Outrunning Failures

How to Turn Failures into Real Estate Success with Joanne Schmidt

• Vish Muni • Episode 28

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Today’s guest is Joanne Schmidt. 

Joanne is an experienced Principal with 18 years of experience as an Investor and Developer. Skilled in Negotiation, Acquisitions, Asset Management, Team Building and Business Development. Joanne is also a proven strategist with a Master of Public Administration focused in Resource Management and Public Policy. Find out her lessons learned and how this knowledge can help you to become a better investor! 

http://linkedin.com/in/joanneschmidt907  

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Creator/Main Host: Vish Muni

Show Advisor/Editing: DBT Marketing

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>> Vish:

Well, welcome to another episode of Outrunning Failures. Today we have another awesome guest, Joanne Joanne, ah, and me met at a mastermind group and we've known each other for almost a couple of years and then we have a lot of things in common. Like she's heavily into fitness and investments and family and also on a spiritual journey. Joanne, can you please tell us a little more about your background and how you got into real estate and why real estate?

>> Joanne Schmidt:

Thank you Vish. and I appreciate you taking the time to have me on your podcast today. I'm Joanne Schmidt. So yes, I, you and I have known each other I think since 2019. And I believe we met at the Raising Capital Summit in Denver, Colorado or it was, at Ultimate Partnering with re mentor. And that was, you know, 2018, 2019. So I believe it probably was that. And at that time, I'd been in real estate for at least 15 years, but hadn't really engaged in networking and had not ever participated in a coaching program. So that said, my real estate journey started when I was fairly young and I would say a primary motivation was that I was married with four kids and broke all the time. And you know, I had a college degree, I was working in professional positions and my husband was working in construction. But you know, going back to 2001, 2002, 2003, you know, that tech bubble was growing, even back then it was pretty tough for young families, you know, so doing everything that we knew, you know, how to do in the right way to try and be prosperous and raise our families just wasn't working. And so I know I had thought about real estate when I was very young. I remember 20, 21 years old, briefly entertaining the idea, looking at properties in Seattle when I was going to college, but just, you know, didn't know anything about anything. So you know, fast forward from a, good idea to a 20 year old to you know, I think I was 32, bought my first apartment building, apply a little pressure and some different adverse conditions and that will, you know, create some heat and forward momentum and so I started looking at fourplexes. I know about an FHA program where I could, just pay 3% down and get a fabulous interest rate. So I refinanced my little tiny house and got $12,000 and bought a fourplex and had to learn everything from there pretty much, you know, by myself. Started that journey with my husband. he was just learning how to, you know, do basic, like, handyman construction. So he got to practice and I got to learn how to be a landlord. And so we did that for nearly a decade. And, you know, I could pick just one deal to talk about a, ah, significant failure. But I've done multiple deals now, and there were failures every single time that could have easily brought the whole empire down, you know. So those, lessons, have, been found in every single deal. and we can start with even this very first deal, and I would say a lesson that would carry through all of them until very recently was that I did everything by myself.

>> Vish:

So that's interesting. So you've been in real estate longer than most of us even knew what real estate was.

>> Joanne Schmidt:

Yeah.

>> Vish:

So, given the time frame, so it must be more than 20 years now. You started from the ground up, and, there was no mentor. You didn't join any mentoring groups. And so you, you went to the school of hard knocks. And.

>> Joanne Schmidt:

Yes.

>> Vish:

And you had a big. Why? Because you had to take care of your family. And so what, what were you doing before? real estate.

>> Joanne Schmidt:

Before real estate, I had been working in behavioral health for over 10 years. And I was running a behavioral health clinic in the village of Hoonah, about 50 miles west of me. And I flew over to, to the village of Huna, every week on a small plane and lived there for three days and ran the clinic and saw clients, patients, if you will, who were, adolescents in trouble with the juvenile justice system or they just needed some supports or adults from the correctional system had to come see me. And I did that for many, many years. I had originally been working on, know, a career in health care and was trying to get into physician assistant school and got married and had two more kids. And you do know, my dear husband, we've been together 28 years, have four kids. So anyway, there was a change in career and, you know, but even back then with, all of the work I had done, I was highly credentialed professional person. I wasn't in software engineering. Healthcare doesn't tend to pay a lot unless you're really, you Know, high up. So there, there was a lot of impetus, you know, in the, you know, my family, you know, being a wife, to find something that would allow me to compress my time and not have to work 50 hours a week to get some sort of reasonable return on my investment, which was, you know, my time, my time that was all largely spent away from my family. And I, you know, saw my four beautiful children growing up very, very quickly and I was having to work very, very hard for just a little bit of money. So, you know, by the age of 32, I had taken down my first deal and that gave me a little bit of money to start. You know, I had laundry machines, so I got laundry income. And then I started getting a tiny bit of rental income and then started figuring out how to do the value add game, remodeling units and raising the rents.

and then at 10:

31, that building into another property. And at this point I had moved from, working in behavioral health to. I got, I went back to school and got my master's degree in public administration and then went into government service and was a land manager for the state of Alaska and a permits officer.

>> Vish:

Oh, so wait, wait a second. Let's back up a little bit. Yes, you work for the government as a land manager.

