Navigating the Short-Term Rental Market: Expert Tips

Stephen Schmidt (00:03.688)
Welcome back to the show where we interview the nation’s leading real estate entrepreneurs It’s your host Stephen Schmidt back at it again And I got a real treat for you today And I know I say that all the time, but I got another Stephen with a pH in the house today I got Stephen Petasky. Hopefully I said that last name, Stephen has been in the real estate world for over 20 years He’s also the founder and CEO of the Luxus Group and he’s essentially the king of short-term rentalsSTEPHEN PETASKY (00:16.376)
you

Stephen Schmidt (00:31.132)
And so we’re going to get into a real cool conversation here today and some of the projects that he’s been a part of and his background. Before we do just remember at Investor Fuel, we help real estate professionals, service providers and real estate investors, two to five X their businesses in order to build the businesses they’ve always wanted so can live the lives they’ve always dreamed of. Cause at the end of the day, that’s what we all get into real estate for is to live the dream. So with that being said, Steven, welcome to the show today, brother.

STEPHEN PETASKY (00:56.984)
Thanks, Stephen, for the pH. I am the first for that, I think we talked about. That is a treat in itself, at least for us. We think it’s cool. Maybe no one else, but.

Stephen Schmidt (00:59.036)
Yes.

Stephen Schmidt (01:05.864)
100 % you got. So for our listener base, can you just give us a little bit of background? Like how did you get into this space? What were you doing professionally at the time? Did you jump right in as a young adult or how did you get into the business and then how did you get to where you’re at today now with the Luxus Group?

STEPHEN PETASKY (01:23.8)
You bet, yeah, it’s been 18 years, it’s been quite the journey, so I’ll give the kickoff to it all because I think like all, I would say, real estate or entrepreneurial journeys, it starts with a problem you’re trying to solve. And for this particular problem was not trying to solve it for anyone else, but for my wife and I. We were having our first, she was pregnant with our boy, and we were totally different careers. She was a journalist, I was in the retail grocery business, so very far removed from real estate.

But we had a love for travel, know, so that was, you know, whether it’s hotels or renting at that time, VRBOs because, you know, Airbnb did not even exist then. And our problem was pretty simple. The problem that everyone had at the time and still has to a certain extent today is when you start traveling, especially with kids.

You want more space, you know, so we would stay in hotels as a couple and it was fine. We eat out three meals a day and we didn’t mind a small hotel room. When you have little babies, which you know, you have a big family, it’s hard to jam them all in a hotel room and it’s not really comfortable for the kids or the parents at all. So we realized hotels were going to be probably done as part of our travel going forward. So what do you look at at that point? We look at vacation rentals. It gives you the kitchen size, the bedroom count, the pool in the backyard. You can just hunker down and relax a little bit versus,

cook your own meals, everything else. The problem is we were, and I think some parents were maybe more chilled than us, but we were pretty anxious new parents. we’re like, don’t, my wife is like, I’m not having my baby crawl on some dirty carpet at some home that I don’t know what it’s gonna be like. The pictures look great, but is it really gonna be that? And that’s where you have still to this day, the horror stories when you book a home and you realize that’s not what it’s shaped up to be. It’s obviously a lot better today than it was in 06, but at a certain extent it still exists.

So that kind of got written off. And then the third option was to buy our own home, but we didn’t have enough money to do it. But the concept was good in the sense that we could set up the home exactly the way that we wanted to set it up. So play pens, booster seats, baby monitors, hairdryer for my wife, know, fully stock kitchen for me and all the things that be, that would make our lives easier instead of packing 19 suitcases and pack and play and everything else for the travel. We want to make sure travel is easy and fluid.

Stephen Schmidt (03:32.017)
Mm.

STEPHEN PETASKY (03:32.024)
But the big drawback, in addition to not having the equity to purchase the type of home that we would have enjoyed to stay at, was we wanted variety. We didn’t want to go to one place. So I didn’t want just beach and didn’t want just to ski and golf and didn’t want just the desert of the city. So we thought, maybe, wouldn’t it be very cool if we had 30 properties in all these different destinations so we had the variety between the city and the desert and the beach and Latin America, and then we had the setup exactly the way that our family would like it.

