Today on Investing for Freedom, Mike Ayala is joined by his good friend and business partner Hans Box to discuss some of the tactical aspects of investing.
Hans Box is a CPA and Senior Director at Old Capital Lending as well as the Co-Founder and Partner at Box Wilson Equity. He has done deals over a number of properties such as multi-family, self-storage, and mobile home parks while raising over 30M in equity. During this episode, Hans Box discusses some of his key advice on being successful and the many deals and syndications that he has worked throughout his career. Mike and Hans Box discuss chasing your dreams and striving for greatness. They also share the benefits of investing in passive income and how you can learn to spot a deal!
“Don’t get frustrated when it feels like you aren’t progressing fast enough. Be patient, if you are taking steps that leads towards your goals, things will start snowballing.”
HIGHLIGHTS:[0:22] Introducing the Guest
[1:21] Who Has Had the Greatest Impact on Your Life?
[2:22] Greatest Impact and What Did You Learn from It?
[3:05] Greatest Setback and What Did You Learn from It?
[12:14] Advice You Find You Share the Most
[14:22] Some of Hans’ Accomplishments
[20:48] We All Have to Make Money Somehow
[21:21] The Pivotal Moment in Hans’ Career
[26:08] Building That Safety Net
[30:09] Hans’ Passive Investor Checklist
[32:30] Investing in Your Education
[42:28] Your Spouse is Your Partner
[43:31] Hans’ Advice for the Future
[47:31] Closing Thoughts
[48:18] Connect with Hans
FIND | HANS BOX
Email | [firstname.lastname@example.org] Box Wilson Equity | [http://boxwilson.com/] Old Capital Lending | [https://oldcapitallending.com/] LinkedIn | [https://www.linkedin.com/in/hansbox/] Facebook | [https://www.facebook.com/hans.box]
Notes from Hans:
As a commercial loan broker, I can assist borrowers with most financing needs over $1MM, in TX and nationally: email@example.com or 214-641-6309
Send us an email to get Hans Box’s Passive Investor Checklist. In the subject line put ‘Passive Investor Checklist’ to get your copy!
Contact us! | [firstname.lastname@example.org]
Mike Ayala: Thank you for joining me on the investing for freedom podcast. Today I’ve got a good friend and actually a business partner Hans Box on the show, and I’m really excited to bring this show to you because for those of you that are interested in getting into investing or getting into the details behind you know, how to analyze a deal or any of that, Hans is probably, he’s probably up there in the top 10 of people that I know when it comes to analyzing deals and excuse the language, but just no bullshit. That’s really why, actually Hans and I talked for a few years before we even started looking at deals together and he’s worked with a lot of different operators. His background is just extremely interesting, and he’s involved in a lot of different types of deals. And so I’m just really excited to get into the tactical part of investing today and probably bring you guys some value. Hans, thanks for being on the show.
Hans Box: Yeah, thanks for having me on Mike. I’m honored to be on your podcast.
Mike Ayala: Yeah, it’s been a long time coming. We’ve talked about it forever and I think it’s going to be good. So we’ll dive right into the question. So Hans who’s had the greatest impact on your life?
Hans Box: Well, that’s a bit of a tough question for me to answer, I would start with my parents and I can’t pick one or the other, I think then together in the way they raised me, my parents were frugal. My dad was very, very stringent about being honest and having integrity. And I think those, and my mom was just very kind person. She thinks of others. So I think the combination of that is kind of what it probably had the most influence on the way I think now, and the way I try to live my life. But, beyond that, I really think it’s just my own personal decisions that I’ve made over the course of my career to take, I guess, calculated risks where it was appropriate, but not taking too much of a risk and basically driving forward towards my goal. So it’s just kind of in my nature to want to continue moving forward whenever that is.
Mike Ayala: I love it. If you could narrow it down to one thing that you think has had the greatest impact on your success, what would that be?
Hans Box: Persistence and continually driving towards my goals. I have a pretty good attention to detail, which has helped me in analyzing deals and investing and sponsoring and syndicating deals. And I really love learning. So I didn’t completely answer your question the way you asked it, cause it was more than one thing, but I would, it’s really about learning, attention to detail and never giving up, persistence, just keep driving forward. And you’re going to hit roadblocks along the way, but just know that, if you’re heading in the right direction, you’ll eventually get there.
Mike Ayala: I love it. What was your greatest setback and what did you learn from it?
