Harry James
Sarah: The next part of our event is going to be Harry James. If you guys have not heard him speak before you are going to be in for treats. Harry is actually my personal mentor that I've hired to help me with my real estate, because he's probably one of the most successful investors that I know. He's been an entrepreneur for over 35 years, owns multiple numerous businesses, including restaurants, even a quarry and so forth and has done more than a hundred million-dollar of deals. So, Harry is going to be talking about the, "Three Ways to Fail as a Real Estate Investor". Welcome Harry.
Harry: Thank you.
Sarah: Awesome. The floor is yours. You tell us what we need to know and let me know if you need anything.
Harry: First of all I'm going to be really vulnerable and personal here. I'm the most excited guy in the panel. I just had my third grandchild, a little boy, and I have two girls and a boy. And his name is Jude, which is exciting for me because one of my favorite bands is the Beatles. So, that's pretty cool. Jude Mercy's actually his name. That's pretty exciting for the family. And I also just found out that my son is expecting. The James clan is expanding and there's just nothing more exciting than life and family and friends and experiences. Bore you all with that.
As Sarah knows, I do not have a large social media presence. As a matter of fact, I have zero. And anytime I have a speaker in front of me or at a podium, or somebody's giving me some advice. I'm always asking the question, why should I deal with you? Why should I listen to you? Why would you have any credibility with me? Those of you that may have heard me speak at the club event live a number of months back, I would never take fitness advice from somebody 300 pounds sucking on a Coke. In other words, there's gotta be some credibility, so, not to be self-centered or to focus on trying to build up my ego, but I thought it would be important to build a little bit of credibility.
It has definitely been a hundred million dollars worth of real estate. As a matter of fact, one of the things that I am always a little skeptical of with speakers is sometimes you'll hear a speaker. And the reality is they are speaking through, and they're talking about something they did 20 years ago. In other words, they were good at one thing and are almost like they repeat that. It's 20 years of experience. It's not 20 years of growth. It's one year, 20 times over.
I thought for the sake of credibility, I just share some things that have been happening over the last three months. And Sarah, can I ask, as we're speaking here because something's happening with my computer? Am I being heard? Okay?
Sarah: You are good. You're all good.
Harry: Great. You disappeared. And I was just a little nervous. I was talking to you.
Sarah: I'm giving you this stage. You're so entertaining and there's so much information. I actually just really want to focus on what you're saying.
Harry: No worries. In the last three months, we just sold a $16.2 million piece of land. I actually put that deal together. 13 years ago, I had no money and negotiated. It was a state sale. We paid $4 million for it. I put 10 people together and here we are 13 years later and we just sold that for 16.2 million. I was very involved in that negotiation. We just sold 10 triplexes in Coburg, Ontario on the water all fully sold out five people on the waiting list. $10 million of triplexes that will close in February, March, 2021. And we have two deals closing November 30th for over a million dollars in a little place called Omemee, Ontario.
If anybody's interested, why Omemee? I'm happy to talk to you about that. So, in other words, I'm very much still in the game. I love what I do. I love real estate investing, especially, two things that I do. I'm a partner with my son. We have HJ group, which is an employee benefit and pension company we do for companies. And my role there really is to talk to the employees as a value added service that talks to them about work-life balance through my live real workshop. And I also talked to him about building wealth, equally what I devote myself to is my craft of investing in real estate, which I've been doing now for I guess 37 years.
And it's my love, it's my craft. And it's something that I want to get better at every single day. There's something though, I want to say to everybody that's listening today. You're not online at eight o'clock at night because you want to be stagnant. You're not online at eight o'clock at night because you want to be average. You're online at eight o'clock at night with this dynamic club. That's giving great information because you want to grow. You want to expand, you want to create experiences for your family and experiences for yourself that you're very deserving of and something that you want to accomplish and what I'd like to say.
I don't want to come across like I'm some guru, because I'm certainly not, but what I've learned all my life since I was 18 years old, is that the most important thing you have to be prepared for success? Is that, you have to be feeling worthy of that success. In other words, the neighborhood between the ears, your mindset, your attitude, and your perspective are everything.
