Why Real Estate Investing Starts With You, Not the Deal

Stuart Gethner (00:00)
People actually, they invest in me. They’re not so much investing in the project. they’ll look at the project, they’ll evaluate the project, and if it’s local, they’ll drive the project. But whether they have the confidence in me or not, that’s really where and who they’re investing in.

Kristen Knapp (00:14)
Yeah, and it’s probably important to just be a genuine, trustworthy person as well that people want to partner with.

Stuart Gethner (00:20)
It goes without saying, but what’s amazing to me is how there’s so many people who aren’t. And we can leave that at that.

Kristen Knapp (00:21)
Yeah.

Yeah.

Yeah, I feel like people probably think they have to act a certain way to get people to invest in them when at the end of day, people just want a genuine person that they like and can trust.

Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Stuart Gethner, who is the owner of Gethner Education and Consulting. We’re going to get all into raising capital. He’s also a part of Dobson Property Management. So we’re going to hit on that as well. There’s a lot to talk about. Thank you for being here, Stuart. Yeah. So tell me how you got into real estate.

Stuart Gethner (02:23)
Hey, thanks for having me, big fan.

well, that’s a great story. So in my previous life, I’m a pharmacist and I used to go to pharmacies here in town. And as much as you think entrepreneurship is fun, you always have a problem with cashflow.

Kristen Knapp (02:29)
Okay.

Stuart Gethner (02:37)
So with that said, I found another tributary to the revenue stream. And ever since I was a little kid, I grew up in Chicago. We had these things back then called infomercials. And there was this guy called Dave DelDotto and one called Carlton Sheets. And they all promoted, lived this lavish lifestyle with real estate, your rent checks at night, surf in Hawaii during the day. And I thought to myself, one day I’d like to do that. So I’ve always kind of had this little love affair and admiration with real estate.

Kristen Knapp (02:46)
Okay.

Mm.

That’s

amazing. I think I hear that a lot where people get into real estate because of the flexibility and all that and you realize how intense it is and how much you have to work.

Stuart Gethner (03:12)
Yeah, know, nothing’s easy. And I mentioned it being as owning pharmacies and being a pharmacist. It’s a lot more difficult dealing with the state board of pharmacy, the DEA, the FDA, big pharma insurance companies. They’re all putting their hands in your pocket trying to take some of your profits away. Here in real estate, not to say there’s no aggravation, because there’s aggravation in anything you do, but it’s a lot more enjoyable.

Kristen Knapp (03:33)
Yeah, and what was that first deal where you started to realize, okay, this could actually be my career?

Stuart Gethner (03:38)
I had a realtor give me a fix and flip on a street called Portobello in Mesa, Arizona. And I thought I was going to give this thing a whirl. And I tried it. And then when I fixed it, I put flyers in the bucket. Remember, we used have flyers in the bucket. And we always knew that the neighbors would come by and take the flyers off first. And I did. I had a neighbor come by. And when I had my open house, she came and she said to me, you’re going to sell it for this much? It’ll never sell for this much. That’s way too much.

And I looked at her I said, don’t you want me to? Like, if I sell it for that much, doesn’t that kind of benefit you? And she scratched her head and she’s like, ⁓ I didn’t think of that.

Kristen Knapp (04:14)
Exactly. And did you sell it for that much? It’s amazing. So from there, you were just all in.

Stuart Gethner (04:15)
I did something. Yes, I did.

I was in, I got bit, I got bit by the bug. And honestly, that actually fixed the flip, went smooth. So God tricked me because he made it go smooth. And if you know anything about life, when it goes smooth, that’s rare.

Kristen Knapp (04:28)
Yeah.

Yeah, I’d love for you to kind of talk about that because I think that’s a good thing to highlight that, you know, there are deals you’re going to have a lot of trouble with. There’s deals you might lose some money. What have been some lessons you’ve learned?

Stuart Gethner (05:32)
Man, there’s a lot of lessons I’ve learned. But probably the number one lesson that I learned and I work with with my clients is there’s two great times to buy real estate. Kristen, you’ve probably heard this before. The first time is 20 years ago, and the second time is now. And so there’s always deals. People think, the interest rates are too high, or things that we can’t control. We can’t control inflation. We can’t control tariffs. We can’t control those things. But what we can control is our strategy, our ability to buy right.