So that was the concept. And we’re like, well, now how do we solve this problem? Well, we don’t have $40 million burdened hole in our pocket to go buy 30 properties. So we syndicated. Obviously, very common approach to any investment. Instead of doing it with five people and buying one home, we thought, let’s get 150 people or 200 and buy 30 homes. So we kicked it off in 07. And we thought, realistically, what are the odds that we’re to have enough people to get this going? And we went out. I say I went out. And my wife probably still thought I was crazy at the time.

And just went out and begged, borrowed, and stole from 20 friends and family. And we raised $3.5 million. And they all, it was funny, sitting with them back then, they’re like, I have the same problem. It could have been a dual income, kids, or retiree, or multi-generational trip, or families like ours. They’re like, I’m sick of not knowing what I’m getting on other side. So I stay at hotels. And I want a hotel experience, but on a vacation property. So.

Stephen Schmidt (04:48.967)
Mm.

STEPHEN PETASKY (04:53.772)
Raised the money, we bought our first three homes, one in Condo, Maui, a home in Phoenix, and a ski summer property in Western Canada. And we thought, you know, our vision was 30 homes, but we thought that’s probably gonna be it, very realistically. But those 18 people told 18 people and told 18 people, and it grew to become like 400 LPs, 100 million in real estate, 50 owned homes globally. And we had this portfolio where these partners of ours,

we’ll be able to travel to the homes and use it almost like a private club. It really was a private club. Think of a private REIT meets a private golf course type concept. And that kind of snowballed the whole organization into developments and short-term rentals and other things that we’re doing now where the business is growing a lot and it’s lot changed a lot. But that’s how it all got kicked off.

Stephen Schmidt (05:28.09)
Mm. Sure.

Stephen Schmidt (05:40.505)
Wow, that’s incredible. Now, so when when was that first jump there? What year was that?

STEPHEN PETASKY (05:42.776)
Thanks.

STEPHEN PETASKY (05:47.182)
So 07 to, it was kind of like when kind of almost like three seven year increments. The first seven years were fairly good to us because the Great Recession hit, but we were in Edmonton, Alberta and the economy was still pretty strong due to oil and gas during the Great Recession, primarily like 09, 10, 11. And so when the world was fairly stalled, we were having pretty good access to capital and we’re buying homes at a discount. So we had a really strong growth spurt for about seven or eight years during that time.

Stephen Schmidt (06:04.582)
Mm-hmm.

STEPHEN PETASKY (06:15.642)
And then the next seven years we shifted into as our economy slowed down, we weren’t selling in the U.S. We’re only issuing this security or this investment in Canada. We didn’t really want to multiple offices around. It wasn’t part of the vision. We kind of keep it small and boutique. So for additional revenue, we got into the development side to build homes for groups like ourselves so that we can build the home exactly the way we want it.

And then, yeah, third iteration we’re in now. We’re 18 years. COVID hit, changed the businesses. And we decided to focus on recreating the businesses in a way that could be far more scalable and larger. On the development side, much larger projects and less of them. And on the vacation property side, we decided to get out of ownership. So we actually have sold 46 of the 50 homes, distributed the capital back to the investors. And we’re getting into a asset light model where instead of

owning the homes or managing other people’s homes under the same vision. So the same setup and standard and experience for the guests.

Stephen Schmidt (07:12.368)
Yeah, now let me ask you this because you mentioned those first three that you got were Western Canada, Phoenix and Maui, three completely different places. Was there some form of unique strategy behind that or why did you choose to be so spread out versus three in Maui or three in Phoenix? Like what was the draw to those places back?

STEPHEN PETASKY (07:22.701)
Yes.

STEPHEN PETASKY (07:34.262)
It really honestly went back to the concept of variety. What we were pitching to our, well for our own problem is I didn’t want to go to one place. I wanted to go to multiple places. So like frankly, in a lot of ways it’s easier syndicating in one country or one state because you’ll learn the rules, you understand the economics. But that was never part of our model. Our model’s intention was to have experiences around the world. I say around the world, North America, Latin America, Western Europe.

Stephen Schmidt (07:37.606)
Hmm.