>> Joanne Schmidt:

Land manager.

>> Vish:

Something to do with land.

>> Joanne Schmidt:

Yes.

>> Vish:

You also flew to a work location every weekend.

>> Joanne Schmidt:

Yep.

>> Vish:

So can you tell the audience where are you right now? Physically? Where are you based? Are you still in Seattle or you moved to a different location?

>> Joanne Schmidt:

Right now I'm physically based out of Juneau, Alaska. And that will be for about six months, of the year. And then I will go down to Tucson and spend some time down there because I have an RV park in Tucson. I'm actually working on selling it right now. It's gone full cycle. But, I go in between Alaska and Arizona because I have an RV park in Denali and then RV park in Tucson.

>> Vish:

And so you have different asset classes. You have a Laundromat and you do ground up construction and you have a RV park. Now can you tell the audience as, any of these deals been a challenging deals, which is to the point that you can't forget that deal. But that deal has made you a better investor and it made you a smarter investor.

>> Joanne Schmidt:

Okay. I had one. Yep. I had one deal in mind that was the most stressful deal I have ever done in my life. and I started this deal in 2015 and I did not complete the full cycle of this deal until 2022. So I worked on this deal for seven years. This is what it was. So, I bought an 8 Plex apartment building, kind of ratty in a fabulous class A area called AK Bay. AK Bay on the water. And this is an up and coming area. And I knew about this because, well, I was a planner and I would go to planning meetings and the city was talking about doing a, a new sub area comp plan and you know, trying to revitalize this area and you know, the whole economic development plan and all that. So I knew that this particular area that was very underdeveloped and just sort of a pass through, was going to be up and coming. So I knew the owner of this building and approached him and worked on him for about a year and finally closed on this aplex. It was kind of gross, didn't have great tenants always. It was not remodeled. It was kind of an eyesore right on the roadway though, in this fabulous area. I also knew, you know, because I had a degree and worked a lot in like, administrative law, I knew that I could do a condo conversion on this building. And for the state of Alaska, there's literally like three things you have to do. All you have to do is get a survey, have a lawyer do your declaration and HOA document. The city, you know, doesn't even have much, you know, purview at all, because it's not a platting issue. So it didn't take a lot of legwork, if you will, to do the things to get this done. But where it became complicated and it was a heavy lift for a long time and was extremely difficult personally, professionally, on my finances and on my marriage was doing all of it by myself without help.

>> Vish:

So, so, so that not only tested the deal, it tested everything else. Your finances, your relationships, your emotional everything, your strengths, everything. So what did you learn from that deal? That deal, you need a finance partner or do you need to do better due diligence or don't take on such heavy lifts.

>> Joanne Schmidt:

Well, don't take on such a heavy lift, and by myself and think that I can complete it in a timely manner, without enormous difficulty. You know, this is a 3.2 million dollar project and just because I knew how to do it didn't mean I could pull it off by myself. You know, I didn't really recruit support for, for it, either, you know, the administrative kind of legal support where I would have, you know, someone would act as an advisory capacity to help me. I did have an attorney, but they were really busy, you know, and when we weren't doing the actual legal documents, they were hard to reach and doing whatever they were doing with all of their other clients and in court and whatnot. So, you know, the legal aspect kind of dragged on and was a little bit too expensive. We, didn't do any capital raising at all and literally bootstrapped like$800,000 of our own money over that period of time. We had to come up with, you know, we got a loan, very small loan, got some SBA money and whatnot. And then I ended up taking some of my retirement money. Like, that is, like, one of the worst things to ever do. We're all told to not do that. Like, that's, that is Financial Freedom 101. Don't drain your retirement account. And I ended up doing that. I didn't drain it. But, in 2023, I finally quit my W2, which, you know, was a plan all along anyway. Right. We hope that if our real estate investments are working for us over time, eventually we'll get to do that, you know, quit that W2. So I did that in 2023, and the legal work had been done. We were already. We had already gone from being an apartment building to being eight condos. But then we had to figure out how to pay for remodeling some of them and then building a brand new garage building. So I had to come up with hundreds of thousands of dollars. And I was never really, savvy at or trained in capital raising. And like a lot of us, mom and pops, we, we learn just by default and lack of good information that we have to do it ourselves with our own money. Right. So there was that element to it. So. And then once I got so far into this project, kind of couldn't stop, you know what I mean? There was that momentum and I got stuck, with the monster I'd created. And there was a lot of, you know, equity potential at the end. But when you get into a development deal, if you will, and this was a condo conversion, is like a development deal.

>> Vish:

So what kind of projects, what kind of real estate, do you invest now? Are you still a landlord or you become an investor now? Full time investor?

>> Joanne Schmidt:

Full time investor. I am a landlord insofar as, I still own three condos here. I live in one, and then I still have two for rentals, which is really good. But they're all owned free and clear. We've sold five of the eight condos in the Past two years and that's gone really well. It took a long time to get here. but in the past year and a half I have figured out how to, how to be a full time investor.