Hans Box: Well, this is a long story. So it’s basically what probably kicked off or did kick off my investing career in earnest. So I was a CPA with PricewaterhouseCoopers for years and practiced accounting and then business strategy, management consulting in the like for almost 9 or 10 years. And then in approximately 2009, I quit my job making a good salary for my age at the time and went into multifamily full time by partnering up with an individual that owned 800 units via syndication but needed help with their accounting. So the deal was I was going to fix their accounting and he was going to quote unquote, mentor me in multifamily. Well, so I did that, I quit my job. I mean, literally took a massive pay cut. At the same time my wife decided to start law school and go into debt. So it was all hitting at once, but it was one of those, it’s one of those calculated risks that I was talking about where I thought at the time, I was like, if I don’t do this now, I’m going to get golden handcuffs at this firm. It’s a great firm. In fact, my wife’s works for them. But I didn’t want to be trapped. And if I stayed there much longer, I might’ve gotten trapped. So I made the jump, cause I didn’t have a lot of commitments and we could live on the cheap. And I partnered with this guy and invested basically my entire net worth at the time in two of his deals. And one of the deals in particular, wasn’t going very well at all. I would say that the valuation of the deal went down after we bought it. We actually had more money in it, and it was probably worth it at some point in that and long story short because of his, number one, I was pretty green, so it was hard for me to pick out good partners and pick out good sponsors to invest, because I’d never done it before. I just, this was kind of out of the blue. I met him in a mentor group. Well long story short, I was really worried about losing my 100K that was in the deal, and that was a vast majority of my network at the time. And, I cashed out my IRA to get that 100K in the deal because I do want full control over the 100K. So another passive investor
and I in the deal started talking and he was one of the more vocal past investors. And we basically concluded that we were going to need to do something to save our money, because we didn’t think he was going to, he was not taking the suggestions from partners. And so what happened is the partnership ended up voting myself and this other passive investor to take over the deal and kick the sponsor out of control. He still had equity, he still got to keep this calm unfortunately, but he didn’t have control. Long story short we turned the deal around, hired the right management company, sold it in about a year and a half from after that, at the time it was a record price per unit in the submarket. Now it would be the cheapest in a submarket, but at the time it was a decent return considering where we started. And, that’s kind of what kicked it off. So, the long answer to your question, but that early partnership obviously didn’t work out. My feet were held to the fire. I had never run a deal before. And suddenly I was running a 208-unit apartment complex with another guy and I’d never run a deal before in my life. And it kind of forced me to learn and forced me to think on my feet and because of that, that passive investor that was my partner in that deal now is my business partner and, it drove the critical mass of investors that were in that deal what started our little list of investors, that has grown exponentially since then. And, the biggest thing I think it did than anything else was, it did kick off my investing career and I was planning to do this anyway, but it just did it in a different way. I think it molded my investment philosophy completely. Almost losing my only money in a deal and seeing all the mistakes that can be made on a deal made me conservative. And it made me look at deals in ways to mitigate risk instead of just the upside. And that kind of just, that’s the way I think now, and I can’t really get away from it. So I think that was what drove that.
Mike Ayala: That’s so good. And this is why I love these questions. Cause it just, I mean, I have 37 follow-up questions just from talking through that. But before we go onto question number four, and then I’ll circle back to some of this and we’ll get into a great conversation, but I love how, you were heading that way anyway. And we discussed this before the show a little bit, I’ve always thought of this analogy of power steering, which most people that are under our age probably have never driven a car without power steering, but in order, when you have a car that doesn’t have power steering, you can’t really steer until you get moving. And so a lot of times I heard somebody say a long time ago that, do strategies determine outcomes or do outcomes determine strategies or actions. And I think a lot of times from a business perspective, especially the more analytical that we are, a lot of times we want to develop the strategy and have like this, even in business teaching today, like a lot of people will tell us that you need to have your business plan. You need
to have your exit strategy, all this stuff. And I think that’s why so many people don’t get moving is because just like without, when we have power steering, you can be going two miles an hour and drive wherever you want to. But the reality is sometimes you have to just start taking steps. And I love how, sometimes life does that to us, because you said you were planning on heading that way anyway, but this just accelerated it. And I think if anybody gets real with themselves, I mean, I didn’t want to be a business owner, but what accelerated me into owning my own business was being out of town, missing my wife’s pregnancy with my third
child. It was totally not what we really wanted out of life. And, so I love how you took a bad situation and it actually, it’s amazing because you met your partner, you guys had a deal come about, and I love that, you had your net worth wrapped up into it. And I’ve often said this too. I mean, we syndicate now to and raise capital, which we can get into that a little bit more, but I’ve often said, you know, I owned a bunch of real estate. I owned five mobile home parks. I owned a 45-unit portfolio of single families. I owned commercial buildings before I started working with other people’s money. And so, we learned the hard way, you learned the hard way and that shaped your investment philosophy. And I can see that for those of you listening, we’ll get into a little bit later, but Hans is probably, if I had to have a
deal, I’ve actually said, Hey, could you analyze some deals for us? If I needed somebody to analyze a deal for me, I would rely on Hans. And now when we start talking through this, you can see, I think you were analytical anyway, you’re a CPA by trade, all that kind of stuff. So some of that’s personality, but some of that is also the stripes, you’ve earned your stripes.
Hans Box: Yeah, it wasn’t planned. If I would have been able to sit down in 2009 and say, okay, here’s my 10-year plan. And here’s how I want to progress. I would have stayed partners with that guy, we’d own 4,000 units right now. But it didn’t work out that way. And thank God it didn’t. I mean, this taught me a lot quicker and a lot faster than I thought I would learn. And, it molded me, and it’s created my success since then. Looking back, I would never have guessed, I could be where I am 10 years ago. It’s not even fathomable, at least to myself in 2010.