If you don't feel worthy of success, if you don't feel that you deserve to build a real estate portfolio to have a journey or a lifestyle or an income like anybody else in the world has, then you will subconsciously, completely undermine anything to achieve the success that you desire, you will sabotage yourself.
The most important thing you can do as a real estate investor or as a business person is make sure that you're top down, not bottom up and top down is your attitude, your perspective, and the fact that you are prepared mentally for the success that you deserve. And the reason I wanted to start with that is if you're not mentally prepared, that's success.
If you don't feel deserving of it, if you put yourself down, if you say geez, I've only got so much of an education or you have no idea what I've done in my past, or geez. You have no idea what my family's all about or what, how people view me or whatever it might be. I'm not good at speaking to people. I'm no good with math, whatever it might be. That's holding you down. You have to somehow eliminate that. I'm assuming, I'm gone now, Sarah?
Sarah: No, you're still here.
Harry: Here's something to pop up on my screen again. You have to eliminate that. Feeling worthy is incredibly important and it doesn't matter what level you're at. I was just hired to coach an individual that does a tremendous amount of building and construction in the Caribbean islands multi-multi millionaire.
When I was coaching him last week, it was very interesting that this individual, with this level of success, was hitting a glass. He wanted more. He felt like he was spinning in circles and he needed to get back to the fundamentals. We all have to work on that mental side of our business every single day and ensure that there's nothing getting in the way of achieving the success that we desire.
I am here tonight to tell you how to fail at real estate. This is guaranteed. If you subscribe to these things, I promise you, you will never achieve the level that you are seeing. I don't know if there's any Beatles fans, but I'm gonna go back to my grandson. Malcolm Gladwell wrote a book about how to become proficient and expert at anything. And it's all about 10,000 hours knowing your craft, investing in your craft, studying your craft, failing at your craft, and constantly becoming better at your craft. And his thesis was 10,000 hours will make you pretty proficient at most things.
The Beatles, as many of you may know, spent many months in Germany and Hamburg. And they played, it was almost slave labor, six, eight hours a day on a stage in Hamburg. And they would hammer out their harmonies and their leads and their proficiency. And if you look at the harmonies and just this, the synergistic way that the Beatles played together, that was from the 10,000 hours. It wasn't necessarily natural talent or ability. It was from constantly logging in the hour, good at their specific craft. And I want to challenge you all as real estate investors. We need to do the exact same thing. I've been at it for 37 years and I constantly make mistakes and I constantly fail, but I'm also constantly getting better at what I do. Here they are, the 3 Ways to Fail as a Real Estate Investor
Transact or buy real estate instead of investing in real estate. It is shocking to me that the people who have the privilege of coaching and working with get hyped up, go to workshops, go to seminars here that most billionaires are real estate investors. And then blindly go out and buy real estate, transact real estate.
Anybody with a pulse, anybody with half a brain can go out and buy real estate that is not investing. In order to invest, you work hard for your money. You must have a set of criteria. You must have a certain criteria that you adhere to ensure that you're putting your money in the right places where it's going to grow.
If you get involved in multi offer situations, overpay, forget to do a sample of the soil and you find out there's $300,000 of cleaning. If you don't realize that there's a toxic dump site next door, if you don't do your homework and you don't figure out exactly what your investment criteria is, you stand to make some very significant mistakes.
It's critically important, you have criteria. The criteria is different for everybody. There's a hundred different ways to get to Florida and there's a hundred different ways to invest in real estate. You may be somebody that wants to flip real estate. You may want a certain return on your downstroke. You may want to make sure that over a certain period of time, your net worth grows a certain amount. It doesn't matter what the criteria is. But here's the key. Once you establish the criteria based on your personality, your risk tolerance, your philosophy, what you do or don't like, then it makes it much easier to zero in on the properties that might be most appropriate for you.
You won't have the scattergun approach. You'll have more of a rifle approach. In other words, you'll be zeroing in on those properties that match your criteria. The reality is you have to do hundreds of offers. If not thousands of offers to land on the deal that fits the criteria, you're going to get a lot more no’s than yes's. And you also have to make sure that you have the activity at a very high level and network with people and share with them your criteria. You get the results that you want.
