate following people that are that transparent and open with what they’re doing, what their goals are and if they align with that person, maybe they can work together. So,

AJ:
And that’s what it is because for me, like people say, I’m like, I’m, I’m not a guru. I don’t make money off being a guru. I don’t do, you know, things like that. For me, I I took sponsors on my podcast to try to help cover the cost. I was spending $4,000 a month producing content. And so my wife was a little frustrated that, but for me, I’m like, I make money off of buying storage facilities. That’s where I make money. And when I came out of hospital, I didn’t want to lose focus. Right. I wanted to keep very focused. So when I started this up, I even started an inner circle. What’d you had people part of in the inner circle, we already got a $6 million deal that me and the other person are closing together. And that was in the first two months of starting my inner circle. And so for me, that’s the payoff it’s he gets to be a part of this deal. Now he gets to learn from us and we get a deal. And so that’s really the focus, right? The focus is on acquiring assets and building more and people see that they understand that and that, and it comes back to me. So the more open I can be on the strategy is it’s literally like telling people, this is what I like. This is what I do. Hey, if you find something, I mean, no, I’m happy to team up, Do deals, everything like that. And so it’s funny how a lot of those things change and how my view changed when you get out of the hospital from where it was more like, no, we don’t want other people to know about this. We got this great strategy. And for some reason, feeling like other people may know that may hurt us or something like that. And that all went away. It was like, I don’t even care about that stuff anymore. I don’t got time to, I don’t, you know, it was like, here’s what we do. Let’s do more deals and let’s progress.

Charles:
Yeah. I love a, you think out of the norm and I kind of want to pick your brain a little bit on something that we spoke about previously was on your thoughts on being wealthy versus rich. And I mean, one thing I want to bring back with your senior time and money and like this, there was a book called 80 20 marketing, and he has a graph in there and it says $10 an hour, a hundred dollars an hour and a thousand dollars an hour activities, and is a great thing for anybody that’s listening that wants to pick that up because you can make the same thing for yourself and you can figure out where you can, what you can offload that off your plate that is just can be done better in and less expensive by someone else. And for you up for those thousand dollars plus an hour activities. But I’m so wealthy being, versus being rich. How do you, how do you explain that

AJ:
This, this is a concept that I really gained a few years back where I was that I was rich because I made a lot of money for myself job. Right. I could only live on a fraction of it cause we were always worried that maybe, you know, we wouldn’t get making, but but I was, and I paid a lot of taxes and I worked my fricking brains out. And when I started looking at the system and I went and started focusing a lot on like macroeconomics and how the tax system works and understanding a lot more about the machine and the game that we’re all playing. And what I found was that, although I was rich, I was not wealthy. And the differentiator between the two is control and time. So I didn’t have control of my revenue and I didn’t have the freedom. If I wanted to go take two months off or five, six months, I couldn’t do that. That didn’t exist. My business would go away and I would go from rich to broke in a heartbeat. And so for me even like I mentioned, mentioned before, you know, when I came out of the hospital effectively my career was over. Done. I could do it again, But I’d start from scratch. There was no going back to my income. And so I, you know, you’re talking about me at a point making very good money too. All of a sudden, I don’t even know what job I’m going to do. That’s rich wealthy is that I have cash flowing assets that when I’m in the hospital and I come out, they’re worth more, making more money and I didn’t even do anything. So it’s the, the principle concept between a with wealth is that there’s a complete separation from your time and money. And when you get there, now it’s a lot easier to audit and say, because if you look at, so for example, I spend time trying to teach others and help others through the inner circle, podcasts, books, everything else like that, that time spent has us attached to three deals under contract that total right around 20 million. And so those three deals at 20 million compared to me doing activities that are very low impact, right. And making, you know, whatever it is. You talked about the money, you know, per time. Like that’s crazy because when you take those three, four deals and take it over 50 years, let me give you an example on my Kansas city deal, the Kansas city deal that I’m doing right now, we’re closing in the next month. And this deal is a $6 million deal. It has massive upside potential. So we’re going to buy it. We’re going to turn it around. And we’re going to refinance in three years and we have something called money on the table. So I looked for the spread of what it’s doing today and what the marketplace is doing. And that gives me the money on the table that can be taken off. That is around 30% increase in income. We can refinance non-recourse in year three, take all our money out, still be making cashflow so that we would take out right around $2 million. So for me, that one deal equals 2 million plus cash flow. And if I’m not able to do those deals, that’s an opportunity cost. And that deal will pay me forever. Right. That’s wealth. So my time is not connected to that at all. Right. I will go, we’ll do it. And yes, work needs to be done and I will spend time on it, but after it’s completed and after it’s purchased, we have the systems in place, everything to run it, everything, to turn it around and I’m off just finding other deals. If I don’t want to grow though, I don’t have to that’s up to me. That’s wealth being riches. I have to run. And if I don’t, I die.