Mike Ayala: That goes back to that old saying, I hear Gary Keller say it, but I don’t know where it came from. We tend to overestimate what we can do in one year and underestimate in 10. And so I think there’s such a lesson, there’s such a gem in this that I’m not saying we shouldn’t have a business plan, and I’m not saying we shouldn’t have a strategy, but also we shouldn’t be so locked in it, but investing for freedom and I don’t know if we’ve even talked about this Hans, but I
narrow this down to five things. What do you really want? Why do you want it? What are you going to do to get it? Measure results and number five is adjust. And so many times, people are like, well, what do you mean adjust? Like, aren’t you supposed to set your goals and not steer away from that? No, it’s like, I mean, with steering sometimes, I mean, if you would have done it your way, you’d have 4,000 units with this guy, but I heard you say, you’re glad it didn’t work out that way. And that’s why adjusting is so important.
Hans Box: Yeah, I mean, another way to put it, as you can look at a map, you can look at a map and you drive from one spot A to spot B there’s five or six different ways to get there usually when you look at Google maps. And it’s the same way with business, you can get to the same goal in a myriad of ways.
Mike Ayala: What is the single piece of advice you find yourself sharing the most?
Hans Box: Well, you kind of stole it in what you just said. But my answer was that, basically don’t get frustrated when it feels like you aren’t progressing fast enough. And it was precisely that I told this to probably, a ton of people in meetups and as I meet new investors is, you will overestimate what you can do in a year. You’re not going to be as far as you thought, but in five years, you’ll look back and like, you’ll be looked back and you just can’t believe that you’ve accomplished that much. So be patient. If you’re taking steps that leads towards your goals and things will start snowballing and let things snowball, just hit singles, if you want to put in a sports analogy, hit singles and doubles, I’ll take singles and doubles all day long over the occasional home run. So to me, the boiler down is just be persistent, be diligent, don’t get frustrated and keep driving and be okay with singles and doubles. Don’t expect you’re going to do everything in a year or six months.
Mike Ayala: I love that. And I think so many people don’t get moving because they’re so scared of risk. And what I really hear you saying, I mean, there’s a way to take calculated risk too. When you talk about singles and doubles, the reason why people don’t really get moving is because they’re always thinking about that home run.
Hans Box: It’s hard to obtain that reach, right? And I would, another piece of advice I would have for people that are having trouble getting moving is, 10 years from now. If you look back on today, are you going to regret not at least giving that a shot. I mean, you’ve only got one trip around this globe, right? Around the sun, we’ve got multiple trips, but you know what I mean, you only got one life, and so will you regret looking back and saying, I could have done that. I could create a freedom for myself, or just an extra income stream of some sort, or even if it’s a hobby, it’s a hobby, whatever it is that added joy to your life, the freedom of your life.
Mike Ayala: I love it. So good. So for our listeners, it is going to be a little challenging for Hans, but I’m going to pull it out of him. You’ve done a lot of things in life. Just kind of give us your, give us what you’ve done. Cause I mean, you’ve exited a lot of amazing deals. You’ve done pretty well as an individual. Hans doesn’t like talking about himself, but I want you guys to understand he’s not just a guru, coach that can show you how to analyze a deal, Hans you’ve done the thing. So give us some of your wins and successes and if you want losses.
Hans Box: Yeah. Well, my biggest potential loss was that first deal, and it ended up being a win, but it was, it started out as negative. We’ve done, [15:07 inaudible] business partner had put together, I believe, 13 total syndications since we started working together. I also worked with another boutique company for a while where I was third on the totem pole there. So I was a pseudo partner where I got equity in the deals and we did, I did another 2000 or 3000 units with them of multifamily. But between myself, my business partner, we probably raised somewhere between 30 and 40 million of equity that has gone to 12 to 13 different private equity deals. And the deals are spread over multifamily of course, self-storage, mobile home parks and distressed debt. And we’ve done a variety of different types of deals where we are the full equity in the deal and we own the entire apartment complex, or we’d done a few of these where we’re preferred equity. So we’re just a little traunch or not a little, but I would say a $3 million out of a $6 million traunch of equity where we get preferred returns that are kept, but we get preferred returns. And so it’s a lower risk investment with still good cash flow for investors. So a lot of our investors have loved those. They’re harder to come by now, but those have been some of our best successes. So all of our deals have hit proforma or beat proforma. And our apartment deal is doing incredibly well, we financed out 70% of our cash. We’re paying 17 plus percent cash on cash now. And that’s being conservative. We’re holding a lot of cash because of COVID. We’ve got quite a bit
of money in distress debt fund, that’s going really well. Again, that’s again, low risk. There’s no debt. So we are the debt. So we’re buying loans and we obviously aren’t leveraging up ourselves. So when Covid hit I was thankful that we had an investment like that, where I could breathe easy and know that would be fine because, we have no debt to service. So we don’t have to worry about people paying us rent. We actually own the loans themselves. And so we’ve exited, I would say, gosh, I hadn’t thought through this, but we probably exited five or six of our funds and we own five or six still. And all those exits have been great. I mean, we haven’t lost an investor. We’ve never lost investor money obviously; cause we’ve always hit proforma or better. And, so it’s just been a good ride so far, but I will caution anyone listening to this as a syndicator that if you’ve had success or if you’re new and you start getting into this, if you do enough deals, you’re going to have a bad one. Knock on wood that, my goal is to mitigate the effects of whatever that bad one is when I have one, I mean, if I do this for the next 20 years, I’m eventually going to get into a deal that’s going to be tough. I mean, some of these deals haven’t been easy. Some of them had times where I was a little worried and I was like, Oh gosh, for instance, Cubesmart was building near us, near our self- storage facility. And we can’t compete with a REIT when it comes to cost of capital, we have to pay a preferred return to our investors. They basically have free money, so they can just give away their units to lease up and take the market. And so, that was a nervous time during that time, but we weathered it well. And quite honestly, we ended up selling to them at a record low cap rate. So we took that issue and that problem and said, how can we solve this? Let’s not compete with a REIT. They want the market, see if they’ll buy ours, they did, and they paid under a five cap for a class B self-storage deal. So, it’s things like that where you just got to be able to adjust and make moves and not just stick by your plan all the time.