STEPHEN PETASKY (07:59.062)
so that our owners and our partners could travel to those homes knowing they’re gonna get the same experience. So if they go to Maui, but not everyone goes to Maui every single year. Sometimes they go to Kauai, sometimes they go to San Diego, sometimes to Costa Rica. So now our group never had to travel anywhere else because we had this, we had New York City and we had a whole bunch of ski summer places. We had Caribbean, Italy. Now people were like opening up their thoughts and minds how they could travel because we made travel easy.

Stephen Schmidt (08:04.699)
Hmm.

STEPHEN PETASKY (08:27.672)
for 20,000 vacationers during that time. know, it hundreds of people, but multiple, multiple vacations each. And so variety was a key component and that still exists today, providing people variety, just like hotels do, but certainty.

Stephen Schmidt (08:42.406)
What do you like about the short-term rental space specifically that keeps you in it and has kept you in it for almost two decades?

STEPHEN PETASKY (08:52.654)
Yeah, I think that what I’ve, I think about any industry, there’s always like formative moments within that industry. And back in 07, 08, we were part of 50 companies that tried to launch this variation of it, call it version 1.0. And we ended up becoming a leader in the industry and the largest equity version that existed. So we’re really proud. We felt like we kind of cracked that nut and did a good job, but we also realized there was limit to the scale and I guess the positive impact we could have for travelers because we only had 50 homes and we want.

you know, homes as an example. So then we said, okay, let’s look at a new version called version 2.0 where we can have that type of positive impact at greater scale. But what does the industry look like? Well, you know, Airbnb dominates, you know, the distribution channels. So we’re not gonna fight against them. We’re gonna work with them. They’re a very key partner in terms of our growth. What else is missing? Well, Airbnb can’t provide, they can provide global distribution, but they can’t provide certainty. You know, they have.

millions of homes and they’re all different shapes and sizes and experiences. So we thought when we re-evaluated again in kind of 22, 23, 24, before we launched this new version, it’s like, we still think the industry is missing certainty. Travelers go to hotels, not because they want a room that’s 400 square feet big, they do it because they know exactly what they’re gonna get every time they go.

And so from a short-term rental perspective, think the industry as a whole continues to grow. It’s still an industry trying to figure itself out to get like mature, large companies. mean, Airbnb and VRBO aside, but from property management companies like us, just think about they just distribute. They’re like the horsepower, but they don’t run the homes. There’s not many very large, sophisticated property management companies exist globally. And I’d say there’s, you know, tens of them, but there’s not hundreds of them. It’s generally an industry filled with mom and pop shops have built really

nice little businesses and their cities and their areas. Pardon me. And we are looking to say, how do we, how do we play a role by providing this variety in the space? So it’s kind of like finding our niche, sticking to it, providing a certain experience within an industry, kind of like Elon did with rental, you know, with cars. He realized that there’s plenty of cars out there and very large sophisticated companies, but he found a version of it that they were not doing. These are too big to move or whatever move quickly. So this is our own little version of that. And hopefully we can make it a,

STEPHEN PETASKY (11:08.398)
$300 billion company like Tesla. Probably not, but maybe not quite that big. But we’re going to try to make it bigger than it is today.

Stephen Schmidt (11:11.059)
Right. Yeah, for sure.

Well, you know, it’s really interesting on that note. I even saw something on, think it was X the other day, stat of car company profits over the last like 15 years or something. And you know, you got Ford, that’s like negative 10 % over the last decade or whatever. And then Tesla, that’s like over 18,000 % growth. It’s like, it’s just incredible. It’s a true testament to innovation.

STEPHEN PETASKY (11:35.924)
Yes. Yeah. Yeah.

Stephen Schmidt (11:41.722)
So, and like on that note, obviously you’re a market leader and you see things differently than, know, your average person that just goes and buys a couple properties or maybe sublets a few properties that they’re leasing to do this. so generally when a major player like you is making big decisions like, hey, we’re going to offload these properties, become asset light, et cetera. There’s in some regard, maybe some challenges that you’re seeing and some liabilities that you no longer want to have in order

boost the profitability of your company, would guess. And so with that, what are some of the challenges for the actual owners that you’re seeing right now in the market?

STEPHEN PETASKY (12:14.797)
Mm-hmm.

