Scaling Your Real Estate Success | Lessons from Arthur Yu

Arthur Yu (00:00)
Yeah, man, I’ll keep it real. think, yeah, in the real estate industry, especially with the influencer, some people really glorify, say like, it’s all perfect, you gotta buy today, and you’re just gonna be swimming in money, gonna retire in two years. In reality, it’s possible, but you gotta really put in the work, and not every day is sunshine and rainbows.

You gotta have a good mentality approaching this, right? Like you can’t take it personal. People say like you either earn or you learn, right? Or like, how does that saying go? Like you either make money or you learn from your mistake, right? So you either earn or you learn.

Quentin (02:02)
Hello everyone. Welcome to the Investor Fuel podcast. I am your host, Q Edmonds, and I’m excited to be with you today. I’m excited because I have someone with me who I know you’re going to get a great ton of value from. We’ve been chatting a little bit behind the scenes and I’m glad to bring them up so that y’all can hear from them and hear the beautiful things that he’s doing, just like I heard, right? He’s making some beautiful moves within the commercial investing real estate space. And so…

I am so proud and happy to introduce to all my friend Mr. Yu. How you doing, sir?

Arthur Yu (02:37)
How you doing, man? I’m doing great. Thanks for the intro, Quentin. Appreciate it.

Quentin (02:39)
Absolutely,

absolutely. Listen, I’m excited about what you’re doing. I’m excited about, man, how you scale so fast. And hopefully we can get into that a little bit as we talk. I mean, I think our listeners is gonna love your approach. You already said, man, you got some good information even in some niche spaces. So I’m just excited for our listeners just to get to know you and to pick your brain. So if you don’t mind, man, I would love to dive in.

⁓ For people who may not be familiar with you and what you’re doing, what’s your main focus these days? And if you don’t mind, tell me what market you’re operating on.

Arthur Yu (03:15)
Yes, sir. So my main focus right now is just value add commercial properties and focusing on operating my existing portfolio. I have about 200,000 square foot spread out in five different states. I’m currently in Arizona, Phoenix, Arizona. So I operate out of Arizona, Houston, Texas, Albuquerque, New Mexico, and I have some other properties in North Carolina as well.

Quentin (03:39)
Yeah, beautiful. I love it, man. I love it, man. We was talking a little backstage and what really caught my attention, and I don’t know if you want to expand on it, but I would love to know, man, you scaled pretty, pretty fast. And so what was the impetus about you making your move, you scaling? Like, how did that come about for you, sir?

Arthur Yu (03:59)
Thank you, appreciate that. Yeah, I would say for a real estate investor, especially with my background. So my background is immigrant, didn’t speak English when I was little, learned English, went to school for engineering, software engineering. Very different from the skills needed for a real estate investor. Pretty much the opposite, right? I’m really good with computers. I was a software engineer for 10 years. Basically had no real estate experience.

grow up, was actually rented all my life. My parents were not well off by any means. So what kind of got me started into real estate investing is because like I had some injuries on my neck that was exacerbated by working as a software engineer in Silicon Valley. Like the more I get hunched over the desk, the worse it gets. So I was like, I need to figure something out. I’m working towards my disability. So that urgency.

Really, I think that’s the core of like, I needed to figure something out. Otherwise, my neck was, you know, like I had chronic pain, that stuff. So I had to figure out a way to replace my active income, which was, you know, was a pretty decent income in Simcoe Valley. So I was used to a certain lifestyle. So that propelled me into buying a lot of residential properties at first in Phoenix, Arizona. So during COVID, I got lucky with the low interest rate.

So just bought a bunch of properties. My first property was in 2020. Took advantage of the low interest rate. I lived in California at the time, drove over, bought a bunch of houses.

And then I realized it’s not scalable just buying one house at a time. I had a bunch. I still have a portfolio right now. And then I scaled up to multifamily and then to commercial.

Quentin (06:18)
Nah, man, I love it. know within the climate, it wasn’t easy maybe to make that pivot, but you did, man. You did. And it seemed like to me that you’re a season of opportunity. I love, you know, I want to make sure I plug the name Ace Valley Capital. Is that, is that correct? That’s the name of the business.

Arthur Yu (06:38)
Yeah, that’s my capital group.

Quentin (06:40)
Absolutely. So what’s, in your opinion, what’s the key of keeping the machine running smoothly?

Arthur Yu (06:45)
in terms of real estate operations?

Quentin (06:47)
Yeah, absolutely. Yeah.

Arthur Yu (06:48)
Yeah, I’ll be honest, know, a lot of people glorify real estate investing. It’s great if you do it right. It’s a lot of, you know, it’s very rewarding, but I’ll say for me, you know, I kind of, didn’t take, you know, I did it the real way, not, you know, not taking too many shortcuts. So I have about 200,000 square foot of residential commercial buildings I manage across four different states.

