[00:03:08] John Plumstead: I loved it. It was a great upbringing. I had tons of friends. We played out in the woods, went ice fishing and snowmobile and hunting and all that kind of stuff. It was great. But I knew from a very early age that at some point I was going to outgrow my town and I was excited for that day from a very early age.

[00:03:26] Patrick Donley: So I know that you’re a big reader. Did books influence you? Like to kind of have a broader perspective 

[00:03:30] John Plumstead: on life? I wish I could say yes, but the answer is no. I grew up a athlete and I grew up idolizing sports stars. I think at that age I was like, I’m going to be a professional football player. Like, that was my out right.

[00:03:44] John Plumstead: I fell in love with reading more like in high school and really started to see that, hey, if this football thing doesn’t work out, I’m eventually going to have to get a real job. Hence my curiosity and reading all those books. But from a young age, it was just like, Hey, I want to go play for the Detroit Lions and [00:04:00] be a famous football player.

[00:04:02]Patrick Donley: So let’s go into that. So you, you set a goal. I know you’re also really a goal setter and we’re going to get into that, but I want to hear about your experience of playing football, setting that goal attending Army in West Point. Talk to us a little bit about that Experie. 

[00:04:16] John Plumstead: I grew up a football player, loved football, was, was competitive from a very young age.

[00:04:22] John Plumstead: Ended up playing on the varsity football team from a, from a freshman. So all four years of high school I was on the varsity football team. Really good. But if anyone’s, you can’t really tell on the video, but I’m only like five feet, 10 inches tall and I’m a white dude, that’s not that fast. So if you’re five 10 and not that fast from rural northern Michigan, it’s not like you have, you know, Michigan State and Ohio State knocking at your door, right?

[00:04:44] John Plumstead: Going to the next level to play college football was tough. I also broke my foot my senior years. I had to sit out most of the games, so I had to figure out, you know, hey, if I want to go play college football, where am I going to go? And looked at a lot of division two schools, looked at a lot of division one schools.

[00:04:59] John Plumstead: Was excited to go play at all of ’em, but none of ’em, none of ’em wanted me to come play football there. So September 11th had also happened my sophomore year in high school. So I, I felt a pull towards the military as well. And at some point between reading books and all the patriotic things that were going on, 2001, 2002, 2003, I just said, in my mind, I didn’t know anything about West Point, but I started reading, trying to learn as much as I can.

[00:05:21] John Plumstead: I was like, I’m going to go to West Point, I’m going to play football at West Point. We called the football coaches at West Point and we’re like, Hey, made the decision we’re going to go to West Point and play football. And they were like, well, you’re not good enough to play football here, basically, right? They were like we’re not going to offer you a spot on the team.

[00:05:35] John Plumstead: So of course I was crushed. But then I got in contact with the track coaches. I was actually a stage champion shop putter as well. Again, I’m not that big, but decently strong and and powerful. So I went to West Point as a shop putter and that’s how I got into West Point. And then once there, just walked onto the football team, never through the shot put, appreciate the track team getting me into West Point, but that was in line with my goals.

[00:05:59] John Plumstead: I wanted to go play [00:06:00] football. So walked down to the football team. So did you have a scholarship 

[00:06:03] Patrick Donley: initially as a shot putter when you, when you entered into West Point? 

[00:06:07] John Plumstead: Yes. West Point doesn’t offer scholarships. It’s like every cadet is on scholarship. But I would say I was I got into West Point as a shop putter, meaning if I had to get into West Point purely on my academic merits, I would not have gotten in, I got accepted as a shop putter.

[00:06:25] John Plumstead: And then, but once you’re in, even if you quit the track team or you quit the football team day one, once you’re in as a cadet, you can remain as a cadet. So you became, 

[00:06:34] Patrick Donley: you joined the football team, you ended up becoming captain your senior year as a what middle 

[00:06:39] John Plumstead: linebacker or what, what position did you play?

[00:06:41] John Plumstead: As an outside linebacker, I started as a, as every kind of undersized, slow white kid does. I started off on the kickoff team right as a freshman walk on. I was like, I need to try to stand out. So I would try to get in a fight and practice every day with the seniors. Tried to make a name for myself as a, as a tough guy.

[00:06:58] John Plumstead: We’d always do special [00:07:00] teams at the end of practice and I would just go a hundred miles an hour, even though the underclassmen were like, dude, you need to chill out, bro. This is the end of practice. And I’m like, I’m going to try to kill you because you guys are playing on Saturday and I’m not, and I hate that feeling, so I’m going to try to kill you until I can play.

[00:07:14] John Plumstead: Eventually got on the kickoff team and then was mostly a special teams guy for a couple years and then someone ended up getting hurt my junior year and I got an opportunity to start a linebacker and then ended up starting at outside linebacker for the majority of my junior and senior year, and then was a team captain to my senior year, which was really.

[00:07:31] John Plumstead: And then 

[00:07:31] Patrick Donley: that’s where you met your current business partner, Frank. Talk to us about how did your relationship start early, like at the arm at West Point, or what, how did you, were you guys buddies? Were you trying to kill him too? 

[00:07:42] John Plumstead: Yeah, we were trying to kill each other. We were freshman linebackers together at West Point in a linebacker room with 47 linebackers.

[00:07:50] John Plumstead: So they had this theory my freshman year that they were just going to recruit as a ton of football players. Although we were playing a four three defense, meaning there were [00:08:00] three linebackers on the field at at a time. There were 47 linebackers in our linebacker room. And Frank and I were at the bottom of that depth chart.

[00:08:07] John Plumstead: So we sat next to each other and then for a long time we were playing the same position in battling one-on-one against each other. Eventually, we were both starters. He was a middle linebacker, I was an outside linebacker. And, and we played together both team captains together. So we, we’ve got a long relationship and then a deep relationship where we’re very comfortable telling each other how we feel.

[00:08:26] John Plumstead: We’re very comfortable yelling at each other if we feel like that’s, that’s what the other person needs to hear. So it’s, it’s a strong relationship. We’ll get into that 

[00:08:33] Patrick Donley: later, but I want to hear first, so after you, after you fulfilled your four years at West Point, what was your next step? Did you do a, you did a tour of duty?

[00:08:41] John Plumstead: Is that what happened next? Yes. Everyone that graduates West Point Commissions as an officer in the Army and has a five year commitment. I was a field artillery officer, did some training, Fort Sill, Oklahoma, then got stationed for Carson, Colorado, and then. [00:09:00] Soon thereafter. I graduated in 2009, summer of 2009.

[00:09:04] John Plumstead: Summer of 2010, I was shipped to Afghanistan and then spent a year in Afghanistan before coming back and then moved everywhere in the military. We, we lived all over the place. And were you were married at that time as well? Yes. Started dating my wife freshman year in high school. And although we took some breaks before we got married.

[00:09:23] John Plumstead: We got married right after graduation. So kind of, kind of pretty much been together since freshman year in high school. Thanks for your service. First 

[00:09:30] Patrick Donley: of all, I want to say that, and then the second I wanted to hear about the master’s program that you ended up doing. This to me is super fascinating.

[00:09:37] Patrick Donley: My wife is a therapist and so talk to us about the master’s degree you ended 

[00:09:41] John Plumstead: up. Yeah. No, I, I appreciate that, Patrick. Yeah, so as a walk on on the football team at West Point, I knew I had to outperform my athletic ability. I worked really hard to try to get bigger, faster, and stronger. But then maybe that, that next element is I felt like I could be mentally [00:10:00] tougher than other people, and that would help me get to see the field.

[00:10:03] John Plumstead: There was a sports psychologist at West Point that I would work with. How do I set goals? How do I keep my composure under pressure? How do I build resiliency? I, I really leaned into that love that stuff. I, I claim I’ve read like every self-help book that that’s out there because I, I love all that stuff, right?

[00:10:17] John Plumstead: And then went out into the army, had lots of fun in the Army, led soldiers in combat. But then I was contacted by that same department at West Point saying, Hey, we’ve been watching you. We see you’re having a great career. We really liked what you did while you’re a West Point cadet. Do you want to come back and teach sports psychology at West Point?