Kristen Knapp (05:43)
I like that.

Yeah.

Stuart Gethner (06:01)
Because in our industry, as in any business, you make your money when you buy. And so learning those strategies, they transcend time.

Kristen Knapp (06:09)
Yeah, and what would you say to someone who is just constantly waiting for the market to shift?

Stuart Gethner (06:14)
Yeah, that’s a great, and I see that a lot, especially when I teach. And what ends up happening is if you do the math, which we’ll do in a class, by now, interest rates of this are way two or three years. What you don’t really appreciate is the deductions that you get over those times when you do buy, whether it’s the depreciation or the interest deduction, and also the appreciation. So getting your feet wet and just getting in the game really is the first place to start. And a wise man once said,

This is true, no one ever lost money in real estate. No one ever lost money in real estate unless they had to sell. So if you’re in a bind and you have to sell, well that could be a challenge. But if you know how to buy right and withstand time, you’re gonna be fine.

Kristen Knapp (06:55)
Yeah, and I can imagine, you know, you have so much knowledge to share. I can totally see how you built this consulting business and why it’s so successful. How does it feel to kind of give back?

Stuart Gethner (07:04)
It feels great. when our local REA started, Real Estate Investor Association in Arizona, about 27 years ago, I think it was, I went to the very, very first meeting. It was here in Phoenix off Van Buren and 44th Street at a holiday inn. I was there and I sat in the very, very last row. And I’m not very tall, so I had to stand the whole time. And there were speakers up front, we’re gonna educate, we’re gonna teach, yada yada. And I said to myself,

One day, I, not if, when I’m successful, I want to be on that stage and I want to help others learn. And it’s been a great ride. And to be very honest with you, when I teach, I learn from my students. I’m not teaching fifth graders. I’m teaching adults, some that have tried it, some that are in different industries. And everybody brings like a different perspective to whatever situation or challenge that you have. So not only am I teaching and feeling that it’s rewarding, I’m also learning a

Kristen Knapp (07:57)
Right. so what is your focus is mostly on capital raising, correct?

Stuart Gethner (08:02)
capitalizing and buying small apartment complexes, probably in the ⁓ five to $10 million price range where the hedge funds don’t get involved and we’re able to manage them ourselves.

Kristen Knapp (08:12)
Yeah, so I can see how you’re probably getting people who have been in the game for a little bit and looking to level up.

Stuart Gethner (08:18)
Absolutely. So I get them from consulting. I also like to put on, I host events and webinars. I’m a big Tony Robbins fan, and Tony Robbins talks about marketing through education. And so I love when I put on educational events, one of the things I say, I love to say this, is put away your wallets, your debit cards, your credit cards. I’ve got nothing to sell you. This is 100 % education. And what ends up happening is there are some people who want more, and I’m available.

And there are some people who get the education and go do stuff with it. And then there’s always those people that figure it’s not for them or they’re analyzing to their paralyzer, they’re going to wait. And that’s what works for them.

Kristen Knapp (08:53)
Right.

Yeah, what are some common mistakes you see from people who are raising capital?

Stuart Gethner (09:00)
They don’t know how to put together an operating memorandum. They don’t know how to properly model, one might call it a spreadsheet, but put together a model of forecasting and whatever kind of waterfalls the investors are going to get. So starting with being able to put together the proper presentation and being able to understand your deal better than anybody else is a very common mistake.

Kristen Knapp (09:22)
Yeah, I can totally see that. what would you say to somebody starting out in raising capital? Where do they find people? Where do they even start?

Stuart Gethner (10:04)
So certainly from the acres of diamond story, there people right in your backyard. Obviously, if you have a rich aunt, uncle, grandma, someone who’s going to be an angel investor and give you money because they love you, that’s a great place to start. But one of the places that I like to go is and help with my clients is everybody goes to these local real estate networking groups, what have you, whether they’re webinars. we’re like the same fish in the same sea looking for the same pot of gold.

So I’d like to have people go where they’re comfortable outside of real estate to make relationships, whether it’s a church or charitable organization or a pickleball club or a soccer club, whatever that is, where we’re able to make relationships. Because at the end of the day, Kristen, what I found over the years is my OM, my spreadsheet, can be beautiful. Everybody puts together a winning game plan. But at the end of the day, nothing ever works according to plan. But you wouldn’t know it unless you had a plan.