At times it’s a little bit difficult to manage big buildings in different states when you’re not in town, right? Some of my properties are in town, that’s easier. So I would say, and your question was like, how do I keep it running smoothly?

Quentin (07:26)
Yeah, right. I mean, yeah. Like, what’s your, in a sense, what’s the key to your sauce? Like, I mean, you’re making moves, you have these properties. Like, what is it that keeps, the machine running smoothly, keeps things running consistently, keep things going and churning for it? Yeah.

Arthur Yu (07:43)
I would say, mean, to take a step back, the secret to what I do is just to buy properly. Like, you make money when you buy. That is the truest thing in real estate, right? If you buy a building that’s worth two million, you buy it for one million, so you basically made the million when you bought it for half price, right? So that’s taking a step back. That’s really the key and the secret formula. I buy these buildings at about 50 to 60 % of

what it’s potentially worth in one to two years. And I don’t do crazy value add. just do a lot of leasing and I do light touch-ups. I don’t do big renovations. And if you want to talk about operations, real estate operations, I think the key is to delegate properly. Obviously, you have to hire, scale, delegate, but it’s also not

blindly delegating because there’s a lot of bad workers out there, like lot of bad contractors. just, you know, we’ve been riffed off by a lot of people, especially in different places when we’re not there. So I would say delegating properly. There’s a balance of like what you should delegate. Like certain things, it’s probably better, faster to do it in-house. For example, like property management.

Quentin (08:55)
Yeah.

Arthur Yu (08:57)
We used to want to delegate and hire out all the time. We want, okay, we got to scale. can’t be like mom and pop. We got to do things properly, but we were basically hiring property managers that were not good at their job locally. So we hired the wrong people to play devil’s advocate, right? Because everybody said you got to scale and hire out, which I agree. but you have to have a balance. You got to know. Like if you hire the wrong property managers, right? Not only you lose a lot of money.

you end up spending more time managing them where you can actually like just hire directly like a handyman, like a maintenance person to just go there, your boots on the ground. So there is a balance to hiring.

Quentin (10:09)
Yeah, no, I love it, man. I love it. And I appreciate that approach. Like you said, there’s a balance. Yeah. I hear you 100%. Now I want to ask you this. As an operator, I know there’s moments when things get real. Maybe like a deal goes sideways. Is there a time you feel like you had to of pivot fast, you feel like?

Arthur Yu (10:28)
Yeah, do you want like a story where I got, you know, I lost some money and just screwed up? Because there are.

Quentin (10:33)
Listen,

we’re so, so what we try to do because, you know, you got people listening in, we talk about the success, but we also got to normalize the hardship, right? Things happen, things doesn’t always go our way. And so I’m not trying to trigger you. I don’t want you to go into too much, you know, traumatic, you know, moments. But of course I would just, you know, just for people that’s listening, you know, they’re on their journey and maybe they hit a bump in the road. And so we just trying to let them know like, hey, you’re not by yourself.

We have operators that are really dealing with real things. And so, yeah, just one of those moments of kind of just touching to the humanity of some of the people that’s watching. Yeah.

Arthur Yu (11:12)
Yeah, man, I’ll keep it real. think, yeah, in the real estate industry, especially with the influencer, some people really glorify, say like, it’s all perfect, you gotta buy today, and you’re just gonna be swimming in money, gonna retire in two years. In reality, it’s possible, but you gotta really put in the work, and not every day is sunshine and rainbows. So, and I’m more than happy to share a story, it’s a pretty painful story. I was gonna make a video about this. It doesn’t trigger any emotions, don’t worry.

Quentin (11:36)
Thank you.

Arthur Yu (11:38)
You gotta have a good mentality approaching this, right? Like you can’t take it personal. People say like you either earn or you learn, right? Or like, how does that saying go? Like you either make money or you learn from your mistake, right? So you either earn or you learn. So most of my stories, like I would say 80 % of the time I’ve been lucky. It hasn’t been too bad. The market was good during COVID. There’s a little bit of luck, right? Every success has a little bit of luck timing, right?

timing, but you know, 10, 20 % of the time things do go wrong. So I’m happy to share just briefly ⁓ this one incident where I was looking at a deal out of town, right? So this is, I was chasing this deal. what I do is like, I do a lot of off market, off market approach, just go direct to sellers. That’s where you get the really good deals. You kind of like get the deal before it’s marketed.

without the competition, right? You don’t have other buyers submitting competing offers, right? It’s the best competition is no competition, right? So I found this deal. Well, I found, I got a hold of this guy who used to run a manufacturing business. He has a really big warehouse in North Carolina. This is a, like a 50,000 square foot industrial warehouse. Not too far from my existing. had a warehouse already around then.