Mike Ayala: I love what you just said, the adjust and not just, cause, I mean, I mean, obviously going into it, you guys didn’t know you were going to sell to your competitor, right?
Hans Box: No, not at all. I didn’t even know they were going to be building there. There’s no permits. There’s nothing, no indications and suddenly.
Mike Ayala: There’s such a lesson in that because, as you said, I’ll just, I actually heard Norman Schwarzkopf at one point in time speak, I was at a Franklin Covey symposium and he was talking about just being creative and building teams. And I
don’t want to go into the whole story, but there was a military problem. He had just been promoted to a two-star general, the four-star general above him had to go to Afghanistan. And so he was in charge of the Pentagon as a young general. And his boss had made a decision like on their third day, this is what we’re going to do. And I think this was under the Clinton administration or Bush. And so Norman Schwarzkopf tells this story about, he asked his boss when they left. He said, how do you know this is the right decision? The previous two administrations have been dragging their heels on this. And his boss just said, this is what we’re going to do. And his boss said to him, Norman, as long as you’ve assembled the right team, and you’ve calculated all the risks, even if we’ve made it bad decision, the team around you and your curiosity and creativity will take that and make that a good outcome. And that’s basically what you guys did. And I think, again, the reason why people don’t get to investing or get moving and, I put a post-up the other day that was kind of a little controversial, but I said, your boss will never pay you enough to be his neighbor.
Hans Box: I remember seeing that one. I loved that one actually. It’s so true.
Mike Ayala: It is true. And the thing that keeps, I think everybody wants to, by the way, there’s nothing wrong with being a W2 employee. Nothing, not all of us want to be entrepreneurs, but as we’ve said so times before, I mean we all have to make money somehow. And whether that’s a W2 job or whether that’s, owning your own business or whatever, you make money somehow, but then you compound your wealth and you grow your wealth through investing of some sort. And that’s what I love. And I’m so excited to have Hans on because as you guys can hear, I mean, he’s got a ton of background, a ton of experience, just an amazing background. And that’s why I love talking with you and being, yeah, we’re actually in a group, we get on a call a couple of times a week and I just learn so much from him. So let me, there’s so many directions we could go from here, but the whole premise behind the investing for freedom podcast, if you want to obviously get into investing passively or, talk to somebody about structuring deals, Hans has some stuff coming up that could potentially be of interest to you. But for now I want to focus on, there’s a pivotal point in your story that you talked about, you were a CPA, you went to school, right? I mean, you went to college for this.
Hans Box: Yeah. I got a master’s in accounting.
Mike Ayala: Yeah, I mean a master’s in accounting and you’re at the pinnacle. PricewaterhouseCooper, I mean, this is like one of the top four, right?
Hans Box: It was one of the big four firms. It’s one of the big four. I mean, it’s not like McKinney level management consulting, but it’s a well-known and respected firm and the biggest professional service firm in the world.
Mike Ayala: And you walked away from that.
Hans Box: I did. And it was hard. Like, I almost, like I don’t even want to say this, but I almost cried last day cause I was so scared about what I was getting myself into, that’s all I’d ever known since college. So [22:25 inaudible] decades a long time. And so I was giving up, I was taking a quite a bit of risk, in my mind I was, when I looked back, I wasn’t, when I think about it and like I had no obligations, I live in an apartment in Dallas, Texas, I was so cheap, I was paying 25 cents to park in some lot out from where I work, that my manager always says, you’re parking out in the killing fields because I was trying to save money to invest. So I really wasn’t taking that much risk, but at the time it felt like it.