The other thing is, a good example in terms of investing instead of buying. When I invested in the piece of land that we just sold for $60 million. I invested in that because I felt that eventually the water was going to come and there was going to be great growth in that area. I knew right up front that I was going to have to invest quarterly, a significant amount of money. I was going to have to write a check. Land is expensive. You have to feed land.
There's no revenue from land. And I was very committed at the front end to put a certain amount of my money into that land. Almost like I was putting in an RRSP or another investment account. I didn't see it as a cost. I saw it as a true investment. When you look at a piece of property, when you look at a piece of land, when you look at a multi-residential building, know what your criteria is, that way, that you will clinically focus and commit to that long-term investment as opposed to reacting based on circumstances or emotions.
Please invest, Don't buy, don't transact, invest. Investing in real estate takes seriously art form criteria. Investigation, it needs all sorts of extra resources analysis. Don't just go along with the crowd. Don't just meet a few people and take their advice. It's your money. You've got to be accountable and responsible for your resources and your success.
Please invest in real estate, don't just buy or transact, establish a clear set of criteria. That's right for you and your family and what you want to build and wealth in the long term. I'd like to encourage anybody by the way, as I'm speaking this evening, I really like to have more of a conversation. If there's anybody that wants to challenge that point of view or ask me any questions as I'm going, please feel free to ask me and I will completely ignore you.
Impatience, I have seen so many people get impatient with real estate. Listen, the key to real estate. And again, I challenge anybody on the line tonight. The key to real estate is time and perseverance. It is not a quick fix. It is not something you're going to get rich overnight. It is time and perseverance, and you've all heard me say this before. It is not easy. Despite what everybody says, despite what the people at three o'clock in the morning on TV say, despite what the little handwritten paperback book says, it is not easy.
Like any craft, like anything worthwhile. Real estate requires time and perseverance, and it requires you to know your craft and take it seriously. Here's what I've seen. Somebody has an $800,000 asset. Maybe it's a triplex. I've seen this with my own eyes, front row seat, and they invest. They start to win and they recognize that they've made a hundred thousand dollars.
They get impatient, they want to consume, they want to be the rock stars. They want to go to Vegas. They want to buy that car. So they cash it. And they take a hundred grand and spend it instead of hanging in for the long haul. No, what sense does it make? And I'm all addicted to OPM. I'm very addicted to OPM. I heard the other guests say they're addicted to OPM, Other People's Money. Why would you sell off an $800,000 asset that was going to be fully paid for by other people over a 15 or 20 year period to cash in on a hundred grand in. It doesn't make any logical sense whatsoever. If you're going to commit to building wealth and real estate, you have to commit to going through the whole process.
The magic of OPM is when you have that triplex and you're up a hundred grand and stay the course, let the other people pay it off in the long-term. Don't succumb to emotion. Don't succumb to wanting to have that immediate gratification. True wealth comes from sticking with the program and making sure that over the long haul, other people pay off those assets on your behalf.
Here's what else happens. You buy a piece of real estate and I've seen this happen in many Nouvel investors. All of a sudden you find out that somebody is raising chinchillas in a basement or have grown-up. And your automatic reaction is holy cow. This is going to be hell on wheels. I'm going to sell it. No, it's just a bump in the road. It is not easy, whether it's somebody's squatting and not paying the rent, whether it's chinchillas in the basement, whether it's a furnace that fails or a roof that collapses. That's part of the game. It's called monopoly folks, hang in for the long haul. It is not easy. It's simply a hurdle. Deal with it.
That's why you get the big bucks at the end. Don't get distracted. Don't get discouraged. Don't head for the hills, just because you meet a challenge that doesn't make any sense in any other industry, you wouldn't do that. Why would you do that in real estate? If you get impatient and you run away, you're missing out on 90% of the upside over the long haul.