Quentin (12:28)
That’s the one.

Arthur Yu (12:52)
So we started talking for a couple of months. told him I’m investor interested in that area. And he just kind of kept me on the string. And eventually we found out that he was actually in bankruptcy. So he filed a Chapter 13 bankruptcy.

Quentin (13:05)
⁓

Yeah.

Arthur Yu (13:09)
So that was a weird situation, but like since we already spent so much time talking to this guy, so he was not upfront with me in the beginning. He was just kept playing with us and he’s like, yeah, yeah, can’t, he’ll give a price and then we’re like, ⁓ that’s a great price. I’m going to buy this building. And then he’ll just keep playing and then he’ll be like, no, I changed my mind. Go up on the price and I look at the new price. Okay, still good deals. We kept chasing, right? We were a little, we were hungry for deals. That was going to be my third deal. So, you know, I had capital ready to

you know, to spend. So I was a little desperate. But then I found out he was in bankruptcy court. And I didn’t properly research the process because because bankruptcy is a whole different. It’s a whole different game. Everything is a specific process. You’ve got to do a certain thing. You’ve got to get your lawyer to represent you. Like the costs go up quick. And when they filed bankruptcy, they had the.

the worst type the most difficult type of bankruptcy, which is chapter 13. That was the business bankruptcy.

So you need a very niche type of lawyer, because most lawyers don’t even handle that. They handle personal bankruptcy, which is chapter seven. So it’s very expensive to get attorneys involved. And next thing you know, I didn’t properly do my research. I didn’t know how bad it was. So I got in the deal. I got my due diligence money and I got in contract.

And everything was a headache just to inspect everything had to go through their lawyer, they’re the seller, but they’re already in bankruptcy. So everything was under the protection of the court and everything had to go through their attorney, my attorney. couldn’t represent myself in the court. So we do our due diligence. I was like, all right, well, we’ll keep going. We’re already inside, right? I think my earnest money was like 40,000 or 50,000, something like that.

It was a significant amount. Yeah, so got my money tied up. And then when we discovered some issues with the building, so we’re just kind of like, and we were a little slower because of the process, the bankruptcy process. And then we tried to terminate. So we found some issues with the building. We tried to negotiate like, hey, look, this is more complicated than we originally thought.

We were kind of newbies at the time, right? For me, I always like, you know what? I can learn everything, which is true, right? Before you know how to do anything, you didn’t know how to do it. You had to learn it somehow, right? So you got to have that approach. Like whenever something’s new, it’s like, hey, man, I’m just going to learn it. It may be a little more difficult in the beginning. You may have to pay a little extra tuition, but you’ll learn it. I mean, before I was a program, I didn’t know how to program. So, um,

Quentin (16:03)
That’s right. Yep. Absolutely.

Arthur Yu (16:18)
But you know, sometimes that attitude can get you caught up in some things. But yeah, so we were trying to cancel contract because we found out something we didn’t like about the building. He wasn’t willing to negotiate. So we’re like, hey, we don’t want to deal with this. And we cancel properly and he refused to refund the earnest money. I think the earnest money was about 70,000 actually, now that I remember it was a significant amount, $70,000. We canceled.

Quentin (16:41)
Yeah, wow.

Arthur Yu (16:43)
He won’t give us back the earnest money. He said we took too long, whatever, but we were within the date. So he was trying to argue the date and all that stuff. He was trying to argue that we were not in contract for good faith. He was saying all kinds of stuff. His lawyer, he was hiding behind his lawyer. His lawyer is like one of the most famous bankruptcy lawyers in the state. afterwards, yeah, afterwards we were looking for lawyers. Everybody was recommending that guy. I’m like, ⁓ crap, that’s the guy we’re going against.

Quentin (16:48)
Right, right, right.

wow.

⁓ man, yeah, yeah.

Arthur Yu (17:10)
You know?

It’s like you’re

finding somebody to like fight against the other guy, but everybody keep recommending the other guy. It’s like you’re trying to find, hey man, I’m trying to find the best basketball players. Like, what did you call Michael Jordan? And we’re like, oh, we’re playing against Michael Jordan. So, and then all these other guys are like, well, good luck.

Quentin (17:16)
Exactly. Exactly.

thinking the same thing.

Yeah, exactly.

Arthur Yu (17:30)
So that was, yeah, that was a painful experience. then, yeah, and then the, and then we ended up finding somebody good as well, also has a reputation in the bankruptcy court. And he was able to negotiate, we ended up losing, I think 15,000 out of the 70s. So at least we got some of it back. But ⁓ that was a very stressful time.

with a of newbies from out of town, a of kids. I look like a kid. I’m not really a kid. I’m in my 30s, but I looked like a kid. I was just running around in bankruptcy court. I had no business being there. That was a very painful, stressful time.