[00:10:34] John Plumstead: I said, yeah, that that’d be a dream come true. So in that process, they sent me to go get a master’s degree in sport and performance psychology. The way I, I like to describe sport and performance psychology is this idea if you have a spectrum and on one end of the spectrum is people that are really struggling with their mental health and the other end of the spec spectrum is someone that’s super mentally tough.

[00:10:53] John Plumstead: I would work with people that were normal functioning to doing really well. I wouldn’t do the, any clinical [00:11:00] psychology, any of the people that were struggling with mental health. I would push them to the needed resources, but someone who was performing a B level and wanted to get to an A level or from Good to Great, that’s where I focused.

[00:11:12] John Plumstead: So was 

[00:11:12] Patrick Donley: that program that, was that open to any cadet? Could they, could anybody come and see you and, and talk to you about how to improve 

[00:11:18] John Plumstead: their performance? Yes. I worked with football players. I worked with, from the starting quarterback to the freshman’s first day. I also worked with a lot of cadets that didn’t play sports and they were maybe just stressed out about going out in the army and leading soldiers.

[00:11:33] John Plumstead: We also have a swim program where a lot of cadets have to, or all cadets have to step off five meter, five meter diving platform. So if they’re scared of heights, they come see us and talk about how do they get over that, that fear of heights. Also, lots of people that have test anxiety or performance anxiety with different physical fitness tests, the whole gamut.

[00:11:52] John Plumstead: We work. It sounds like a dream 

[00:11:54] Patrick Donley: job, honestly. Like what were some of your top, I wanted to hear what some of your top two or [00:12:00] three sports performance, or not necessarily sports, but high performance habit type books are. Do you have any favorites 

[00:12:06] John Plumstead: that are off the top of your head? None immediately jump off, but I, I would say the takeaways are, are this.

[00:12:14] John Plumstead: Okay. One is, I would say take an inventory of your life and the activities that make you feel better about yourself. Do more of those and then the activities that make you feel worse about yourself, do less of those. I know everybody’s going to be like, Hey, I, I know that, but it’s amazing how many people don’t listen to that advice.

[00:12:32] John Plumstead: Then the other thing, I’m a big fan of self-talk and how self-talk leads into. Meaning we all have a voice in our head. Most of us can’t shut that voice off. That voice is going to tell us something no matter what. And trying to be aware of is that voice in our head building us up or is that voice in our head tearing us down?

[00:12:50] John Plumstead: And most people have really bad, negative self-talk. So if you can become more aware of that negative self-talk and just get a little bit better, especially in high pressure situations, you’re going to [00:13:00] be happier, healthier, and you’re probably going to perform at a much higher level. So let’s say for like the 

[00:13:04] Patrick Donley: the starting quarterback, would you give him affirmations?

[00:13:07] Patrick Donley: What were some of the like homework things that you would do to help him excel? Like to get his mindset, you know, maybe thinks he’s good, but how do you get him to think like, I’m actually great, like, 

[00:13:16] John Plumstead: alright, I could be great. I think being a quarterback or any position where you have a tendency to put a ton of pressure on you or put a ton of pressure on yourself, my first place would be to try to listen to everything on that player, that athlete, that cadet’s mind.

[00:13:32] John Plumstead: But then I would go, okay, let’s talk about all the preparation you’ve done, right? Like, what does the job entail and what is the preparation that you’ve done to get to this point? And then let’s talk about past performances. A lot of quarterbacks or athletes, they want to play like Superman. And what I want to, my techniques would be, Hey, let’s try to lower that ceiling and let’s not try to play like Superman.

[00:13:53] John Plumstead: Let’s just try to play really good. Because if you play really good, if you play a little bit better than average, we’re probably going to [00:14:00] win, win the football game or win the basketball game or whatever. So let’s not put too much pressure on us, let’s lower our ceiling, lower our expectations, at least until we get into a groove.

[00:14:09] John Plumstead: Then let’s also fall back on, you’ve been in this moment before. You’re completely prepared that that’s a good place to start. How 

[00:14:16] Patrick Donley: would you implement some of the things that you learned in the sports psychology, in real estate investing? How? How would that 

[00:14:23] John Plumstead: transfer over? The first time my business partner, Frank and I went from flipping houses to commercial real estate.

[00:14:31] John Plumstead: We bought a $1.4 million storage facility, and in that process we had to get a $1 million loan. To some people, a million dollar loan is huge to some people, a million dollar loan is small. At the time, Frank and I were nervous to get a million dollar loan. The two of us sat next to the president of the bank and his sales associate at a Mexican restaurant eating chips and salsa, and it was our job to convince them that they should [00:15:00] give us a million dollar loan.

[00:15:01] John Plumstead: I was nervous. How did I implement it? I acknowledged that I was nervous. I tried to keep my composure. I tried to go, okay, what is the number one thing I want them to walk out of this meeting with? If I fail everything and I’m stuttering and I’m about to bomb this meeting, what’s the one thing? And I think it was, Hey, we’re high character guys and we’re going to work really hard.

[00:15:22] John Plumstead: If I can get them to walk outta this meeting with, Hey, John and Frank, our high character guys, and they’re going to work really hard, that’s good enough, right? So I prepped that and then I’m decent in those situations. So over time, I did get comfortable, set a couple jokes, cut the air a little bit, and it was a great lunch.

[00:15:36] John Plumstead: We did really well. Before the lunch was over, they said, Hey, not only are we going to give you the loan, we’re excited to do it. Do you think those terms worked? Do you want to adjust terms? And we adjusted terms in our favor a little bit. It was, it was a great lunch, but it’s just situations like that. Like, hey, when you’re at the tip of the spear and you have to keep your composure and you gotta make sure your brain works, what are those few little things you can do to take a couple deep breaths to make sure you’re in the moment?

[00:15:59] John Plumstead: [00:16:00] What are some of 

[00:16:00] Patrick Donley: the common hurdles or things that you see hold people back in terms of mindset, whether it’s with regard to sports or real estate? 

[00:16:08] John Plumstead: I think imposter syndrome’s a big one. This idea that people don’t think they belong or they think that the situation or the organization is, is bigger than they are, let’s say in real estate.

[00:16:20] John Plumstead: A lot of people, the way they were brought up or their path to get to a certain point, they think they have to do $1 million deals and, and smaller. They don’t think they can ever do bigger deals because that’s over their ceiling. That, that would be a lot of imposter syndrome and that situation. I don’t do any real estate coaching, so I, I’m not working with any clients, but I were to pursue that and someone came to me and said, Hey, I’d like to do bigger deals, but I, I have this feeling that I’m not good enough to.

[00:16:46] John Plumstead: I just, number one, try to say, well, how’d you do your first a hundred thousand deal or 2000, a hundred thousand deal? You start building up and you make sure, I think you just continue to push your comfort zone slightly. If your comfort zone is a million dollars, then you know, let’s do [00:17:00] 1.1. If your comfort zone is 700,000, like let’s just push it to 800.

[00:17:04] John Plumstead: Let’s push the comfort zone, but we don’t have to go way, way outside the comfort zone. And the other thing I think that’s helped me a lot is anytime I’m feeling imposter syndrome or I’m feeling inadequate, I look at my business partner who brings me up, Frank, and I’ve got this great relationship where we’re really hard on each other, but we also have strong enough awareness where if I’m hurting or he’s hurting, he’s going like, Hey, you got this man.

[00:17:25] John Plumstead: Like, there’s, there’s a reason that I’m partnered with you. I’m a badass and I’m partnered with another badass. That’s you. Let’s do it. Yeah. And you guys played your linebackers, right? I was joke when in doubt, like, we’ll just fist fight ’em and we’ll be fine. I wanted to get 

[00:17:38] Patrick Donley: back to how the real estate bug bit you.

[00:17:40] Patrick Donley: Like how did you start getting intrigued and interested in investing in real estate? What, what point did that happen? 

[00:17:46] John Plumstead: I grew up poor and on welfare we’re, we’re in a poor area of Michigan, like poor county, and then we were the poor town in the county, and I felt like a poor kid in the poor town, in the poor county.