Mike Ayala: I think there’s a lesson in that alone, the theory of loss constraints. I mean, sometimes we put so much time and money and energy into a project at work or education that we paid for, or we’ve invested the last 10 years climbing the corporate ladder in a certain organization. And again, I’m not saying that people should, I’m not trying to point that out because I think that if you’re a lawyer, you shouldn’t be a lawyer. But I talked to so many people and Hans I know you have too that were attorneys, they were doctors, they were lawyers, or they still are, and they decided to invest passively. But so many people have left their careers. And the only thing that I’m really saying is what do you really want? And once you determine that, why do you want it, the key is what are you going to do to get it? And you are obviously, and I’d love to unpackage this a little bit. You were obviously so focused on something that you walked away from everything, not everything, but I mean nobody can take that education from you, but you left your career. What were you chasing?
Hans Box: Well, I mean, what drove me at the time was obviously, we just had the 2008 financial crisis and I saw the amount of layoffs that were happening. And, during this whole time I had gotten involved a little bit in real estate and bought a couple of rental houses. So I was, I had my feet wet a little bit, but then I saw 2008 and I saw the amount of people that got laid off. And I said to myself, I said, I don’t want to ever depend on somebody to decide whether I get paid or not. I want to decide if I get paid or not. And the only way to do that is to go either invest, with other people, which is in a way you’re controlling, cause you’re an investor, you own equity in the deal. It’s much more controllable than whether somebody gives you a good review on your work and you get a raise or not. And, that made me want to give it a shot. And I realized that, if I stay where I am, I’m going to get trapped as I said earlier, and I’m going to be in this job, but yeah, I could get paid a lot, but I could get laid off at any time. Cause there was, I don’t know the demographics of your audience, but the people that were older back then remember this time, there were really great employees that got laid off that got laid off, not because of performance because it’s something they couldn’t control. And, so that’s what drove me. That’s why I wanted to create and have control. And it’s still, the control part is still a big deal with when I invest or when I do deals.
Mike Ayala: Well even we’re sitting at the end of July in 2020 and we’re experiencing the coronavirus and all this stuff. And we’re part of a group called GoBundance, which there’s been a lot of talk lately about, now’s the best time to be hiring because there’s so many amazing employees that have been laid off, not because of performance, but because companies have been cut in half, literally companies are going bankrupt and broke and having to go out of business because of instant shifts in the economy. So I heard Kiyosaki one time say that if you want the best place to have security is in prison, you get three square meals a day, you get food. And I had another guy tell me, what scares the crap out of him is knowing on January one, how much money he’s going to make by December 31st. And that’s just cut just such an interesting switch in philosophy and thought process because usually that’s security to people. Well, I have a good job. I know how much money I’m going to make. I can budget. But the reality for me is like, that’s scares the hell out of me. If I knew January one, I was going to make $49,000 by December 31st and nothing more, nothing less like that’s scary.
Hans Box: Yeah. I fully agree. In fact, part of what drives me is maybe I’m not doing as good one month or maybe, the year’s not going as well as I thought, I can always ramp up what I’m doing If I get a little complacent and make changes like
we discussed and adjust. You have control. You’re able to decide, what your end game is. And a lot of people are saying, Oh, well, that’s risky. What if you didn’t make any money, well, what if you get laid off or think about another way, what about the risk of what you missed and what you could have been and what you could have done? And it may be as simple as like, you mentioned earlier, and a lot of your audience may be W2 employees and they’re just looking to invest. There’s plenty of people that love their jobs and that make good salaries and love their jobs, but they’re dependent on that salary. So I would, tell those people that that’s great, keep doing what you’re doing, keep playing offense and making the money, but then go over here and invest it and create that kind of, that safety net for yourself, where, when you’re ready to leave your career, you can leave on your terms and not theirs, because you’ve already built yourself, some passive income, whatever that is, whether it’s through syndicating yourself or with other people. So there’s nothing wrong with being a W2 employee and just investing well and having passive income on the side. There’s nothing wrong with that. That can create tons of freedom for employed people.
Mike Ayala: Yeah. Well, in fact, I was watching a video that you did at a meetup that you were speaking at for passive investors, really, it was focused on passive investors. And so when you go to an event like that, there’s a big percentage of people there that actually are self-employed or W2 employees and are completely happy. Not everybody’s an operator, right?
Hans Box: Not at all, not at all.
Mike Ayala: In fact, I would say that the opportunities, there’s probably more opportunity in being a passive investor than there really is, starting your own multifamily business.
Hans Box: Totally, because you can, it’s easy to go invest money with a bunch of different sponsors that have good track records in different asset classes. But I know multifamily, I know self-storage and mobile home parks, but if you can tell they’re all pretty similar, they’re multitenant type properties and they’re run somewhat similarly, but then if I try to step out and go do office or retail or go buy an operating company, I don’t have knowledge in that area. I could learn it. I know I could, but I haven’t, it’s much easier for me to just go invest with, for instance, I
have money with a big retail fund right now. Thank goodness I am with them versus myself, because right now I’d rather be with them. Cause they have way more experience than I do in this environment and they’re doing fine. I totally agree. Passive investing and sprinkling around, especially if you make a good W2 income and you’ve got a little bit of extra to invest, even in 25,000, just take that first step.