Kristen Knapp (10:57)
Mm-hmm.

Stuart Gethner (10:59)
people actually, they invest in me. They’re not so much investing in the project. they’ll look at the project, they’ll evaluate the project, and if it’s local, they’ll drive the project. But whether they have the confidence in me or not, that’s really where and who they’re investing in.

Kristen Knapp (11:13)
Yeah, and it’s probably important to just be a genuine, trustworthy person as well that people want to partner with.

Stuart Gethner (11:19)
It goes without saying, but what’s amazing to me is how there’s so many people who aren’t. And we can leave that at that.

Kristen Knapp (11:21)
Yeah.

Yeah.

Yeah, I feel like people probably think they have to act a certain way to get people to invest in them when at the end of day, people just want a genuine person that they like and can trust.

Stuart Gethner (11:37)
Absolutely, and I think what’s great about real estate is that it’s a hard asset. So you can actually see it, touch it, feel it, look at it, drive to it. You know, not to diminish bond stocks, crypto, or oil and gas, or any of the other investments, this is a hard asset. And so it’s tangible, and we could put value on it. And of course, let’s not forget what’s great about real estate, and that’s the leverage. If something costs 100, you don’t need 100, you need 10 or 20,000. Something costs a million, you don’t need the million.

You need 100, 200, 300,000. So the ability to leverage is really a caveat.

Kristen Knapp (12:09)
Yeah, and is that also something that you teach, kind of how to properly leverage yourself?

Stuart Gethner (12:13)
Absolutely. So it’s a package on how we present ourselves. Just like how when we get up in the morning and get ready to go out the door, it’s a package. We have a routine. So we want to make sure we stick to that routine. Sometimes the routine gets broken for whatever reason. Things change. Life happens. But at the end of the day, we have the proper systems in place and the checklists to make sure that we’re checking all the boxes. And then one of my favorites is when somebody asks a question where we don’t know the answer, sometimes we feel compelled to answer the question even if we don’t know it.

Kristen Knapp (12:42)
Right.

Stuart Gethner (12:42)
The best

answer is, you know what, great question, I don’t know, but I’ll get back to you. And then that gives you a reason to get back to them.

Kristen Knapp (12:49)
No, think that’s really good advice. What would you say to somebody who, because I know that I hear people say like there are different times to fundraise, like you shouldn’t fundraise in the summer, you shouldn’t fundraise, you know, in August I hear that. What would you say to people like that?

Stuart Gethner (13:04)
I think fundraising is a full-time job. think you’re always prospecting and looking for people who might be interested. So you may not have a project that you’re trying to raise capital for today, but we’re always out there building relationships. You know, I’ll tell you a funny story. I live in Arizona. I’m a big animal lover, big dog fan, and I belong to the Arizona Humane Society. So I come home from work one day, and there’s this postcard in the mail, and it says, meet the executive director of the Humane Society, Dr. Stephen Thomas, free.

Kristen Knapp (13:06)
Mm-hmm.

Stuart Gethner (13:30)
at the Ganey Ranch Hyatt, drinks, hors d’oeuvres, open bar, come eat. And I thought that was cool, so I left it on the counter in the kitchen for my lovely bride Stephanie to see. So the very next day I come home, and in the mail is this letter from the Arizona Humane Society. And it says, come meet Dr. Stephen Thomas, executive director, at a $250 plate dinner at the Biltmore. And I’m scratching my head going, yesterday, I thought, and I went into the kitchen and I got this postcard, and there it was.

And I got this letter and I go into the living room and I’m saying, Stephanie, look at this. I got a postcard. I can go for free and meet this guy and drink and eat. Or I got to pay $250 to meet the same guy. I mean, why would I do that? And she looked at me and she said,

imagine the people you’ll meet at the $250 plate dinner. And I said, that’s why I married you. Smarter than the average bear. yeah, so you put yourself in positions.

Kristen Knapp (14:57)
Mmm.

Yeah.

Stuart Gethner (15:05)
to where you want to be in maybe events or hobbies that you enjoy doing because rich people, people who have capital, they transcend all facets of life.