[00:17:57] John Plumstead: You know what I mean? That’s just how I grew up. Whether that was [00:18:00] perfectly accurate or not, I had this feeling that people were in better financial situations then I was, and I didn’t like it. Right? Some people talk about how they grew up poor, but they never realized it for some reason, good, bad, or indifferent.

[00:18:10] John Plumstead: I don’t know. From a young age, I was like, my family’s poor, and I hate this, right? From an early age, I was like, I’m going to figure out how to make money. Took me a long time to get to real estate. But I think one of those things was looking just in my town and saying, Hey, who lives? Who lives a great life?

[00:18:27] John Plumstead: And realizing that, hey, some of these people in real estate seem to be living a, a pretty great life. And there’s another point at West Point, I saw someone reading Rich Dad, poor Dad, the Robert Kiyosaki book that I think the book is great. As we talked on the pre-call Robert Kiyosaki, take Him or Leave Him, right?

[00:18:42] John Plumstead: But that book is great. I saw someone reading that book, title of book, rich Dad poured Adam, like, I don’t know what that is. That’s an amazing title. Like, I gotta figure out that book. Got the book, read the book. And then was just on a path of reading as much as possible, trying to go to network events, trying to get into real estate to make money.

[00:18:58] John Plumstead: I wanted to be in a [00:19:00] financial position where I felt like I made it or I felt like I could control my own financial destiny. That’s how I got into real estate. I wanted to talk more 

[00:19:09] Patrick Donley: about some of those early books. Like if you were to teach a class back at at West Point and you only had two or three books to teach the class, the a real estate curriculum, 

[00:19:17] John Plumstead: what would those be?

[00:19:19] John Plumstead: If it was like a, a 101 class, right? I, I think Rich Dad, poor Dad, right? Or at least that concept of understanding basic financial literacy to me, four hour work week, although four Hour work week is not a, it’s not a real estate or really even a business book. I think four hour work week. And so much of what Tim Ferris is, is put out is, is just so on point of what is the 80 20 of something.

[00:19:43] John Plumstead: How can I maximize my time? How can I look at freedom of time, freedom of location, and financial freedom? I think those two. And then if I was going to go into the real estate realm, I would look at the bigger pockets, books, bigger pockets as put out. Brandon [00:20:00] Turner’s got two or three main books that are really good and they’ve probably put out another 10 or 15 in the last five years.

[00:20:07] John Plumstead: So I, I’d have to dig into ’em, but I know their first, like five books were all really, really good. I, I read a bunch of ’em over and over and over again. And then I think one of the big things that people miss is real estate finance. There’s a really good cash flow finance book. I forget the name of it, but it’s from a guy, he’s a professor at Columbia, or n y u I forget, but it’s got a green cover.

[00:20:26] John Plumstead: I think it’s real estate cash flow. It’s all about the financial aspects of real estate. And that’s a really good book too. I agree with all 

[00:20:34] Patrick Donley: of those. I, I’m a huge Tim Ferris fan, and I think once you’ve read the, I know when I read the four hour work week, it was like my life was kind of on pause, like, how do I figure out to do what this guy’s talking about?

[00:20:45] Patrick Donley: Because it, it just makes so much sense. So it’s really great stuff that he puts out. I’m a huge fan and you know, his content’s amazing. I wanted to talk to you about, you said that you had, at one point you bought an ice cream store and you tried to turn around and you said that the [00:21:00] education was priceless.

[00:21:01] Patrick Donley: At what point did that happen and talk to us about that experience of like what you learned from running an ice cream 

[00:21:06] John Plumstead: shop. It happened, man, we, we did it. It was much more intensive than anything. Tim Ferris talks about in his book, Tim Ferris talks about like mail order businesses of like, well, let’s try to apply that to an ice cream shop.

[00:21:18] John Plumstead: Here’s a story though, is my wife and I, I think are both ambitious in dreamers. We go to Zillow all the time and look for awesome houses, lake houses, back home, whatever. We were living in Washington state at the time, and my wife looked for lake houses back where we’re from, and she said, oh my goodness, there’s no lake houses that we can afford.

[00:21:39] John Plumstead: Big surprise there, but our local ice cream shop is for sale. And I was like, wow, the ice cream shop is for sale. How much do they want for? And it was $140,000. And I was like, $140,000. Really? So like, just doing some math in my head I was like, this could be a deal. And my wife could see the look in my eyes.

[00:21:57] John Plumstead: She was like, John, don’t do it, John don’t, [00:22:00] don’t do it. And I’m like, I’m just going to call. I’m just going to call the broker and just see what they have to say. Right. I called the broker. I was happy with the numbers. My brother was, he’s four years younger than me. He was looking for work at the time. Then I called him and I was like, Hey, are you interested in running this ice cream shop?

[00:22:19] John Plumstead: He’s like, yeah, I, I would be interested. We ended up buying it for, this is another crazy thing. It’s for no money down. I got personal loan from a friend for $40,000, and then I got seller finance for the other a hundred thousand dollars, right? So I bought this ice cream shop for no money out of pocket.

[00:22:35] John Plumstead: We ran it for two summers. First summer, we increased revenue like crazy, but we also increased expenses like crazy, right? So we learned that hey, driving revenue is exciting, but if you don’t keep your expenses in line, it doesn’t matter. Next summer, we did much, much better at a expenses. We ran super lean company, profit loss was good.

[00:22:56] John Plumstead: But then we realized that owning an ice cream shop in [00:23:00] northern Michigan, where even in July you can have three rainy days a week is a tough business to run. Year three covid hit and I was super nervous that the governor was going to shut down the state and she was in the process of kinda shutting down the state.

[00:23:15] John Plumstead: We kind of fire sailed. It made some money, but, but not a ton. And because my brother basically gave his life for two and a half years, any profit that we did make, I just gave to my brother and said, Hey, thanks. We tried our best man. Take, take this money and run. What were the big takeaways? I think big takeaways were like, your basis, the price you enter matters a lot.

[00:23:34] John Plumstead: I think a lot of times when you buy small businesses or buy real estate, you think that you’re going to be so much smarter than the previous owner. But the bottom line is, if a, a business has been doing a hundred k of revenue every year, you might be able to get it to 110, 120, maybe 130. But the idea that you’re going to take it from a hundred to 200, it’s, it’s probably not going to happen depending on the business.

[00:23:54] John Plumstead: Also, learned a lot about doing business with family. I definitely believe, like, don’t ever do business with someone [00:24:00] that you can’t fire or someone you know, family. Frank and I have this saying now, like, Hey, our business is super important, but we acknowledge like our business might end up ruining our friendship in the long term.

[00:24:11] John Plumstead: We’ve acknowledged that business is so hard that we shouldn’t be in business together unless we are completely prepared to tell each other off if, if that’s what we need to do, right? So, so many good lessons, but I’m glad I no longer own an ice cream. I 

[00:24:24] Patrick Donley: bet I had some friends that started an ice cream shop too in their twenties, and it was a great idea.

[00:24:29] Patrick Donley: It was kind of like a Coldstone creamery before Coldstone Creamery really took off, like mixing up Oreo cookies and different kinds of ice cream and they could have killed it had they like just continued. But they, I think they ended, they fin they did two years and then they, I ended up selling it, but I think they’re all happy they did it and it’s funny stories now, but tough, like you said, tough to do.

[00:24:48] Patrick Donley: And, and that was back in 

[00:24:49] John Plumstead: your hometown you said? Yeah, it was back in my hometown. It was good. I mean, I, I consider myself kind of a marketing guy, so we did Facebook ads, we went live on Facebook and Instagram every day. Some [00:25:00] interesting stuff with branding and specials and all that. And I think if you put a gun to my head and said, Hey John, you gotta figure out how to make an ice cream shop profitable.

[00:25:07] John Plumstead: And that’s how, what you have to live off going. I would only pick a spot that is in a very high foot traffic area, right? Like any place someone has to drive to to get ice cream is going to be a lot harder. I’d want to be high foot traffic area where people can see other people eating ice cream cones and then make that irrational decision to go eat ice cream right then and there.