Mike Ayala: Yeah. I love it. And we’ll get to this a little bit later, how you can get ahold of it. But Hans actually has a passive investor checklist that he put together that’s pretty amazing. And, again, if I was a new investor, Hans I appreciate you being open and honest and talking about this, but you had everything invested in a single deal that started to go South. And, a lot of that has created this process and your ability to make the checklist. But the reality is, all of our listeners, if you’re not already a passive investor or investing, at some point in time, everybody’s going to have all of their investment money tied up in something for the first time. And so whether that’s $5,000 or whether that’s $50,000 or $500,000, because you’re conservative and scared to invest, I talk to people all the time that literally have $500,000 sitting in a bank account and they’re just scared to invest it. And so again, we’ll get to that in a little bit, but Hans has a checklist that can kind of help you maybe avoid some of the pitfalls that you got into. And nothing’s fail-proof right.
Hans Box: And it’s not rocket science, it’s just experience and knowing what to look for. And the best thing, it is not hard and if you look at it
[31:08 inaudible] investing, it’s just that basically investing is something you have to learn and you have to follow a process when you look at deals and if you can follow that process and then you can over time, learn to look at deals better with more and more detail and be able to catch red flags early and not waste time looking at deals. And your world will open up in terms of what you can invest in and where you’re comfortable and this whole idea of it being risky, to me, it’s risky to have half a million dollars of cash sitting in a bank and not making it my money, making me money.
Mike Ayala: We’ve had some conversations just as friends and in the call we’re on every week and that can be stressful in itself. I mean, for just having money sitting.
Hans Box: Well. Yeah, because it’s depreciating by at least 3%, probably a lot more right now, it’s going away as we speak, I mean, cash in the bank, granted you have to have some, but I would press your listeners to try to get past that block of it being risky to invest your money. It’s risky not to, the key is to find, is to learn how to invest from other people. And there’s plenty of people out here doing this.
Mike Ayala: Well and I come back to that lot just, and again, there’s a wide range of listeners and some people have never invested anything, and some people don’t really have the money to get started. So what I often say, and I’d love your thoughts on this. If you’ve only got like a $1,000 to $5,000, I tell people, invest in your education, take a trip, go to a conference, go to some meetups, because really there’s a level, you really got to get to a certain level of base knowledge. I mean, you said this, investing is not really that difficult as long as you’ve got a base understanding, which to me is that education. So what’s your thoughts on that?
Hans Box: Oh, I 100% agree. If you’ve got $5,000 extra cash, then I would, well, let me start out with, there is a ton of free content on the internet. I mean, it’s all over, number one, you’re listening to one and you can listen to 10 others. And if all you have is $5,000 to invest, go digest all the podcast, all the free content, you can register for a bunch of the crowdfunding sites like crowd street or, some of them have gone under, but there’s quite a few of them that are existing, like fund rise. And you can literally get access to a lot of their deals to read the documents, to begin being able to understand the document. You just have to sit down and read them and try to understand them. It’s going to look like Greek the first time, but it’s just like anything else, repetitiveness and understanding and listening to podcasts will help. And then, at that point you probably will have pinpointed a conference or a coaching program or mentorship type group that may help you after listening to podcasts and go to meetups. I mean, there’s so much free knowledge out there that, you don’t really have to spend any money quite honestly. And the networking is more value than anything else, because you are going to meet people who are going to introduce you to this person. And you’re introduced to this person and you’re going to look back five years ago. If I hadn’t talked to that guy at that conference, I would never have met this guy five years later down the road, he’s now, becomes an investor or business partner or somebody that’s even more integral to my business.
Mike Ayala: That is so powerful that point you just made Kara, my wife and I were just talking about this. When I think back to, I sold my first business in 2014, and then it was like, up until then Kara and I had, we didn’t have partners in real estate. It was, we weren’t syndicating. But then I was kind of like, I want to take a stab at making a business out of real estate investing. And so a friend of mine, Tyler, who you know, works with us now, he actually sent me a link to a real estate guys event which was in Phoenix. And so this was early 2016, it was actually, yeah, it was like January 12th, 2016, something like that. Maybe it was 2015, it doesn’t matter. There was an event. And he texted me this link and it was literally like eight days later. And I told Kara, I’m like, I’m going to go to this. And she’s like, not without me. And I’m like, okay, great. So we jumped on a plane last minute, went to Phoenix. I met the real estate guys. I met my partner, Andrew. I met so many people, joined the mastermind, I think fast forward to the next January, which I think was probably 2017. There I was at a goals event that’s where I met you. And I mean, you can’t plan that stuff.