STEPHEN PETASKY (12:22.454)
Yeah, it’s a great question. As we shifted from version 1.0 to 2.0, was our ability to, you our challenge with scalability. So as we kind of shifted to a business that could be scalable, we wanted to look at through the homeowner’s lens. They have really three options. You know, if I’m a homeowner that bought a home that I want to rent out, I can do it myself, which was like a hot thing during COVID. Everyone’s making lots of money, but realize that it’s a very hard, grindy business, property management.

No one wants to take calls on a Saturday night when a guest is calling to ask where the channel is for Dancing with the Stars. You know, it’s like, this seemed like a great idea to make all this money. And now I’m like, you know, dealing with the leaky dishwasher in my Sunday afternoons. they, they, but still a lot do it themselves. Option number two is use a local property management company. And as I mentioned, there are thousands of these PMCs spread around. So Joe and Jane Smith started San Diego surf rentals and 10 years ago, and they got

50 properties in San Diego or whatever it could be. The problem with them is they probably very good operators in the ground. I’m going to generalize, but say very good operators in the ground, but they don’t have scalability. They’re not looking to have Maui surfer rentals and Costa Rica surfer rentals and all these places. So if I’m going there, it’s very hard to create loyalty because you only have one destination. And second, generally they don’t have the sophistication as it relates to revenue distribution. And this is an important challenge. So if you look at Airbnb,

Stephen Schmidt (13:34.917)
Mm.

STEPHEN PETASKY (13:46.072)
you have to use Airbnb and VRBO. They’re key, they are the players. They have 92 % of the distribution out there. So we love people booking direct with us, but we realize most people are gonna find us using those search engines. Well, those search engines are constantly evolving the same way Instagram and X, it’s all data programmers reevaluating and changing algorithms on a daily basis to figure out how to reward or punish you on those algorithms on who’s gonna show. And the reality is if you’re in the first few pages,

Your property’s filled. If you’re down the list, your property’s not filled. It’s just a fact. It’s how it works. So we’ve been working diligently to say, do we game the system, for lack of better term? How do we leverage and use sophistication and thought in order to make sure that we become the ones on the first page or the second page? So our properties outperform the market generally, even though we may only been at it for a year or two, we can outperform guys who’ve been there for 15 years.

And the local PMCs just don’t have that hundreds of thousands, if not millions of dollars of investment upfront that it takes to kind of build a platform to support that. back to your original question, if I’m a homeowner, my revenue is generally not doing as good, especially because COVID was so easy, now it’s hard. So you need someone that knows how to manage the system. And also, we can be a good property manager in the ground. So we’re trying to solve that revenue problem for people by creating a better experience.

Stephen Schmidt (14:44.549)
Well.

Stephen Schmidt (14:53.413)
Sure.

Stephen Schmidt (15:00.261)
Yeah.

Stephen Schmidt (15:09.921)
What’s your worst nightmare from a business standpoint and do you have a plan to work around it if it was to hit? Because I think my worst nightmare if I was in your shoes would be what happens if the platform goes dark, right? Obviously there’s always gonna be something, but what would you say that is for you and do you see maybe even building a solution for that at some point?

STEPHEN PETASKY (15:33.878)
Well, I’ll share a story. This will help illustrate. we, on our other side of the business, our development side, I was more my early part of my career, I think probably like most entrepreneurs, a little more while the West shoot from the hip and not in a way we didn’t think things through and spend the effort to do the best job we could, but we weren’t thinking with the end in mind. You were kind of trying to think a day, week, month, a year. Now my job is really to think five years ahead and the team job is execute on the daily basis. So I have the, I’ve been punching the throat enough now to know that it hurts.

Stephen Schmidt (15:36.782)
Yeah.

STEPHEN PETASKY (16:02.874)
And you know, if I give an experience is when we were developing our project on the big island of Hawaii, 17 homes, $55 million sellout was our biggest development project at the time. We thought we had it figured out and we had a perfect plan a, but we didn’t have plan B and plan C and plan D and planning and F and everything else. Cause what could go wrong? You know, we have a perfect project, a great piece of land, a really great vision around it, a great thesis. Well, I’ll tell you what can go wrong.

Stephen Schmidt (16:22.991)
Right.