[00:25:28] John Plumstead: And then I would only do fancy hard ice cream and I’d, I’d make it right on spot and I’d try to have busiest place in a city. I’d try to be right downtown and have 200 square feet as small of a retail spot as possible. Talk to me next about 

[00:25:44] Patrick Donley: what happened that that was around Covid. So did you then partner up with Frank at that point to join forces?

[00:25:50] Patrick Donley: Or had you guys already been partners doing some side real estate? 

[00:25:54] John Plumstead: No, we partnered up right before Covid. We were, I own the ice cream shop and Frank and I were partnered up at the [00:26:00] same time. Always someone, or, or at least historically, I’ve always kind of had side hustles going and, and multiple deals going at, at the same time.

[00:26:07] John Plumstead: But Frank and I, basically, I was in the Army for after West Point for 12 years I think it was. And during that time we bought a bunch of real estate, single family houses, small multi-families live in flips. And at a certain point, Frank was kind of doing the same thing. And we said, Hey, instead of keeping our stuff separate, why don’t we join forces?

[00:26:27] John Plumstead: We’ll do it together and we’ll just kind of double the amount of money that we can put into it and see how it goes. We said, yeah, let’s, let’s do it. And then I said, Hey, but I’ve been doing a bunch of research on direct to seller marketing, so instead of buying stuff on market, let’s try sending a bunch of text messages and cold calling these owners that want to sell or potentially want to sell and let’s see if we can get some good deals.

[00:26:50] John Plumstead: And we just like it worked and it worked really, really well. And we quickly had more deals than we knew what to do with. So we started wholesaling deals, we started flipping houses. [00:27:00] I think, you know, within a couple months we had a team of maybe like 10 or 15 people we’re doing 10 houses a month and like it blew up in a good way.

[00:27:09] John Plumstead: What 

[00:27:09] Patrick Donley: were the effective things that you were doing in terms of cold calling or texts? Like what did you found that have worked really well For a lot of people, that’s really a hard thing to do. What have you found 

[00:27:17] John Plumstead: worked? Well, we were not geniuses. We were just really lucky that we were some of the first people to mass text.

[00:27:25] John Plumstead: What we would do is we would go to a city, Fort Hood, Texas is in clean Texas, so we’d go to Colleen, Texas. She was a military town. We were very comfortable with it. And we’d say, okay, who lives out of state and has owned this house for more than 10 years? And we’d pull up that list and then we’d get the phone numbers of those people and we’d shoot ’em all texts and say, Hey, my name’s John.

[00:27:46] John Plumstead: I’m a military guy. I would love to buy your house. And we could figure out, at that point, maybe we’d send 500 text messages and we would get one deal from it. So we’re like, okay, we can send 500 text messages and get [00:28:00] one deal. Let’s try to sell, send 5,000. And then we found platforms that would help us send 5,000 text messages and then 10,000 text messages.

[00:28:09] John Plumstead: At our peak, we were sending 10,000 text messages a day. It was crazy. We had a team in the Philippines helping us run it all. But then a couple things. One is we had elections that fall and all these super pacs were sending out text messages as well. I knew it was going to piss off a lot of people and people were going to complain and they were going to do something about it, right?

[00:28:29] John Plumstead: So I knew text messaging was going to die. So we decided to switch to cold calling because that was still working. And it wasn’t long after that that on iPhones, it started showing up scam likely for numbers that were doing just like we did. So it wasn’t that we had some great idea, we were just kind of one step ahead.

[00:28:48] John Plumstead: But then we could tell text messaging was dying and then we could tell cold calling was dying. So we said, shoot, this business that we’re doing that we think is so good, this business sucks. Like it is not going to work anymore. So [00:29:00] that was part of our drive to get into commercial real estate was we’ve gotta find, like we’ve built up all this knowledge.

[00:29:05] John Plumstead: We’ve got investors, we’ve got a team, we’ve gotta go to a more resilient business model. Cause the business model we have right now, frankly, is fragile and it sucks. At 

[00:29:14] Patrick Donley: that point, were you mostly wholesaling all of those deals or were you, was it kind of a mix? You would wholesale some, would you do some fix and flips yourself?

[00:29:22] Patrick Donley: What did that 

[00:29:23] John Plumstead: strategy look like? We would wholesale probably 75% and then we would flip 25% of ’em. Right. So there’s 25 that we would flip, though. We would do all the flips remotely, right? So we were buying all across the country. We would flip remotely. People were like, how the hell would you flip remotely?

[00:29:39] John Plumstead: Well, we’d get a contractor and we’d get an agent and we would pay the contractor we’d, we’d find the best contractor in in town and we’d find the best agent in town and we’d pay them their market rate. So the only place we could make money would be on getting a really good deal because in the middle of the deal, paying the contractor, we were never going to get a good, good deal.

[00:29:58] John Plumstead: And then on the back end, paying the agent, [00:30:00] we were never going to get a good deal. So our business only worked if we could get really, really good deals on the front end. And we had a great sales team. We had numbers. I think at our top, we were spending 30,000 bucks a month just in, in marketing. So like, if it was working, but it w again, it was just super, super fragile and we could tell our cost per lead was going up, so like the writing was on the wall, that it was going to die.

[00:30:22] John Plumstead: And the, the people that didn’t see that writing, like our friends in that space that kept doing exactly what we’re doing, they have now either gone out of business or unfortunately they’re all teaching courses because that seems to be what you do. If you can’t make it in real estate, you just start teaching courses pretty profitable.

[00:30:38] John Plumstead: That’s me hating on course creators, even though I know there’s some good ones out there. Yeah, there are some good ones for 

[00:30:42] Patrick Donley: sure. But I’m a little leery and skeptical of them myself, but I wanted to talk, did you have a portfolio too that you were building out that you, that you had a rental portfolio at that point also, or was that, did you not mess with any rentals?

[00:30:55] John Plumstead: Personally? I think I had 10 rentals and then Frank and I at [00:31:00] our most probably owned 15 houses. 

[00:31:04] Patrick Donley: And then, so how did you unwind that once you realized like that strategy was dying, you needed to segue to something else? How did you transition 

[00:31:11] John Plumstead: outta that? The good thing was, is every flip we ever did, we felt comfortable enough with the numbers that if we had to turn it into a rental, it would cash flow as a rental.

[00:31:22] John Plumstead: So we never did any high-end flips. We always said, Hey, we’re flipping cheeseburgers, man. It’s like $150,000 house that will rent for 1400 bucks. Like it would’ve been a solid rental. So from a financial aspect, when we decided to close that part of our business, it, it wasn’t that difficult. We felt good about those positions.

[00:31:38] John Plumstead: We felt good about going to storage. Good to go. The hard part though, was we had a team of 25 cold callers that we had to let go. Most of ’em were in the Philippines. We had some in El Salvador, some in. There were great loyal workers that we had to let go. That was super tough conversations we had to have, but we basically said, Hey, to save this business, we have to let you [00:32:00] go.

[00:32:00] John Plumstead: We feel really good about how we separated with those people, how we communicated, how we gave ’em severance. Worked really hard to try to get, get ’em a a follow on job and for most of them we did. But that was the hardest part, was just taking a bunch of people that we felt were really good contributors to our team and saying, Hey, you did nothing wrong, but you no longer have a job here.

[00:32:17] John Plumstead: How did 

[00:32:18] Patrick Donley: you focus then on self storage? What, talk to me about that process, the researching process, the thought process that went into figuring 

[00:32:25] John Plumstead: out your next strategy. Because we felt we were really good at direct to seller marketing, meaning going without a broker, buying stuff off market. We knew we wanted to go to commercial real estate and we said what asset classes are best for going direct to the seller?

[00:32:41] John Plumstead: And we basically came to mobile home parks and self storage. And we did deep dives on both of those. And ultimately we picked self-storage because it’s not a primary residence and we think there’s, over time, I think rent caps on primary residences are going to be more and more difficult to overcome, especially [00:33:00] at the lower end of the spectrum, which most mobile home parks are.

[00:33:02] John Plumstead: So for those reasons, we picked self storage. So before we let our team go, we bought a storage facility and then we were looking at if our business plan was working or not. And within 60 days of buying our first storage facility, we were like, this is working. We’ve probably added $200,000 worth of value in the first two months.