Charles:
Yeah, no, it was years back. I was talking to a real estate investor and I was going to meet him. We’re going to talk about some different properties. He want the sound. He goes, Oh, and it was like June or something. He’s like, Oh, you know, I’m taking off the rest of the summer. Let’s meet up in like September. And I’ve never had anybody really say that to me. So it was some thing where you’re like, wow, this is exactly what I want to be doing. I don’t know how I’m going to do this, but whatever this guy has got going on with the system in place where this guy can take off a whole summer and then come back and doesn’t have to worry about anything. I mean, what a great, what a great strategy to, you know, building real true wealth that you can actually pass on being rich. You can’t really pass on to your heirs and stuff like that. It’s just not going to be theirs. There’s nothing.

AJ:
Yeah. Multigenerational and Hey, it’s, it’s affected by really wealth is you’re betting on the economy. You’re betting on the United States. As long as that keeps going. You’re good. Right? Rich is you’re betting on yourself. And that is a horrible bet. Now let me explain what I mean by horrible, but it’s obviously the best bet at the first, but it’s a horrible bet in the fact that you are going to die a hundred percent. There is no more sure bet than that. At one point, your bet goes to zero. And I don’t know when that wa that when that is, for me, it was a few years back. I stopped being able to work. My back, went to zero. So if you’re betting on yourself, you are betting on a hundred percent guaranteed zero. Now you’re trying to get whatever you can in the short term. Wealth is not like that. Well, I’m betting on generation. I don’t know. Maybe my grandkids will be in this business and they’ll own the assets. I don’t know. They could be right. We can transfer it. In fact, we can transfer it tax free. Like once, once you transfer it over, right, the depreciation gets wiped to zero and they start all over again. So this is owning and this is not participating in the economy. It’s owning the economy. And that is very different.

Charles:
Yeah, no, it’s definitely true. You, if you focus any reviewed any like old money wealthy families, and you can just see that they’ve had it for hundreds of years, hundreds of years, and how they’ve made money, how they transfer it. And in the assets they’re investing in and it’s always commercial real estate is part of that investment scheme at some point. Of course, with other ways of probably how they made it, that they’re focusing on. But the main thing, there’s always commercial real estate involved in that. And it’s always, it’s always gonna be something that’s, it’s not going to be going away. So

AJ:
Just people in the world made the vast majority of their money off off investments. So bill Gates, it’s something like 23% of his entire wealth came from Microsoft. Everything else came from his investments that kind of blows your mind when you think. Yeah, because Microsoft is so and so much has happened, but the vast majority of Bill Gates wealth came from investments.

Charles:
Yeah. It shows how powerful it is. But so you’re obviously a seasoned real estate investor. What mistakes do you normally see real estate investors make new ones ones that have done a couple of deals. What do you normally find?

AJ:
There’s two things, first of all, thinking way too small. It, it just, honestly, it’s like, you need to double whatever you’re thinking. Because you, we always underestimate the amount of effort and time that it takes in. So we think that lots of people think that investing means, Oh, you just buy something and then you’re rich. That’s not how it works. Investing doesn’t mean you just buy an asset and you become rich. That’s not how it works at all. Investing means you build a process that can be repeated, keep it simple, but you need to be able to repeat the process. So first thing think bigger and second focus on a repeatable process. So this is how compounding works. I know that I can invest in something it’ll produce a certain return. I can take that return and I can reinvest it. Now that we know that now you can focus on how to increase, return, and increase the speed in which you buy more. Then you can focus on how long it’ll take you to your goal, and you can keep changing. And the changing on how you get the return and how fast you can reinvest it. So you can compound that out quicker. But most people think that it’s buying and you’re done like, Oh, if I buy, you know, and that’s why you hear people say things like, well, if I had a billion dollars, I could buy a skyscraper too. You’re like, well, that’s, they didn’t just get a billion dollars. That’s not how it works. Right? It’s like that doesn’t even make any sense. You know, they have a process that they could repeat and scale to get to that point. That’s where the value is. The value is in the process. And so you need to think a lot bigger. You need to focus on processes, procedures, and how you can repeat an action. If you are super good at buying renovating single family homes and then renting them out and getting a 20 plus percent return. And then you can systematize that and start doing deals and focus on how can I do five deals a month, right? Or if you’re really good at finding people to invest with, and you can say, I know how to look at operators. I can see what they do. I know how to vet them. I know how to do that. So I can place capital with them, whatever it is, whatever it is you need to be able to, once again, you need to be able to repeat that is so fundamental and important. And I think lots of investors, they think short term, they’re thinking small things like they’re way more worried about how they the money that they save on an installation of a HVAC on a home than they are at all about creating deal flow, making the right connections and repeating the process. And they’re so focused on not on low impact decisions. They’re never making or looking at high impact decisions. And they, they stall out. They don’t grow and they don’t understand why, although they’re doing great things and they’re investing why they’re never at a point where they wanted to be. And they said, this took a ton of money and a ton of time. And I’m 10 years down the road and I’m still not where I wanted to be. And that’s because you focused in the process, you focused on the wrong thing.