Kristen Knapp (15:15)
Yeah, I think that’s great advice and also good advice if you’re stuck ask your wife. That’s the real lesson.

Stuart Gethner (15:21)
My wife has a lot of great honors to God. She’s a great resource. But

you know what’s funny, Kristen, is if I don’t take her advice, she gets upset with

Kristen Knapp (15:29)
Well, of course. Well, that’s great. Tell us more about the property management side and how you got into that.

Stuart Gethner (15:30)
Hahaha

Yeah, so I was teaching at the Commercial Real Estate Institute in Phoenix, and the owner, a guy named Mike Maloney, was doing this condo conversion in Las Vegas. And he was taking these kind of dilapidated condos and turning them into luxurious condos. So I bought one, and I had to have a property management company, because I’m in the Phoenix, Scottsdale area. He’s there, that was in Las Vegas. And I swear, this property management company, they must have had a brother-in-law who’s an out-of-work plumber.

Because every other month I’m getting a bill, $180 leaky faucet, $300 broken toilet. there was mold, and we had to knock down a wall. it wasn’t close enough where I could go just make sure I wasn’t getting ripped off. And I kind of came to the conclusion that I was getting ripped off. So I figured if I was going to invest any more, whether out of state or do anything on my own, that I’d have my own property management company, I would control those costs. So now I started.

Kristen Knapp (16:15)
Right.

Hmm.

Stuart Gethner (16:29)
It’s called Dobson Property Management because the very first property I bought was on a street called Dobson in Mesa, Arizona. And the title lady said to me when I bought that property, she said, how are you going to take title? I had no idea what she was talking about. And she said, you know, got to take it in the name of something. And I said, well, my name is Stuart Gethner. She’s like, no, you don’t want to it personally. Well, the streets on Dobson, how about Dobson Property Management? She said, that’s the name of the company. So I’ve that name ever since.

Kristen Knapp (16:35)
Nice.

Thank

Wow.

Stuart Gethner (16:57)
And

we raise and deploy capital in emerging markets on small multifamily where I am the property manager. So we have property in Ohio, in three different cities. We do the admin work here in the Phoenix Scottsdale area. And I control the costs, which my investors appreciate because I’m an investor in my own deals. And so I’d rather get the dividends and the distributions as opposed to make a few dollars on the repairs and leasing. So everybody wins.

Kristen Knapp (17:15)
Mm-hmm.

Wow, that’s amazing. So you’re deploying capital as well and you’re doing business in a lot of different states between your investing and your property management.

Stuart Gethner (17:30)
Yeah, it’s the ADD in me.

Kristen Knapp (17:32)
How many markets are you in?

Stuart Gethner (17:33)
both Ohio, Phoenix, and we’re looking in the Illinois and Florida market. Thanks.

Kristen Knapp (17:37)
That’s amazing. And I

imagine each market kind of has its own challenges, especially with weather.

Stuart Gethner (17:43)
Absolutely. So we’re going to get appreciation in Arizona. In other words, things are going to go up. What I found in Ohio is we don’t get the appreciation. So I’m sure you and your listeners are familiar with the 1 % rule, which is kind of not really a rule. If you buy something for $100, it’s rent for $1,000. You buy it for $120, it’s rent for $1,200. We’ll get the 2 % rule in Ohio. So Ohio will give us good cash flow, but we won’t get the appreciation.

Kristen Knapp (18:07)
Mm.

Stuart Gethner (18:07)
In

Arizona, we’ll get the appreciation. Another thing we’ll get in some of those climates, and I grew up in Chicago, so I’m familiar with this, the winter months. It’s really hard to do, whether it’s a flip or turnover a unit, to purely gut something and turn it over when it’s really, really cold outside. So we’ve learned some of the lessons the hard way.

Kristen Knapp (18:21)
Right.

Yeah, I imagine. And then also Arizona when it’s really hot.

Stuart Gethner (18:28)
Yes, when it’s really hot, my guys get up at like four in the morning, which is really early for me.

Kristen Knapp (18:33)
Right?

Yeah, so what are some kind of like red flags for property management or what makes a good property manager?