STEPHEN PETASKY (16:28.726)
a volcano can erupt in the middle of your sails thing. And so 2018, we’re getting ready to launch sails, Kilauea erupts, first time in 20 years, and basically shuts down the island. It’s not like there was lava that went over our properties, but it was the smoke, the fog covered the island, and basically, I’ll mock the news, but made it sound like people are running from their homes. And so the island tourism went to nil effectively immediately. Well, of course, sails went to nil as well. So now we’re like, crap.

Stephen Schmidt (16:41.11)
Right.

STEPHEN PETASKY (16:56.962)
We have a huge mortgage. have contractors going, we’ve running out of money because we need sales to funnel it and feed it. And it was the hard, it took five years to correct. Well, I should say three good years, kind of four to five years to finish it all off. But that really delayed us three solid years as a result. So now if I speak more in generalities, we like, well, and then to top it off, COVID hit. And the beginning part of COVID was really, really hard. Obviously the second part of COVID was real estate prices increased, but we missed that window.

But we have two massive acts of God in the period of 24 months that basically almost put us down, like for good type thing. So now we look at every type of business that we operate. What is the worst thing that could happen? Could aliens land in our vacation homes and commandeer our ship? And if so, what would our plan be in such an event?

Stephen Schmidt (17:41.199)
Yeah. All right.

STEPHEN PETASKY (17:49.75)
And so, you I can’t say we’re perfect, but I think we’re much better at identifying blind spots now and having the plans in place to effectuate a pivot at that time versus what I might have had 10 years ago, we started that part of the business. So anyway, we’re a little smarter now, certainly not perfect, but you live through it enough times, you learn how to navigate it.

Stephen Schmidt (17:50.233)
Right.

Stephen Schmidt (18:09.324)
Yeah, man, you know, I have a long standing mentor and friend of mine who was probably eight months ago. And it’s something I’m kind of actively working on just with my own mindset. But he looked at me one day and he goes, goes, Steven, you are the most positive.

Pessimist I’ve ever met in my life So I think it was something along those lines or something to the extent of you know, you’re you’re you’re a positive You are always looking for something that could go wrong And it’s like yeah Well, it’s what happens when a lot of things go wrong that you didn’t expect at least if I think about it in advance Like I won’t be so shocked when it happens, you know Makes the hit a little easier

STEPHEN PETASKY (18:31.21)
Hahaha

Yeah.

STEPHEN PETASKY (18:45.254)
Hahaha

STEPHEN PETASKY (18:55.818)
You know what, I’m gonna use that positive pessimist as a great thing. That was always glass half full and be like, what could go wrong? And now I’m like, well, what could go wrong will go wrong. And so we need to be ready for it. So now I’m definitely more like, are you sure? Like, are we gonna do this? And you have to be a glass half full in any entrepreneur in order or you’ll never move the needle. I am a belief that it can be done, but you could also do it with the right caution in mind to make sure you have ways to get yourself out of a bind when it comes. Yeah.

Stephen Schmidt (19:01.528)
Yeah.

Yeah.

Stephen Schmidt (19:07.608)
Yeah.

Stephen Schmidt (19:20.492)
Right, exactly. And it just hit me. The actual term he said was an optimistic pessimist. That’s what he said. Optimistic pessimist. So let me ask you this, because obviously you’re in the luxury travel vacation business. What’s your favorite place you’ve been?

STEPHEN PETASKY (19:27.18)
Got it. Off to the best mess. All right, I like it.

STEPHEN PETASKY (19:39.214)
Well, you know what? It’s, it evolves, you know, as you get to, we’re very blessed that we’ve owned places, properties, lots of places. We’re now developing mentioned to earlier, but four seasons projects. and, so we’ve had a chance to, I’m actually travel the world, but you know, doing Western Europe and Latin North America, there’s so many good spots. I’d say it’s always cave in with the type of vacation, but I’m still a super fan of, Guana, Costa area, Costa Rica. I just think it’s a, the remarkable balance between.

Stephen Schmidt (19:42.968)
Sure.

Stephen Schmidt (19:50.188)
Mm-hmm.

Stephen Schmidt (20:00.419)
Hmm.

interesting.