Quentin (17:51)
Yeah.

Yeah.

Quentin (00:00)
So what do you feel like is the next goal for you guys? I think he was talking about, I’m blanking on what you said, but I think he was talking about, diversifying, but what was the term you used? Was it diversifying? That thing though. Thank you so much.

Arthur Yu (00:12)
consolidating.

Yeah.

So yeah, right now all my headaches are because, so you know, money is good, right? Everything’s good. Every property is performing. We’re selling a couple. Right now the headache is just there’s so many properties across a couple of different time zones and different places and different laws in different places. So I’m selling a couple properties out of town to consolidate into at least

one or two cities where we operate. So, you know, kind of have a family office locally so that we can like hire a couple people just full time, just managing everything instead of having part-time people everywhere.

Quentin (00:55)
Yeah, yeah, no, absolutely. I hear that, and you guys looking to consolidate, you’re making moves, you have things in place now. And of course, like the next move, can either compound things or kind of create chaos, kind of depending on how y’all play it. And so I definitely understand that for sure. I know you just mentioned family, so I would love to know, and I think it would help benefit our listeners. So when it comes to, let’s say,

relationships and growing your network, what’s made the biggest difference for you when it comes in that space of relationships?

Arthur Yu (01:34)
Are you talking about ⁓ personal relationship like family and friends or are you talking about business networking?

Quentin (01:41)
I’m actually talking about both, you know, cause sometimes, you know, you know, sometimes they coincide. So I would love to hear whatever vantage point you want to come from the business relationship. If you feel like personal relationship has powered you forward within your business, within your venture, like I would just relationship building in itself. Like how do you feel about that as it contributes to where you are with your success?

Arthur Yu (02:04)
Yeah, definitely want to work on both. ⁓ I’m a firm believer into believing that like, nobody is like inherently ahead or behind, right? I may be more ahead in the investment journey, but maybe I’ve, you know, a little bit behind in the relationship aspect, right? So happy to talk about both ⁓ professional relationship. think these, you know, I think real estate is one of those fields where like we benefit greatly. I mean,

Every field you would benefit from having connections and networks, but especially real estate, people always say it’s not about ⁓ what you know is who you know. So business networking, I want to get more out there. It’s been really busy just operating my own properties, but I want to expand my network. And part of what I do is to have a bigger social media presence.

so that people know what I’m about when I meet them. They can watch all my videos because otherwise like you go to those networking events, real estate events especially can be kind of rolling the dice, kind of a crap show. There’s people from all industries, like nobody know what you’re doing. then, yeah, so I want to expand my network by joining some more masterminds that focus on commercial real estate investing and also

spend more time making content, just put my stuff out there to help out the community and to meet more people doing ⁓ similar things. It’s a very niche field what I do. Value add commercial build, commercial investments, very, very niche. So that’s professional. ⁓ Personally, you know, just to spend more, more time, I think it’s just, you have to spend time with, for those, you have to nurture those relationships, right? It’s whether it’s,

Yeah, friendships or family or potential romantic partners. You gotta spend time. ⁓ That’s something that I have to spend more time as well.

Quentin (04:03)
Yeah, absolutely.

Absolutely. No, I love it, man. I love it, man. Listen, I thank you so much for your insight. I thank you so much for your perspective.

Quentin (00:00)
if they want to reach out to you, they want to contact you. I want them to be able to know your information. So how can people reach out to you,

Arthur Yu (00:08)
Yes, sir. So my social media is ⁓ investor art. One word investor A.R.T. underscore. That’s my Instagram and my and I have a TikTok and YouTube I think is both.

My username on TikTok is tech.

as in technology, tech real estate, underscore. That’s my TikTok. And I think it’s the same on YouTube.

Quentin (00:38)
Beautiful, beautiful. Well, man, listen, I appreciate you so much for sharing your story, sharing your perspective, your honesty. I appreciate it. We need more people like you that’s doing it like you’re doing in this space. And so just want to thank you again, Mr. Arthur Yu, for being here and joining us and giving us part and wisdom, man. I appreciate you so much,

Arthur Yu (01:02)
Yeah, appreciate you too, Quentin.

Quentin (01:04)
So for those that’s tuning in, listen, if you got value from this, please make sure that you are subscribed. You do not want to miss these type of conversations like I had with my friend, Mr. Arthur Yu. I appreciate you, sir. I appreciate y’all listening. Until the next time, y’all have a great one.

Arthur Yu (01:05)
Yeah, no problem.