Remember it's time and perseverance. Don't get impatient with your investments. There's all sorts of things that happen that are unplanned. There's all six that happened. That taught me that it is tough. I was in a partnership in Colbert, Ontario, building some very nice waterfront properties. The first phase went excellently. The second phase was absolutely hell on wheels. It was very painful for me, for my family, as one of the few times in my life, that was up at three, four in the morning, wondering how I got myself in this situation, but there's a quote that I remembered, "when you're going through hell, keep walking, don't turn and retreat". Just keep walking. It's going to get better and sure enough. After a number of years, we turn lemons into lemonade through that very difficult situation. No, it wasn't easy. Yes. It was really tough, but the payoff and the upside has been very significant in that particular project.
Whether it's bad tenants, bounce checks, whether it's things that you didn't expect in terms of repairs, you've got to stay the course because when you have other people paying off an asset and your behalf magic is going to happen. Inflation is going to cause property to go up and the mortgages are going to be paid down.
To recap very quickly in the first two. One sure way to fail is, transact and buy. Instead of investing, instead of having a very strict set of criteria to determine whether you will or won't put your hard earned money into a project. Number two, the sure way of failing is, impatient. Grabbing money and running or getting discouraged because the journey is not as smooth as it was purported to be when you started out on it.
The third, and this is one, and by the way, I don't take credit for any of this stuff. I've stolen this from books. I've read people who I've heard of. And that's what it's all about is sharing information, right? And coming up with a philosophy. But this is from Ken Fowler, the most proficient real estate investor, an amazing guy, not a high profile, not a lot of books, but Ken Fowler. As a matter of fact, I interviewed him. If you look up Ken Fowler and Harry James, amazing real estate investors. And I had him here at the Live Real Factory. And he said the key to his multimillion dollar X success. And he built Red Leaves. He developed the Banff Hotel in Calgary. This was an incredible real estate investor. He said the key to success in real estate investing is
Staying Power. We're going through COVID right now. I'm sitting in the old town hall, a beautiful building. I bought it in 1996, when the best investments ever made this building have generated beautiful revenue for a lot of years. But guess what? I'm going through a bump in the road. I am down $16,000 per month. Right now, the $16,000 per month that I was earning on this building two years ago is now gone. Now, when you are in the real estate game, you can't put your back to the wall.
You must have staying power. You must have a contingency plan. That contingency plan might be lines of credit. It might be private money. It might be private investors, family members, what? It could even be a very significant cash advance on your very low interest rate, 50,000 on a credit card. The reality is no matter what you need a contingency plan. When you go through real estate there, inevitably, especially with what we're going through right now. There's going to be trials and tribulations, commercial real estate's real tough right now, finding commercial real estate people to tenants to lease your property. Very difficult right now.
What do we do? We pivot, we reinvent or we just hang in because we know it's going to get better. And by the way, I'm going to say this publicly. I hope I'm right on this. I think I am. You can't build culture through a computer screen, you can't build a company without energy. Human beings need to be together. They need energy. We need each other. That's a human fact. They are not going to knock down and pave all the buildings downtown into a parking lot. Commercial is going to come back. People are going to reconvene and we are going to get back to some type of normal situation with commercial real estate. Most human beings, albeit, the odd tech guy, don't want to be holed up in their basement in the dark, in their underwear, living without human interaction. That's just not normal.Commercial real estate is not going to collapse and die in my humble opinion, but those in commercial real estate obviously need to have some staying power.
There it is just in a nutshell, Harry James' three ways to fail miserably in real estate, transact or buy instead of carefully investing, get really impatient. Grab your money and run or batten down the hatches because you've gone through a tough time or put your back to the wall and don't have any staying power. Those are three ways to make sure that you'll have a miserable ride. If you can avoid those things, I assure you'll build great wealth. You'll build a great portfolio and there's lots of people. That'll give you some advice along the way.
Sarah: Amazing. Harry, thank you. That was just very inspirational, but you speak from experience. You've been through these ups and you've been through these downs, maybe not a pandemic per se, but you've been through a lot of market shifts. Thank you for sharing the insights and thank you for making it really engaging as well. Guys, let's get some ones for Harry and feel free to ask a series of questions, just make sure that it is handless and attendees, but this is why I hired this guy for me personally because Harry, you are awesome.
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