STEPHEN PETASKY (20:06.35)
untouched, but you have luxury, have incredible beaches, you, everything’s at a deal compared to going to Hawaii. Um, and then I’m also super fan of Tuscany. I’m biased. We have an office there and a large team that we do projects in Tuscany, but the place is magical. Tuscany has done a remarkable job on maintaining authenticity to the region. Unlike other parts of Italy, Italy, Italy in general is amazing, but Tuscany’s done a remarkable job. So I probably put those top two.

Stephen Schmidt (20:08.878)
Yeah.

Stephen Schmidt (20:12.952)
Hmm.

Stephen Schmidt (20:24.856)
Mmm. Really.

STEPHEN PETASKY (20:31.638)
And I did take, I would say if I were to put up the top of the list, if anyone can do it, we took a bucket list trip to the Maldives a few years ago. And that’s like everything you see in Instagram, but a hundred times better. And it already looks amazing on Instagram. So that’s, if you get a chance to check that one off the list, that one was pretty darn special before, sadly waves wipe it away in the next hundred years, but it’s a pretty special place.

Stephen Schmidt (20:38.532)
Nice.

Stephen Schmidt (20:54.308)
Hmm. I’ll have to we’ll have to add that to our list or you know, we’re in Maximizing where we’re at kind of season and so we’re we’re probably like two years out, but we talk like we’re we gotta go on a cruise We got to do this we got to do that. I don’t know I feel about the cruise thing, but Italy’s on the list I’ll that I have to add them all these and I’ve heard Costa Rica I’ve consistently been hearing that lately about Costa Rica as well. That’s really interesting

STEPHEN PETASKY (21:01.325)
Love it.

STEPHEN PETASKY (21:08.674)
Yeah.

STEPHEN PETASKY (21:17.164)
Yeah. If you’re going family, Costa Rica is the best. You got options to get there relatively quick. It’s inexpensive. You got kids to host. It’s safe. there’s parts of Costa Rica that are less safe, but that Northwest part is a place. So hit me up when you’re looking to travel. We probably have a property for you to rent by the way. Then you’ll be totally sick.

Stephen Schmidt (21:20.91)
Really?

Stephen Schmidt (21:31.968)
You got it. I love it. I love it, man. So let me ask you this. If you could go back to when you got started, but you were able to take all the lessons and all of the knowledge that you’ve gained over the last 18 years and you started over back then, what would you do different and what would you do the same?

STEPHEN PETASKY (21:53.43)
Yeah, I think, what I would do the same as is back on that optimistic side is you have to be a true believer in your product. So I’ve been, you know, we’ve had a chance to do lots of things, you know, in real estate, different things. And I have said yes to lots of things I should have in the past because it seemed like a good idea, but it really wasn’t my true secret sauce, you know, of what I was actually good at. like, it’s not a problem that I’m trying to solve for myself, I don’t do it. And I’m, I, I did not do that through the whole 18 year journey. I did in the beginning, the middle, I kind of got a little mucky.

Stephen Schmidt (22:21.57)
Hmm.

STEPHEN PETASKY (22:23.126)
And now I’ve cleaned it up and we’re doing what we’re truly good at. So stick of what something you love now that might be solving, you know, student housing problem and you’re in your city. Like if that’s something because you were had bad student housing and you want it, that’s a problem, you know, that can be resolved. But I try not, I started staying my lane and I think I would’ve said stay in your lane more and I would’ve got back probably a lot of dollars and thousands of hours if I would’ve stayed in my lane, not have to correct problems. And then what I wouldn’t do is I,

Stephen Schmidt (22:47.576)
Right.

STEPHEN PETASKY (22:50.754)
this is always a tricky one. I’ve been asked this in the past, but it’s like, don’t fret over the small stuff. it’s failure is does happen and it will happen in your journey. I failed more times than I can count. And, and I think I, I wore it emotionally or it was like a heavy stress and burden and you should, you know, if you’re representing investors or clients and you failed at something or hasn’t achieved the success that it has, you should feel some weight of that, but don’t let it cause you to quit.

You know, and it’s, fortunate to ever cause me to quit. Not to say it hasn’t crossed my mind to be like, my God, is this more hassle than it’s worth? But it’s a, if I spent less time worrying and more time, you know, I guess doing, might’ve been able to move through those failures. If you’re going to fail, fail quick. Maybe is the advice I would say don’t fail long fail fast.

Stephen Schmidt (23:19.138)
Hmm.