[00:33:22] John Plumstead: So it was very clear to us that this is a better business model, this is the more resilient business model. We need to pivot immediately and put all of our focus on self-storage. So I’ve got a couple questions. 

[00:33:33] Patrick Donley: The first one was that the million dollar purchase that you mentioned earlier about trying to get the bigger loan that you know, like that was outside of your comfort zone, was that for the self-storage?

[00:33:43] John Plumstead: Yes. Our first self storage facility, 1.4 million and we got a a million dollar loan on it. Yep. And 

[00:33:48] Patrick Donley: then you mentioned that you added a bunch of value. How did you guys do that? 

[00:33:52] John Plumstead: Basically, we looked in, it was in Lotton, Oklahoma, and we looked at all the rents in a lotton, Oklahoma, and we could see the [00:34:00] average rent for a 10 by 10 with something like $70.

[00:34:04] John Plumstead: Right. And we could tell the place that we bought was charging $50. So we’re like, we, we don’t know if this is true, but if storage is a commodity and the market is saying the average price is $70 a month and this place is charging 50, we should be able to raise rents from 50 to 70. Right. We didn’t know.

[00:34:25] John Plumstead: In that process, would all those people move out? Would one of ’em move? Would they refuse to pay? We didn’t know how any of it would work, but we said, okay, let’s pull the bandaid off. We raised prices from 50 to $70 and we had a couple people move out, but within two months we went from revenue being X to revenue being 50% greater or something drastic like that.

[00:34:46] John Plumstead: Right. And because commercial real estate is valued based off net operating income, which is a function of revenue, if you can drive revenues and keep your expenses relatively the same, you’re creating value. Were you doing the 

[00:34:58] Patrick Donley: outreach to the [00:35:00] owners directly or was the the team in the Philippines doing that part 

[00:35:02] John Plumstead: of it?

[00:35:03] John Plumstead: Both our team in the Philippines was reaching out. I was reaching out directly, but our first deal was bought on market through a broker. It was actually listed on LoopNet, which everyone’s like, you can’t find deals on LoopNet ever. But we found one. It was a good deal. I promise. It was. It was a good deal.

[00:35:21] John Plumstead: And what’s interesting is part of our motivation to go to storage is the direct to seller aspect, buying stuff off market. And now we’ve bought, I think 12, 13 deals, something like that. And I think one or two of them were off market. Right. So even though that was our thesis going in, and we still work really, really hard on the off market brokers have been so good in the last 12 to 18 months that finding off market deals is very, very difficult.

[00:35:47] John Plumstead: So geographically, where are you focusing? The southeast United States, we really like Florida. Prices in Florida are really high and insurance in Florida’s really high right now. Buying deals in [00:36:00] Florida is tough. We only own one in Pensacola, but we own in Florida, Georgia, Texas, Oklahoma, Missouri. We’re also open to Tennessee and the Carolinas basically looking, we call ’em tertiary markets.

[00:36:13] John Plumstead: We’re kind of looking like, let’s call a 50,000 people or greater. We don’t like to be get too rural. And then like the primary and secondary markets we’d like, but oftentimes they are priced, they’re priced out of our range, I guess I’d say. 

[00:36:28] Patrick Donley: So, and then are you keeping the units in your portfolio and operating them, or are you selling them off once you’ve increased the rents and added the value that you can, what’s your exit 

[00:36:39] John Plumstead: strategy with them?

[00:36:40] John Plumstead: Our exit strategy is to buy properties that we know we can add value to, and we’re going to try to add that value as fast and efficiently as. Let’s say we buy a deal for 2 million bucks and we think we can add a bunch of value, and then it’s going to be worth 3 million bucks. Well then we get to that point where [00:37:00] we think it’s worth 3 million bucks, and we have to be able to look at the landscape and say, is now a good time to sell?

[00:37:05] John Plumstead: Right? Because we have multiple properties in our portfolio right now that we have added that value. But because interest rates are high, it’s a really difficult time to sell right now. Right? So then you go, can I refinance? And we go, well, because interest rates are high, it’s not a good time to refinance either.

[00:37:21] John Plumstead: So at this point, even those deals that we’ve added the value to, we’ve got long-term financing in place, we’re holding onto ’em until we get to a better point where they’re, they’re cash flowing. Good. So we’re good, right? But when we talk to investors, most of our deals we do on a five year timeline. And we say, Hey, if we can hit this price at the end of year two, the end of year three, and it’s likely in the best interest for us and our investors to sell at that time, but we also make sure that we have financing that’s good for five years.

[00:37:50] John Plumstead: For 

[00:37:51] Patrick Donley: somebody that was wanting to learn about self-storage, you talked about your due diligence that you did. Do you have any books or courses or anything that you’d recommend for someone that [00:38:00] w has identified self-storage as 

[00:38:02] John Plumstead: their next step? I think the community on Twitter is really good. There’s a lot of storage owners and investors on Twitter that are sharing great information.

[00:38:13] John Plumstead: I think we’ve learned a lot from Nick Huber sweaty startup. He’s, he’s been very candid in, in sharing tons of information. Lots of people have a love hate relationship with Nick, because he can come on kind of strong in Twitter. And, you know, maybe 25 of his stuff is just engagement bait. But the other 75% of it’s really good, especially the storage stuff.

[00:38:32] John Plumstead: And then we took a course by Mike Wagner from The Storage Rebellion. Mike Wagner’s a really, really good guy. He’s creating courses, in my opinion, not to make money as much as to help people live the life they want to live. And if you’re just getting into storage, I think Mike Wagner would be a great place to start.

[00:38:51] John Plumstead: And that was a course, not a book. It’s a course. Yeah. And then I, I think book-wise, I think AJ Osborne’s got a book, but I haven’t read it. I’ve never read a [00:39:00] storage book Back to nicu. 

[00:39:02] Patrick Donley: I think he just came out with an episode today on My First Million. I was on Twitter earlier and he said like, it’s the most, he’s revealed more than he is ever had.

[00:39:09] Patrick Donley: You know, he’s a little kind of taken with the grain of salt, what he’s saying. But it sounds like it’s a, I’m definitely going to check out the interview. It sounds like it’s, I love the, I love My First Million. I don’t know if you watch it much, but 

[00:39:18] John Plumstead: it should be a pretty good episode. That’ll be exciting. I, I listen to all of My First Million episodes that, that’s good.

[00:39:25] John Plumstead: That’s good. He’s going to be on it. He’s coming on our podcast in a couple weeks as well, which maybe that helps us because My First Million is That’s a legit podcast. Yeah, they’re doing really 

[00:39:34] Patrick Donley: well. And did you do a couple of phone calls with Nick when you, in the early days to learn the business and get a little coaching and insight from him?

[00:39:42] John Plumstead: Yes. He saw me on Twitter posting about direct to seller marketing and he shot me a DM and was like, Hey, can you teach my team about direct to seller marketing and I’ll pay you a consulting fee. And I was like, Hey, how about we do a, but instead of paying us a consulting [00:40:00] fee, you come on our podcast. And he did that a couple years ago, which is great.

[00:40:04] John Plumstead: And then we’ve stayed in touch. So now I would say he did help us evaluate our first deal, but I would say over time he’s someone that we can reach out to if we, if we’ve got specific questions, we want to talk shop on what storage looks like these days. He’s been a great re resource for. I wanted 

[00:40:19] Patrick Donley: to hear a little bit about how you and your partner Frank divide up the responsibilities.

[00:40:24] Patrick Donley: What does that look like? 

[00:40:25] John Plumstead: We look at the real estate game as finds, fund and finish. Again, we’re knuckle dragger, meatheads trying to our, to do our best to understand this complicated game. So we said we gotta find deals. We gotta finish deals or correction. We gotta find deals. We gotta fund deals, and then we gotta finish deals.

[00:40:44] John Plumstead: How we think about that is finding deals. The acquisition part, I own the whole acquisitions part, right? And then the funding deal is debt with banks and equity with investors. Frank owns all that part. And then the finish side of our business, we look at that as like our [00:41:00] property management side. We’ve got a general manager named Adam Parsons that is top-notch.