Hans Box: No, you just have to take action and you know what? You’re going to kiss a lot of frogs and you just have to accept that right now. I go to a lot of meetups and a lot of times I’ll go to the meetup and it didn’t provide any value for me for that hour I spent there, but then once in a while, I’ll meet that person, or I’ll make that connection that was worth every, hundred other times I went where I didn’t have value. So I mean, there’s no getting around it. You have to put in the work, this isn’t just suddenly you’re good to go. And, can’t just learn this by osmosis. You actually have to put in the work. One of the things that net reminds me, one of the things I’ve meant to mention is a lot of people will spend hours or days searching for the best TV to buy. How much should I spend or the cars, or somebody will spend six months searching for a car, the right car that they will put a ton of time into it. Yet the same person who’s making good money, say, a lawyer making good money will then go invest a hundred grand in a deal and just do it like that without even thinking about it. And I’ve never understood that mentality. So my point is, if you really are serious about trying to invest and create some freedom for yourself, you really need to treat that as your second job, at least for a while, until you’ve kind of got your feet under. Cause to me, it’s almost more important your job, because it is the base, it’s the base of your net worth. And, it’s giving you the freedom to make choices about your job. So it’s more important than your job in my opinion.
Mike Ayala: Yeah. Well, and I love, you said this a little bit back, but when you’re first getting started, just studying, researching, carving out time to learn is important, and you’re going to meet a bunch of different people, but eventually you’re going to want a mentor, you’re going to want to get some kind of mentor, and that might be a paid coaching program. It might be investing with an operator or something like that, but one thing I’ve, you and I’ve had this conversation a lot, it’s super important the mentor you pick right?
Hans Box: Oh yeah, a hundred percent. I mean, so in that case, I would, if you’re looking at mentors to actually, hire as a coach and join a mentor program, I would spend a lot of time talking to the members that are already with him. Obviously if it’s been going on, if it’s new, but you can’t do that. But and look at the coach themselves, have they done what they are teaching? Are they making more money teaching than they are doing what they’re teaching? And so I have seen a lot of that where people are making much, much more money and there’s nothing wrong with making money in education. That’s not what I’m saying. I’m just saying that it becomes, it is their primary business and they got into it to make money instead of the other way around where they made money in investing, and then they teach their expertise and there’s value to it. So they should get paid. But if somebody gets into it strictly to be an educator without doing first, I would steer clear and doing first, I mean, doing a lot first, not just one deal.
Mike Ayala: Well I heard Warren Buffet said that wall street is the only place in the world where people show up in Bentley’s to take advice from a kid who took the subway.
Hans Box: That is so true.
Mike Ayala: Yeah. Just putting it in perspective. And again, I love what you said, because experience is one thing. I mean, usually there are people out there that have never done the thing at all. They just went through a program or whatever. I actually not to get on a soap box or a tangent, but I think that’s the problem with our education system. You’ve got, professors and teachers and everything that have never actually done the thing they’re just teaching out of a textbook.
Hans Box: Yeah. They’re just trying to make you memorize.
Mike Ayala: Yeah. So it’s an interesting point, but I like that you took it even a step further because a lot of times people get to a certain level of success as an investor or a business owner or whatever. And then they realize like, Hey, there’s a huge opportunity in the coaching world. And I agree with you a hundred percent, they should get paid for it. But if they’re making, a hundred times more from coaching than they have ever actually done in the thing, then you might really just want to look at their track record. I love the way you said that.
Hans Box: Yeah, definitely. That’s what I do when I looked at it, I mean I started out with a coaching program and that person had made a lot of money in apartments before I joined their group. And it served its purpose for me and then I moved on.
Mike Ayala: And we’re not in any way saying that, I mean, I think you should have a mentor. It doesn’t even have to be paid. So some of my greatest mentors in life never asked me for a penny, but the problem it’s really challenging to find a mentor who can take you all the way because mentoring is free. And usually people that you want to learn from, their time is very valuable. So that’s the question I get a lot, people hear me talk about my, one of my mentors, Barry Lipparelli who’s never charged me a penny. But I’ve also, I’ve learned a ton from him. And honestly, like we only talked to probably three or four times a year and people, when they hear all the lessons that I’ve learned from him, they probably think that, I met with him once a week. Well, that’s not necessarily the case. It’s just, when you have that focused time, I would usually talk to him when I had an issue, or it was a specific problem and he would work through it with me. But if you really want to get to a level where you’re getting consistent coaching, you’re probably going to have to pay.
Hans Box: Oh 100%, you’re going to have to pay. And you have to think about it as return on your investment. I mean, if you want to pay, I don’t know, thousand dollars to learn how to invest or thousand dollars to learn how to buy an apartment yourself, think about the amount of money you could lose if you do it wrong. And so to me, it just needs to be commiserate with what you’re getting the value you’re getting. If I’m investing $50,000 to $100,000 in a deal, and I’ve never invested in a passive syndication before, I would pay someone to help me in some form or fashion, at least to mitigate my risk to a degree so I can get in the right deal. I didn’t do that at the time. Well, I kind of did because I met this person in the mentor group I was in, but I didn’t really spend enough time learning how to invest before I invested. And I got out by the skin of my teeth.
Mike Ayala: Totally. So just a quick question that I’m thinking about. So back to, you’ve got a successful career and you decide to quit, your wife’s in law school. Is that what you said?
Hans Box: Yeah, she started in 2009 or 2010.
Mike Ayala: Just talk me through, this is obviously not a marriage podcast, but we’re partners with our spouses, was that a difficult conversation or were you guys on the same page?