Stephen Schmidt (23:35.963)
Yeah, I call those McDonald’s moments as an entrepreneur where we just want to burn it all down and go flip burgers because there would just be less stress.

STEPHEN PETASKY (23:39.895)
Yes.

STEPHEN PETASKY (23:43.726)
You’re always going to have one of those. I was going to train beach volleyball in San Diego. So like that was going to be my thing. I’m not even that good at volleyball. It would not be an awesome thing to do if I had to quit at all.

Stephen Schmidt (23:50.39)
I love it. That’s hilarious. guess you do that and I’ll teach surfing, guess. I don’t surf, but… my goodness. So, Steven, on that note though, one question that I have about failure, like how do you define a failure?

STEPHEN PETASKY (23:57.474)
There we go. We can set up a little shop there. Yeah, exactly. Live off the land.

STEPHEN PETASKY (24:13.944)
The good question. mean, I think that, you know, society judges it like, you know, maybe this is maybe not accurate, but like it’s, I tried to do something and I never achieved that goal. So I failed, you know, whatever that goal is. I tried to build a rental house and it came a hundred thousand dollars over budget or I lost investor money or, I never, I launched this new product and it was, you know, no one bought it, you know? So those are all kind of, you know, I think definitely, you know, versions of it. I look at now as a failure and I probably pretty broad with it. Like I feel like we still fail.

Stephen Schmidt (24:24.78)
Right.

STEPHEN PETASKY (24:43.886)
every single day. And this could be with a minutia thing, a core process that we thought was going to be brilliant that we spent 300 hours developing and realize it doesn’t work. It’s not scalable. It’s like that is a failure in it, but it doesn’t mean that like it’s something we’re going to fret over. It’s just how you fix it, you know, for the goal. That’s part of the learning. So I think that, um, you know, I, you know, I, I don’t, it’s not like the team affects that. It comes back. Like I did a bad job. It’s like, I just failed. I tried something. It didn’t work. I’ve corrected it and now it works.

Stephen Schmidt (24:54.605)
Sure.

Stephen Schmidt (25:06.563)
Mm.

STEPHEN PETASKY (25:10.35)
And, uh, and that’s really, think now, of course it can be bigger where you have a personal bankruptcy or a project goes under those ones feel heavy, you know, and we’ve never. Fortunately been in a position where we’ve been in bankruptcy or anything like that, but we’ve had moments where it was feasible based on volcanoes erupting and having millions and millions of dollars of personal guarantees set up that could wipe you out. And so we’ve been in precarious positions and I think that’s

Stephen Schmidt (25:10.456)
Yeah.

Stephen Schmidt (25:19.427)
Hmm.

STEPHEN PETASKY (25:36.738)
part of the game of business. You have to take risks that are meaningful to do big things. And if you don’t, it’s okay. You just won’t be able to do big things, but don’t be upset that you’re not doing a big thing if you’re not willing to kind of risk it to get the biscuit. So now we’ve just learned what failure looks like. We’ve kind of redefined it in our minds, understand it’s part of the process. Don’t fret over it. Fix it as quick as you can. Solve the problem and move on.

Stephen Schmidt (25:40.748)
Right.

Stephen Schmidt (25:50.637)
Yeah.

Stephen Schmidt (26:00.384)
Yeah, you know, love that. There’s an entrepreneur that I really respect who built a rather large metal building company and went to his mentor. And on your note, this just struck a reminder of this clip I saw of him talking and he said he walked up to him and he’s like, look, man, I think I’m going to go bankrupt. I’m owed a million dollars. I can’t, you know, get stuff done. I’ve already taken out a second mortgage on my own to cover payroll. And the guy just slapped him on the back and goes,

STEPHEN PETASKY (26:13.23)
Mm.

Stephen Schmidt (26:27.489)
Son, if you don’t feel like you’re gonna go bankrupt every four years, you ain’t doing anything anyways. Just walked off. Eddie.

STEPHEN PETASKY (26:34.56)
It is, it’s so true. It’s great. Every successful entrepreneur, especially when you have mentors in life, I know you do and I do is, and you share the journey. like, welcome to the club. You’re to be that much smarter for it. The keys just don’t quit and do an honest, you know, integrity, ethical path to your exit of whatever that looks like. But like, welcome to the club. And honestly, I now don’t even, I don’t say,

Stephen Schmidt (26:42.125)
Right.