[00:41:04] John Plumstead: He runs all of our property management team to include managing all of our Filipino customer call center. Talk to 

[00:41:12] Patrick Donley: us a little bit about the operations. What does that look like? Do you have somebody on site at the, at the storage units or is it all managed remotely? I know you guys are kind of into remote stuff, so talk to us a little bit about how you handle 

[00:41:23] John Plumstead: operations.

[00:41:24] John Plumstead: Yeah, it’s tough. It’s tough. I think if I were to do this interview maybe a year ago, I would say, Hey, our business strategy is we find a storage facility that’s paying someone to sit there 40 hours a week. We cut that person and then we manage it all remotely. That’s a sexy business plan that people love.

[00:41:42] John Plumstead: But the bottom line is you can’t manage these facilities fully, remotely, right? The access gate doesn’t work at least 10%, probably 25% of the time. Right? And if you don’t have someone that can figure out how to go fix that gate, open that gate, like your business isn’t going to work. You have homeless people [00:42:00] try to live in your facility on almost a weekly basis.

[00:42:04] John Plumstead: It’s crazy and it’s unfortunate, but people try to live in units constantly. People do damage at the units. People say they’ve moved out and they haven’t. What does all that mean? That means that we don’t put someone at the office for 40 hours a week, but we make sure we have a local presence at each facility every single week.

[00:42:24] John Plumstead: We have to make sure that our facilities are being inspected and being managed onsite every week. But the heavy lifting, all of the customer facing stuff, we offshore to the Philippines and we’ve got basically our own call center. They all work for us. It’s our company, but they’re located in the Philippines, so we can keep all that in-house.

[00:42:45] John Plumstead: And then having people in the Philippines gives us a couple things. One is the wage arbitrage is really good, four or $5 an hour, and the Philippines is a middle class income, so they’re happy with that. Also, Filipino culture goes hand in hand with customer service, in my opinion. They’re a very helpful [00:43:00] customer oriented.

[00:43:02] John Plumstead: I wanted 

[00:43:02] Patrick Donley: to hear a little bit more about like what your ideal acquisition looks like. What are, what’s kind of the size and what, what are you looking 

[00:43:09] John Plumstead: for in like an ideal purchase? I’ll first give you my ideal purchase, a little bit like a smart ass, and then I’ll tell you what the market actually looks like.

[00:43:18] John Plumstead: My ideal purchase is like a 10 million facility in a growing area like Tampa, let’s call it Tampa, a 10 million facility, all nine non climate control, drive up storage that’s charging 50% below market rents and is also willing to sell said facility on current financials. That would be my dream. Number one price point, 10 million bucks.

[00:43:43] John Plumstead: All the numbers, all the margin. Look, It’s a big deal. Buy it for 10 million bucks, double the rents. That means we basically took a $10 million facility and made it a $20 million facility. Depending on how big it was and how hot the market was, we could probably do it sometime [00:44:00] between 12 and 24 months, right?

[00:44:01] John Plumstead: Like what an amazing way to make 10 million bucks. If we had investors and we split something like 50 50 investors get 5 million bucks, we get 5 million bucks, everyone’s happy, right? Unfortunately, the market gets a vote, and the market, although it’s storage and storage is less efficient, I would say, than the Dow Jones.

[00:44:20] John Plumstead: It’s still a decently efficient market. So what do most of our deals look like? Well, almost every 10 million deal we look at, I would say, is very efficiently priced. So we immediately go down to the 5 million price points. Sometimes we can find 5 million deals that look good, but in reality, the best deals are under million bucks.

[00:44:40] John Plumstead: We don’t like going that low because it makes the numbers, makes it difficult to get the numbers to work. So a lot of our deals are somewhere between one and 3 million. We’d like more three to 5 million deals, but they’re hard to come by. Right? And then in a tertiary market, right? So the Macs of the world, the lot and Oklahoma’s of the world, the Columbia, Missouri of the [00:45:00] world, the Hinesville, Georgia’s of the world, those types of places that are mismanaged in some way, they either look like crap and we know that we can put some better signage and we can paint it and we can make it look nicer.

[00:45:14] John Plumstead: Or someone that doesn’t look at the asset like a capitalist, right? There’s a lot of people running storage that look at it like an Airbnb, meaning they know all of their customers by name. They have this great, amazing customer service. They’ve got a wait list, they’re a hundred percent full, but they never increase rents.

[00:45:30] John Plumstead: And the rents have fallen behind the market. So we know we can go in there, look at the asset like a capitalist, get prices up to market value, and try to extract all that value out of it. I know 

[00:45:40] Patrick Donley: we mentioned that you are a big goal setter. What does the company look like? What are your goals in the next, let’s say five to 10 years?

[00:45:46] Patrick Donley: What kind of growth do you want to 

[00:45:47] John Plumstead: see? Our goal last year was to buy 20 million worth of storage and we bought 17 million. We only bought one property in the third and fourth quarters because interest [00:46:00] rates shot up. Right. So we are doing really good to our 20 million goal. Then we go into this year and we say, Hey, what is, what is our goal?

[00:46:06] John Plumstead: And I think generally we want to be somewhere around 20 million acquired again in storage. Right? And it’s not that we have to hit 20 million, but it’s, it’s important for us to verbalize to investors, Hey, this is what our growth looks like. I want to make sure investors understand how much capital they can allocate to us.

[00:46:25] John Plumstead: And also they understand the risk that our business is getting ready to take on. Are they comfortable with that? I think this year we’ll probably be somewhere around 20 million worth of storage. And then where do we go from here? Right? Where do, what do the next five to 15 years look like? And I, I think it looks like this, it’s, it’s not a perfect goal, right?

[00:46:44] John Plumstead: If I went back to my master’s class about goal setting, they’ll be like, you need to refine this a little bit because it’s more of an idea than a goal. But I’ll give you the idea, okay? Is right now, Frank and I are really good at adding value to real estate deal. Meaning we find a real estate deal where the [00:47:00] market is pricing at a X, and we know we can extract more value and we can get that value to 1.5 Xer or two x.

[00:47:07] John Plumstead: But the problem with that is we’re buying deals generally in places that get almost no market appreciation. We get paid for the work we’re doing, but we don’t get very many tailwinds from that market. If you buy something in the middle of nowhere where Oklahoma rents aren’t going to go up that great. If you buy something in downtown Tampa, rents are probably going to go up a bunch.

[00:47:30] John Plumstead: But guess what? It’s really hard to add value in the short term. You’re kind of at the mercy of the tailwinds of the market, so what do we want to do over the next 10 to 15 years? We want to figure out how, instead of just adding value in the short term, we can evolve our acquisitions process to buy more deals in areas and assets where we can get more tailwind.

[00:47:53] John Plumstead: Makes total sense. I wanted 

[00:47:55] Patrick Donley: to also hear a little more about like what are some common mistakes that you see [00:48:00] self-storage, like new people to the self-storage space. What are some of the common 

[00:48:03] John Plumstead: mistakes that they make? They pay too much. That is the mistake is they pay too much because this is why they look at a storage facility that doesn’t have a website and they go, these owners must be idiots.

[00:48:15] John Plumstead: I can pay anything. Or they look at people that have a, a bad sign and they go, these owners must suck. And they look at those easy things of like, Hey, this person isn’t running a wonderful business. I know I can immediately go and fix those things and I’m going to fix the business. But they’re looking at it through like an H G T V lens.

[00:48:35] John Plumstead: They’re like, oh, let me just put shiplap on this and uh, paint the door red and it’s going to be a beautiful business. But that’s not how business works. A lot of business is in the financial statements, right? You have to understand how much revenue is this business bringing in today? What is the potential revenue that it can bring in?

[00:48:52] John Plumstead: And then what are those expenses looking like? Too many people are falling in love with the deal, independent of what the financials of [00:49:00] that deal look like. And then even if you have the financials of the deal, you have to figure out what can you pay? And the only way to, in my opinion, figure out how much you can pay is to back into some type of yield on cost or understand the cap rate or understand the long-term internal rate of return.