Stuart Gethner (18:43)
That’s a great question. And I marvel at this all the time. How about something that we’re supposed to do, and that’s fix stuff when it breaks? I know that sounds crazy, right? We actually had a public company here, a hedge fund, that bought apartment units here in Phoenix last summer and wouldn’t fix the air conditioning when the units went out. And we had one of the hottest summers on record, over 115 degrees for over 30 days straight.

Kristen Knapp (18:51)
Yeah

Wow.

Stuart Gethner (19:09)
and the governor had to involved to make them fix stuff when it broke. So obviously we can’t fix stuff if the tenant doesn’t tell us, but we ask our tenants to do three things, pay their rent on time, take care of the place as if it was their own. And when something breaks, fix it. So maintaining your properties, I think is important. It’ll pay off in the long run, whether it’s when you go to sell or just being able to do a cash out refight on the line, you increase the value, you’re increasing your asset.

Kristen Knapp (19:37)
Yeah, and I can imagine it’s

a step that a lot of investors maybe rush or maybe not think is as important to really get a great property manager who takes care of the tenants, because then if the tenants are happy, it’s a win-win for everybody.

Stuart Gethner (19:49)
You’re spot on. We’ve had a tenant that’s been with us for three different apartments. They were in a one bedroom. They ended up having kids. They moved to a house that we had across town. Then he had a job transfer. Now he’s in another single family residence that we have on the other side of town. I know that sounds crazy, but people stick with us just because we fix stuff and we take care of it. I would think that’s our job, but not everybody does a great job.

Kristen Knapp (20:12)
Yes, I mean, I live in Los Angeles and I’ve gone to a lot of different apartments and I’ve had definitely bad experiences. So if I found someone who I really loved, I would follow them too.

Stuart Gethner (20:23)
Appreciate that. Thank you.

Kristen Knapp (20:25)
Yeah, and so, you know, just to kind of wrap this up, what would you, what advice would you give yourself at the, if you could go back in time, what advice would you give yourself?

Stuart Gethner (20:33)
That’s another great question and I’ve done it. Get yourself a mentor or someone that can help you shorten the curve. I’m a big baseball fan and there’s this guy named Alex Rodriguez and he played for Seattle and he played for the Yankees and when he was playing for the Yankees he was playing third base because Derek Jeter was playing shortstop and one of the sportscasters was interviewing him and said you’re having a great season on the field, you’re having one of the best careers in the hitting.

Kristen Knapp (20:38)
Mm.

Stuart Gethner (21:00)
What are you attributed to? And he said, I attribute to my coaches. And the reporter said, and I saw this interview, and the reporter said, yeah, the Yankees have great coaches, don’t they? And he’s like, no, I’m talking to my own personal coaches. I my own personal coach for hitting. I have my own personal coach for fielding. And here’s this guy that makes more money than we’ll ever know how to spend playing for the New York Yankees. And he felt it was important enough for him to have his own one-on-one coaches. And when I saw that,

I’m like, okay, if it’s good enough for Alex Rodriguez, good enough for A-Rod, maybe I should try it. And honestly, it’s been very helpful for me. You there’s an expression, you never get hit by the bus you see coming. And you you think you got it, you think you know it. And one of the nice things about having coaches and mentors is that they look at maybe the same thing a different way, or they have more wisdom or experience. And so they have shortened my learning curve a lot, and I attribute a lot of my success to them.

Kristen Knapp (21:50)
I think that’s just such great advice for people. mean, and so useful. I mean, tell people how to find you and how to work with you.

Stuart Gethner (21:57)
Well, I’m sure the show notes my name is Stuart Geather and pretty accessible. I know it sounds crazy, but I answer my own phone We’re not a very big company. So Stuart Gethner com or email Stuart at Stuart Gethner com and I’d be happy to have a conversation with some of your listeners and The whole idea really is to spread the information What I learned a long time ago coming from abundance and not scarcity is in order for me to have more Does not mean someone else has to have less so I’m happy to share

There’s enough for everybody.

Kristen Knapp (22:26)
I love that. Well, listeners, please take advantage of that. Stuart has so much information to share and thank you for being here today.

Stuart Gethner (22:32)
Thanks, Kristen, and I appreciate it. Been a big fan. Nice to be here.

Kristen Knapp (22:35)
Wonderful. Well everyone, thank you for listening and we’ll see you back next time. I hope you learned a lot. Bye.