Stephen Schmidt (26:45.919)
Yeah.

STEPHEN PETASKY (26:58.67)
I think I earn more respect from investors and clients because we’ve gone through the tough times and we’ve been, think could be, know, several survivors and find ways through because they’ve all been through it. So it’s like, it’s, if you haven’t failed yet, it’s kind of like, I’m kind of, kind of wait for you to get, you know, punched in the throat a few times and then, and then you’ll be ready to be, you know, my mentee or my investor, whatever it could be. Yeah.

Stephen Schmidt (27:03.683)
Hmm, sure.

Stephen Schmidt (27:08.833)
Right.

Stephen Schmidt (27:15.512)
Right.

Stephen Schmidt (27:20.035)
for sure. Well, and even to that extent, like if nobody’s gone through it, like if everybody’s just completely successful all the time, you don’t know how they actually are when something does go wrong too. You know what I mean? It’s like, can you go through it and bounce back?

STEPHEN PETASKY (27:30.828)
Yeah, that’s that is honestly the truth. My mentor mind that was an investor of ours, had a really good blast seven or eight year run before issues started happening based on, you know, growth stalling, economic issues, made a couple of bad decisions, whatever it is. And he’s like, yeah, I’ll have to be your mentor now because I needed you to have a kind of house of cars fall down a little bit. And it wasn’t like it was horrible, but it was enough that like I felt the pain.

He’s like, now I think I can be your mentor because it was things were going too good and you need to fall down. It’s just the reality. And to your mentor’s point or the clip you saw, it does happen every four to five years, seven years, whatever it is. If you’re pushing the envelope, if you stay within a very safe comfort zone, it probably won’t, but which means.

Stephen Schmidt (28:06.956)
Yeah.

STEPHEN PETASKY (28:18.99)
doesn’t mean it’s wrong, it just means that’s a path to probably, probably slower growth versus running the car to the wall a couple times and then realizing how to make the turn a bit better next time.

Stephen Schmidt (28:29.846)
Right. Man, that’s so, so intriguing how you framed that too, or how your mentor did that to you. It’s almost like he essentially told you I needed failure to be your first mentor so then I could actually help you. That’s wild.

STEPHEN PETASKY (28:42.286)
That was it. He’s like, he goes, I failed. I’ve lost it all. He goes, how am going to help you if we haven’t even lived part of that experience yet? Like, cause I would just be hearing him talk about failure. I’d be like, well, I’m not going to fail and fricking everything’s going great. You know, have to, you have to go through it to be able to make a bigger impact. He could make a bigger impact for me knowing I’d gone through it. And sure enough, within three or four years I had, I called him up. I’m like, the volcano erupted. I’m struggling. I need help. I just need someone to talk to. And it’s not like he helped solve problems, but he helped you.

Stephen Schmidt (28:48.918)
Yeah.

Stephen Schmidt (28:53.346)
Alright, yeah.

STEPHEN PETASKY (29:10.542)
frame it in a way mentally that this is part of the process and that’s, and it’s okay. Yeah.

Stephen Schmidt (29:14.646)
right. So Stephen, if people want to connect with you for more, see what you’re working on, where should they go for that? What’s the best place?

STEPHEN PETASKY (29:22.38)
You bet. Probably the main site, Luxus group.com. So I think I mentioned you, but maybe not the group Luxus is the Latin word for luxury. So it’s not the car company, but that’s where the main website is. And then underneath that we have multiple different sister sites that represent the various product offerings. So hit it up there and me personally, Steven Pataski on Instagram. So feel free to hit me up. I don’t spend a lot of time on Instagram. Probably won’t see anything super inspirational in there from me.

but I do respond to DMs and people reach out and I do love connecting with people, whatever it may be. So feel free to hit me up there.

Stephen Schmidt (29:57.068)
There you go folks, we’ll go connect with them for more, show them some love from the Real Estate Pros podcast and the Investor Fuel family. Thanks so much for being here, Steven. We’ll see y’all on the next episode.

STEPHEN PETASKY (30:06.498)
Thanks, brother. Great chat.