[00:49:15] John Plumstead: But you gotta have some of those kind of advanced metrics, in my opinion, to figure out what is a good deal and how much can I pay. You mentioned 

[00:49:23] Patrick Donley: a wonderful business and I know that you’re a fan of Warren Buffett. You mentioned Mohnish Pabrai, his, his book Dondo Investor. You, I saw that you mentioned it on your Twitter feed and, and I’m a huge Mohnish 

[00:49:33] John Plumstead: Pub fan.

[00:49:34] John Plumstead: Excellent. I think 

[00:49:34] Patrick Donley: he’s excellent. Amazing. And I love listening to his stuff. Do you do any kind of investing 

[00:49:39] John Plumstead: outside of, of real estate? I do. It’s pretty boring though. It’s all just an index fund. It’s in Vanguard Index Fund. Right. I look at it like. I said earlier, I’ve always had side hustles, right? I’ve always been trying to make money on the side, have ideas, this, that and the other.

[00:49:57] John Plumstead: And at a certain point I realize I want [00:50:00] all of my business energy to be focused on my commercial real estate business. So all of my money making energy is focused strictly on Gray Line investments, which is our real estate investing company. And any other investments I have at this point in my life are just in an index fund because I don’t want to, I don’t want to spend time learning about Apple or Amazon or Facebook or anything else because I want to, for now in my life, it will be a better return of time on that or better inve return on investment of that time to just focus on my.

[00:50:33] John Plumstead: We’ve got a 

[00:50:33] Patrick Donley: great newsletter called We Study Markets that’s a hundred percent free. I don’t know if you’ve, you’ve checked it out, but I’d encourage our listeners to look at our newsletter. We cover a lot of like value-based investing, do write-ups on Mohnish and Warren Buffett and Charlie Munger, and it’s really great.

[00:50:48] Patrick Donley: It’s the Investors podcast slash newsletter. Really, it comes out daily and it’s good stuff. Along these lines of, of value-based investing, there was a question that I saw you ask. One of [00:51:00] ’em was about the biggest lessons that real estate investors who lived through the 2008 great financial crisis were what their, what the biggest, you know, lessons were.

[00:51:09] Patrick Donley: And I wanted to hear what some of the better answers that you received on how to handle a downturn. Some of the comments that you got were pretty interesting to me and I wanted to 

[00:51:17] John Plumstead: to hear some of your thoughts on it. It was definitely interesting. I think my biggest takeaway, both from that thread on Twitter and then just trying to talk to people as much as possible, I think number one is making sure you have good debt on the property.

[00:51:31] John Plumstead: Making sure that you don’t have a bloom payment coming down anytime soon. Or even variable interest rates. All of our interest rates are fixed. I think a couple years ago, people would think you’re crazy for fixing your interest rates, but all of our interest rates are fixed, so we feel really good about that.

[00:51:46] John Plumstead: And then focus on cash flow. When you look at a commercial real estate deal, it’s easy to over-index on an exit cap rate because if you put a low exit cap rate, it can make every single deal look amazing. But if you can’t [00:52:00] get that low exit cap, then it could blow up the deal. So making sure, even if you do believe you can get a low exit cap, looking at the cash flow until that point, and understanding what that cash flow looks like.

[00:52:11] John Plumstead: And then the third thing that I don’t think is at the top of everyone’s mind, but I think is really important, something Frank and I try to do a lot is communicate with investors. Communicate the good, communicate the bad. You know, obviously, In investor relations, you want to do your best to let people know that the investment is doing good, but if you’ve got things that aren’t going well, you need to make sure you tell them.

[00:52:33] John Plumstead: And I think that’s super important. And something that Frank and I talk about a lot is making sure that even though we’re optimistic about all of our current portfolio, making sure we’re letting our investors know the last 90 days or so vacancy has increased, right? Like we’re in the slow season, people aren’t moving.

[00:52:50] John Plumstead: Vacancy and storage is increasing right now. We still feel good about everything, but it’s our responsibility to make sure we’re communicating that to investors right now. 

[00:52:58] Patrick Donley: Yeah, I think that’s a really good [00:53:00] point. I’ve had a couple of guys on recently that live through 2008, and both of them said that like, you’ve got to be brutally honest with your investors.

[00:53:08] Patrick Donley: You know, it’s like it will benefit you in the long run. And, and people appreciate the, the level of honesty of like, not sugarcoating how things are going and really hearing what’s what’s happening. I wanted to hear, we mentioned Twitter, talk to us about how Twitter’s affected you, how you use Twitter.

[00:53:22] Patrick Donley: What’s that experience 

[00:53:23] John Plumstead: been like for you? Twitter’s wild beast. It’s one of those things that I used to giggle when I told people I like being on Twitter because I don’t know Twitter. For a long time in my life I felt like it was like a, like a teenager’s tool, right? And then I don’t know how I got on it and started checking it out.

[00:53:42] John Plumstead: But we’ve learned a ton. This is maybe like the spark moment is Frank and I were messing around on Twitter and then on our first storage deal we were talking about it and we had someone hit us up. We met ’em, we talked about ’em, and they ended up giving us a big check for our first storage deal from Twitter.

[00:53:57] John Plumstead: We met this person on Twitter. We were not trying to solicit [00:54:00] investments, they just came to us and said, Hey, I want to invest a bunch of money in your first storage deal. And then since then we’ve had a bunch more people that have done that. So it convinced us like, Hey, Twitter is is a good place to meet investors.

[00:54:11] John Plumstead: If we share everything we’re doing on Twitter, people will come to us and let us know that they want to invest in our deal. And also from the networking aspect, you are able to reach out to people that are potentially 10, 20 years ahead of you or 1 billion, 2 billion ahead of you and have them talk to you and give you advice.

[00:54:29] John Plumstead: So Twitter really has been invaluable to our careers. I’m not sure we would’ve made the jump to commercial real estate if it wasn’t for Twitter. Let’s, fascinating. 

[00:54:37] Patrick Donley: I’ve found it to be incredibly valuable. I wish my wife, I think she views it like how you were saying like a school kid kind of thing to do.

[00:54:44] Patrick Donley: She still views it that way. I’m like, this is how, you know, this is like how I learn. It’s a such a great tool and it’s amazing that it’s free. You know, it’s like I kind of gotta pinch myself that you can get in contact with all of these people and so many of ’em will, you know, respond to you on dms and you can just learn pretty much whatever you [00:55:00] want on, on real estate.

[00:55:01] Patrick Donley: Twitter through the right follow. So for somebody that wants to be John in five or 10 years, what kind of advice would you have for a young guy? Let’s say he’s like, maybe, I don’t know, working some job that he doesn’t like, but wants to get into real estate investing. Do you have any kind of advice for a young, hungry person that wants to look at you and be like, ah, that he, what he’s doing is pretty cool?

[00:55:21] Patrick Donley: I’d like to make 

[00:55:22] John Plumstead: some steps towards that direction. I think first you have to take kind of inventory of where you are, right? Like what does your bank account and investments look like today? What does your network look like? What are your connections like? Take inventory of that and be honest and clear about how far you are or how close you are to doing that, right?

[00:55:45] John Plumstead: Like make sure you’re honest about how far you have to go, and then try your best to be like, okay, wherever I am. What is the next step? What is the next couple steps? You don’t, you know, if you’ve never done anything in real estate and you want to go buy a storage facility, [00:56:00] I’d probably tell you like, don’t do it like that, right?

[00:56:02] John Plumstead: Like, maybe go residential first, find one deal, you know, one small rental you can do first. But take some baby steps in my opinion. Or go find someone like me that you can try to get mentoring from or that you can work for for free. Like try to get near someone that’s doing what you want to end up doing and try to work for ’em.

[00:56:22] John Plumstead: But it’s I, I think anyone can do it. You just gotta make sure you keep being curious, keep pushing your comfort zone, and then ask good questions to people that you want to emulate. 

[00:56:31] Patrick Donley: I mentioned this a lot, but Sean Sweeney took a job as a receptionist at a, at a, at a real estate development firm. And, you know, now he’s a serious developer in Minneapolis.