Hans Box: We were on the same page there. She knew that I wasn’t totally happy where I was, and I wanted to give it a shot. And she’s obviously, she had a recruiting career before she went to law school. So she was doing somewhat of the same thing, making a change and doing something that she had always thought about doing, which was getting a law degree. And so she was a hundred percent on the same page. And luckily, I married a great woman that is, she puts up with my frugalness that I had, especially at the time it was pretty bad. I mean, we were literally unplugging our TV to save on electricity. Cause I had a plasma that I bought when I had a job and I was, so we were cutting pension pennies in any way possible. And she was along for the ride and 100% on board. So I couldn’t have done it without her.
Mike Ayala: Wow. That’s amazing. It’s impressive. Good stuff, man. So obviously, nobody has a crystal ball, but we’re in some interesting times right now. What do you see coming? What’s your advice for people right now?
Hans Box: Well my advice is don’t be an all cash and don’t be all in the stock market. I would give some real assets, whether that’s precious metals or whether you get into real estate. In the real estate segment I think, I keep thinking or wanting to see distress in the apartment market cause I want to buy, but I don’t know, I’m not convinced we’re going to see it yet. Mainly because there’s so much money on the sidelines that are looking for yield that any distress, we do see in the apartment market going forward because of job losses and Covid continuing is going to be canceled out by people paying higher prices, just to be able to place money into real estate. I mean into good real estate. So, I think multifamily still have a good spot. I just don’t think you’re going to find the deals that were done back in 2012, 13, 14, 15, 16. It’s just to me that there’s too much money chasing it right now. E-Commerce, I think is going to be huge if there’s a way that you can think about getting into ecommerce where, I mean, that’s part of your podcast investing for freedom and if you have to invest, go sell something on, I mean, people are looking more and more to buying online. I mean, there’s, I invested with a group that just purchased one of the biggest name brands that anyone on this podcast would recognize. I invested with them and they just bought the brand and IP for about $30 million. And this at one time was over a billion-dollar company. And I took a little risk, so I have enough money I can take a risk, but that could be a home run, but I didn’t do that when I was in 2010. I did it now where I’ve just put a little money, playing money with them, knowing I can lose it all. But if it pays off, it pays off big. So I love e-commerce. So there’s a way to get into that. And I also think industrial is a big area of real estate that I would, I would love to get in myself. I’m not in it. And I’m still searching for sponsors and people that invest with there. So I think industrial development, industrial, existing industrial buildings are just going to be the last mile of distribution now is going to be so important, because so many more, much more things like cold storage and stuff is being delivered where it can’t just sit in a huge warehouse, 30 miles away. It’s got to be very close for quick deliveries. So, I think those are the areas to look at it. And we’re still looking at self-storage and obviously mobile home parks, I think, are always going to be there and always be a good investment because affordable housing, they’re not building any more of them. So if I was a new investor right now, I would just hoard your cash. Maybe put some into precious metals, just as a store value, not as an investment, and then start searching for that right sponsor, that right investment type that when the time comes that you can jump in with both feet. We’re going to get through this, but I think it’s going to be at least 8 to 12 months before we’re kind of free of the Covid thought. I think at least.
Mike Ayala: Yeah. Well, I don’t make recommendations very often. I don’t know if I ever have, but I can tell you guys listening right now that if I was going to invest with anybody, cause you know as onset right now, I mean real estate is interesting right now. You got to be really careful. Nobody has a crystal ball, but I would put my money with Hahn’s because I know that whatever deal he’s moving forward with he’s vetted it better than I probably ever could. So again, I don’t make recommendations, but if you’re interested in passive investing and Hans, do you guys only take accredited investors or what…?
Hans Box: Yes. We’re credited only.
Mike Ayala: So yeah, I mean, if you guys are considering investing in, am I breaking up? If you guys are considering investing? I mean, I would definitely reach out to Hans. And again, I don’t give endorsements much, but, and again full disclosure too we do have a mobile home park fund together too, but I would look at anything he’s doing, whether it’s industrial or apartments or storage, I would feel comfortable investing with him. So Hans, I appreciate you taking the time. Is there anything else that we need to discuss that we haven’t?
Hans Box: No, I just want to reiterate to your listeners to be, don’t get frustrated. It’s going to take time, be patient and just keep plugging away and it will pay off. It will snowball. I promise. Just make sure you’re holding; you’re heading in the right direction. That’s the key.
Mike Ayala: And if people want to reach out to you, where’s the best place for them to find you?
Hans Box: Well our website is www.boxwilson.com. And my email is email@example.com. Hbox@boxwilson.com
Mike Ayala: And Hans actually has an investor checklist, which I mentioned earlier. If you want to send an email to firstname.lastname@example.org and in the subject line, just put passive investor checklist. We’ll make sure you get a copy of that and we’ll make sure you get connected with Hans as well.
Hans Box: I appreciate it Mike. Thank you.
Mike Ayala: Yeah. Thank you for your time and all your wisdom and expertise. It’s going to be an amazing show. Appreciate it.
Hans Box: Alright, no problem. Thanks for having me on.