Charles:
Yeah. It’s also another thing too, is if you spend time with wealthy people before, see a wealthy people, spend a lot of time and we’ll pay for it, generously on convenience. So whatever makes their life easier, they’ll pay for they’ll make it. So that the process, like you said, worrying about the system, the network, the process, everything has to run. Once it runs, then now you have something and now you can duplicate it to unlimited number of times.

AJ:
And that’s what other people don’t have. So us setting up our process was not that it was a nightmare, but it was hard. I had to learn all this stuff. I had to set it up and it costs money that took away money for me. But once we have it, now you have what people and rich people don’t have. They have no process to repeat. They have no process to underwrite. They have no price to value. They have no process to manage. If you can solve that problem for people. You now have a machine that can just skyrocket. And this is a big thing that I, I think that new investors forget like you, they focus so much on image. They focus so much on things that are not essential and they are not putting in the work to make themselves valuable. And they’re surprised when other people don’t see value in them. And that is something, you know, I can’t stress enough. I didn’t, I wasn’t talking about self storage until after we’d accumulated a hundred million in assets. So I wasn’t on podcast. I wasn’t doing that kind of stuff because I didn’t even felt that I could, I didn’t feel that I had enough value and everything talk about it. So you need to be so obsessed with being the best so that other people see you as the best that they, it naturally comes to you. And I, I love this analogy. I get it real quick. Do you mind if I give a courthouse for sure. All right. So there’s an analogy that I love and it’s probably cause I’m from Idaho, but it’s about the bear and the fishermen. So, alright, so you like, I’m a fly fisherman, right? And you got the fishermen who standing on the side of the bank, who’s waiting for fish to come by and he’s hoping that they’re going to bite his flight or hoping that they’re going to catch it. Right. But then you have a grizzly bear that just walks into the middle of the river, plops down in the fish, jump into his fricking mouth. And so that’s why it grizzly bears a thousand pounds. Right? And so when you look at this, my analogy with it is, is be the grizzly bear go out. So you need to get in front of opportunity. You need to get in front of people. You need to get in front of the pathway. Don’t be sitting there spending all your trying, trying to catch an opportunity created and get yourself in the middle of it. And we do that through creating value. So the more value you bring to others and the more you’re an expert, the more you’re getting in the middle of the river and people just start coming to you and opportunities start coming to you. And then you hear people say, well, some people get all the breaks and well, geez, this guy’s got unlimited opportunity. I don’t have any well that’s because they position themselves in a place to do it. And so that needs to be your focus, improving yourself. So the fish come to you.

Charles:
Yeah. It’s also that the value that you create, that’s what you’re compensated for. So the more value that you can provide, whether to people, to the deal, to your partners, that’s what you’re going to be compensated for. So you have to go in with that mindset, how much value can I add to these people I’m working with? And the more I add there, the more I’m going to be compensated, whether on this deal of future deals, whatever it might be.

AJ:
And that’s the hard part. People don’t like to hear that people don’t like to hear change yourself, work on yourself, make yourself better. Because they expect that they should just know the right person or they should, you know, all that concern. That’s not how it works. You need to make sure, like I said, try to be the best focus on it. Wake up in the morning, say, what do I need to do to be the best multifamily investor? What do I need to do to be the best flipper? What do I need to do to be the best single home investor? And when by doing action, other people will take notice and opportunities will arise as your skillset rises. So don’t focus on trying necessarily to create the opportunities as much as you try to create your own skillset. Everything else will come

Charles:
Awesome. Yeah, for sure. How can our listeners learn more about you and your business AJ?

AJ:
Yeah. Go to self storage income. That’s we got my book there. I’m an investor’s guide to creating wealth growing wealth through self storage. And you can email me from that site. And you can go to Instagram, AJOsborne, follow me there. I post things. We just did. Solar redo solar roof project. I’m I’m posting, I’m showing things that we’re doing. And you can literally just DM me from there. So Instagram or my website, self storage income, either one. It’s great. And you know, to the my books on Amazon AGL one on Amazon you’ll find it there. So any of those ways, easy enough, I mean, seem fine.

Charles:
Awesome. Awesome. I’ll put all the links into the notes and thank you so much for being on the show today.

AJ:
Thanks for having me. I appreciate it.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of harborside partners incorporated exclusively.

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About AJ Osborne

AJ is a real estate investor and self-described ‘Freedom Fighter’ who has built up a $100 million portfolio in real estate. It wasn’t until AJ became paralyzed from head to toe and placed on life support that he realized how important cash flowing assets were for him and his family. AJ speaks about how buying cash flow producing assets literally saved his life.

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