[00:56:39] Patrick Donley: And, but you know, he was humble enough to take a, an entry level job and just learn whatever he could. And he, and he said that, he, he’s like, I, I’ll do whatever you want. Just let me learn the business and get around it. I think that’s 

[00:56:50] John Plumstead: pretty good advice and a good strategy. I was just going to add this idea that my business partner, Frank says it all the time, this idea that so many people overestimate what they can get done in [00:57:00] one year, but then underestimate what they can get done in five years.

[00:57:03] John Plumstead: Right. And that the story with Sean Sweeney is a, is a perfect example. Like someone being like, I want to meet all my goals this year. I don’t want to be a receptionist for a year. But then you go, okay, well do that for a year, but where, what trajectory does that put you on for five years? And that’s something Frank and I constantly try to remind ourself is like, Hey, we want the short-term wins, right?

[00:57:22] John Plumstead: Like the short-term wins feel really, really good, but ultimately how can we play the long game? Yeah, that’s 

[00:57:29] Patrick Donley: a good point. Really good point. I wanted to do a quick fire round here 

[00:57:32] John Plumstead: before we wrap up. You up for that? Let’s do it, man. I’m ready. All right, cool. Question 

[00:57:37] Patrick Donley: number one is who’s your real estate or entrepreneurial 

[00:57:40] John Plumstead: hero?

[00:57:41] John Plumstead: They don’t know they’re real estate guys, but I would say it’s all the value investing guys, right? It’s Warren Buffettt, it’s Charlie Munger, it’s Mohnish Pry. Those guys are my, my heroes, right? That who’s the Sam Zell? Like I could say Sams Sam Zell, but Sam Zell’s not my hero, right? Like reading his book, it’s like, ah, it’s, it’s whatever he is.

[00:57:58] John Plumstead: Got some good ideas, right? But you know, like [00:58:00] read the shareholder letters from Warren Buffett, like, guys my hero, right? Like absolutely. And my whole thing with real estate is taking those principles. Cause I think it matches my risk tolerance and I think like it actually works is like taking all those principles and applying ’em to real estate.

[00:58:13] John Plumstead: Like that is what I’m trying to do. Hundred percent. Moses 

[00:58:17] Patrick Donley: Kagan said the same thing. Read Warren Buffettt shareholder letters. Like, if you want to become a good investor in real estate 

[00:58:22] John Plumstead: or, or anything, you know, it’s 

[00:58:23] Patrick Donley: like probably the best education you can get. Question number two, most gifted 

[00:58:27] John Plumstead: book. Maybe unorthodox answer, but I’m like, I find book recommendations tough because a lot of people like, where are they in life, right?

[00:58:36] John Plumstead: Like I look at all the books I’ve read and like the sequence of those books is important. So for reading books, I would say everyone listening to this podcast should have a subscription to Audible and they should buy every book they want to buy as soon as they’re ready to listen to it. Like buy the book, always buy the book, it’ll be a good investment.

[00:58:54] John Plumstead: But here’s what, I don’t buy people books that often, but I recommend podcasts quite often. A couple great podcasts. I think [00:59:00] right now. My First Million, I think is a great podcast right now. And then The All-In Podcast I think is is another great podcast. I’m not familiar with 

[00:59:08] Patrick Donley: that one. Tell me more about 

[00:59:09] John Plumstead: The All-In Podcast.

[00:59:11] John Plumstead: All-in podcast is Chama who used to work for Facebook, big VC investor. I forget the other three guys’ names, but it’s grown. It’s even bigger than My First Million right now. But they talk politics, they talk Elon Musk, they talk a lot of the stuff that My First Million is talking, but I think it’s from a more macro perspective, but four really smart guys that do a good job jamming back and forth about hot topics.

[00:59:35] John Plumstead: They’re very comfortable disagreeing. I think it’s really well done. I’ll check it out. I used 

[00:59:40] Patrick Donley: to be a big Chamath fan, and then I went, kind of exited that stage for a little bit. I’ll definitely check 

[00:59:45] John Plumstead: it out. It took me a while because I, when Chamath is basically putting out shareholder letters, that’s like, I’m way better than Warren Buffett.

[00:59:52] John Plumstead: I’m like, who is this guy? Like, screw this dude. Right? And he, he still has some of that pompous ness, but I, I refuse to listen to the All [01:00:00] In podcast for a while because of that. I’m glad I came back though. He still drives me nuts sometimes, but the bottom line is like, he’s a super smart guy. I’ll check it out.

[01:00:07] Patrick Donley: All right, last question, John, what does 

[01:00:09] John Plumstead: success mean to you? Yeah, big question. I think in my professional life, it’s like, making sure that I continue to push my comfort zone, right? Like, I love the idea of being challenged. I hate the idea of being bored, right? So I want to continue to work on deals and work on problems that challenge my intellect, that challenge my emotional intelligence, that keep pushing my, my comfort zone, right?

[01:00:32] John Plumstead: And I, I think from a family perspective, I think it’s having kids, I’ve got four young. Having kids that are great kids, having kids that when they’re adults, like want to come spend time with you and then hopefully they’re great fathers sometime in the future. I think a lot about what’s a successful marriage look like, right?

[01:00:50] John Plumstead: Like parenting is, is hard. I think marriage might even be harder. You know, like communicating in a productive way with your spouse all the time can be tough. So I think do my wife and I [01:01:00] enjoy each other’s company? Are we friends? Can we laugh and go out to eat and have tons of fun together? I think that’s super important.

[01:01:06] John Plumstead: And then I’ve also thought about success in the social aspect. I’m, I’m a big believer in happiness comes a lot from your social network and I, I think too many people have stopped trying to make friends or keep up with friendships. So to me, success is having a bunch of close friends that we go out to eat with and our kids play together and we have fun together Big.

[01:01:28] John Plumstead: But I look at it like that because I, I, I want to be super, super successful in real estate and I want to make a ton of money, but none of that matters at all If I’ve got a broken family, if I’ve got no friends, if I’m too stressed and anxious to go to sleep at night, I, I want to keep pushing my comfort zone, but I want to make sure I stay in a place that’s, that’s balanced and how happy, healthy for my entire family.

[01:01:48] John Plumstead: Yeah, that’s great. I really love that. 

[01:01:50] Patrick Donley: For those of our listeners who want to get in touch with you, what’s the best way for them to learn about you, maybe reach out to 

[01:01:56] John Plumstead: you? What’s the best way for them to do that? Appreciate that, [01:02:00] Patrick, I’m at John Plumstead on Twitter. You can help me up there. If you want to shoot me an email.

[01:02:04] John Plumstead: I’m John Gray line investments.com. Gr ay, for the grey line investment investments.com. And then we’ve got a, a podcast, it used to be virtual real estate investing. It’s now Commercial Real Estate Playbook. It’s hard for me to say because we just rebranded and I was about to screw it up. But Commercial Real Estate Playbook.

[01:02:21] John Plumstead: Playing on Frank and i’s football history. We’re going to try to do a better job on the podcast if you want to want to check it out. But really appreciate your time. Patrick, super well prepared these questions were really, really good. I really enjoyed the conversation. Thanks, John. I really appreciate it too.

[01:02:37] John Plumstead: You, 

[01:02:37] Patrick Donley: you’re a fun guest. I mean, your story’s fascinating and I’m, I got, you know, there’s a ton more questions I could ask you here, but I want to be appreciate your time here and I know you got a busy day ahead, so thanks a lot and maybe we’ll have you on the show again. And I definitely encourage our listeners to check out the podcast. I listen to a couple of ’em and they’re, and they’re fun to listen to. You guys go back and forth together. 

[01:02:57] John Plumstead: Thanks r really appreciate it. And don’t forget about Tampa. I’m Don [01:03:00] in Tampa now. My hashtag is long Tampa because I think everyone should be investing down here in Tampa. So if anyone’s coming down to Tampa wants to play golf, hit me up.

[01:03:08] Patrick Donley: I may do that. We may, may need to do a round or two down there. 

[01:03:11] John Plumstead: Let’s do it, man. 

[01:03:12] Patrick Donley: Okay, folks, that’s all I had for today’s episode. I hope you enjoyed the show and I’ll see you back here real soon. 

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