>> Vish:

Well, that's, that's good to know. If it was easy, I'm sure everybody, every other person would have been an investor and every other person would have been doing a heavy lift. Good things take time. So good things. Hard work every day, in and out. I know you're a fitness enthusiast and you know, it is not easy to lose that one pound or ah, two pounds. People talk about it and it requires discipline, it requires consistency. It is painful. It is really, really painful for an extended period of time, right?

>> Joanne Schmidt:

Yes.

>> Vish:

So, I've come to realize investing is more like building that muscle or putting on five pounds of muscle. It's a consistency and discipline. And you are tested at every point. It's so easy to just throw in the towel and walk away. But we are all crazy as an entrepreneurs. We don't want to give up. We have too much ego at times.

>> Joanne Schmidt:

Yeah, right. And too much time put into it. You know, just like we said about this deal here, you know, I put seven years into this deal just like, you know, completing 75 hard. Recently, I put it in, you know, 75 days straight of, you know, the two workouts a day and the gallon of water and the reading and this and that.

>> Vish:

Tell us, tell us a little more about, I just heard that you're doing the 45 hard, right? Tell us more about 75 hard. Sorry. So tell us a little more about, how that is making you a better investor and what have you learned from doing the 75 hard?

>> Joanne Schmidt:

Well, thanks for that question and I actually appreciate the direction of the conversation and your mention of how the way that we approach our physical health really relates to how we operate as investors. Right. Or there's just really also a lot of similarities in the, certain values that help us to be fit physically or I guess fit and successful as investors. And it's the, it's a long game for sure. You know, it's a long game that takes a lot of patience and consistency. And it is very hard, and it can be very, very painful. you know, the 75 heart program that I just did, the Andy Frisella's mental fitness challenge involves a lot of working out. but it also involves a lot of daily self discipline where we are consistently doing the same things over time. Knowing that at the End is going to be a result. And that is just the same way that we want to play the long game for real estate. And I wanted to give up a lot because I would. Didn't have money a lot in the beginning. I started real estate because I had nothing and you know, it wasn't a lot to risk. I didn't have much in my hand, you know, but some hope and you know, the, the knowledge that other people had done it before me. So I got it in, got in it for the long game too, you know, and knew that there would be times when I would have to do the same thing every day, every week, every month, knowing that maybe three years from now my real estate investment would pay off, you know, just well.

>> Vish:

So I'm glad you finished that condo conversion and you realize that you, it's a team game and you also need a good player. I mean you need to pick and choose players, everyone at something or the other. And in your case, I feel that you guys have been overstretched. You and your husband Austin. And that's not the end of it. We all learn a lot by doing every deal. And every time we think that the deal is going fine, but that is when you hit a road bump right there. M. And I thought syndications would be the best, but I've ran into a lot of challenges the last two years. It's extreme challenges. It's testing out every bit of me and asking, I mean to the point I need to question myself. Am I doing it right or am I doing it all wrong? But nevertheless, it's a learning experience. I wouldn't call it failures, I would call it feedback. I would call it like if you're going to build a muscle, if you're going to build muscle, you need to go to the gym. And when you go to the gym, you have so much options. Either you get a mentor will show you how to do it right, so that creates better utilization of your time and you have more impact. And that is what I'm beginning to realize now. Rather than doing everything in real estate, I've decided to pick one asset class within real estate and just go all into it. That is what I'm. But but we will keep doing. We're not going to turn around and go back. We've gone too far into real estate. Yeah, it's. No, no, it's not worth giving up at this point in time.

>> Joanne Schmidt:

It's too late, too late for us to quit. But back to, back to the failures. So, I used to be terribly afraid of failure because I was just so worried about what people would think of me probably. But you know, as I continued on, I've failure after failure after failure and you just get numb after a while. But there is really a good correlation between failure in real estate and again back to health and fitness. And we like to talk about that because you and I like to work out and do spartan races and things like that. Think about how sometimes we are literally trained in the gym to lift to failure. I've had coaches have me, you do that to failure because know you can do low weight, high rep, just go, go, go, go, go, go, go. But that's not super challenge if you go to failure. That's just one technique. Like say you've got your, you're doing bicep curls one day and you're going to go heavy just a little bit. So you're going to lift until you can't. Now, when you're trying to get stuff done in real estate and you're young and you're kind of broke, but you're ambitious, you don't have a lot of partners, but you're just starting to get a little bit going, you're just learning a little bit. You're kind of getting ready to try some stuff. Go until you hit failure and then you're going to pick yourself up. All right, I guess I could have done this. I maybe shouldn't have done that. And you kind of regroup and then you take another run until you hit failure. And every time you're still stacking up, little, little wins along the way there. There's no way that the universe with a higher vibration energy that we create when we're doing these things, making efforts, you know, trying to do the next right thing, that we're not going to stack up wins and have that momentum carry us. The universe will provide us that, ah, positive high vibration energy. We're continuing to be teachable and apply what we've learned every day and suit up and show up. Even if we're afraid of failure. Every day we're going to go a little bit further. Keep going till your point of failure.

>> Vish:

Well, I'm beginning to realize there's no failure. It's a feedback. You're learning another 20 ways not to do things. It is maybe 20 times stronger now.

>> Joanne Schmidt:

Oh, yes.

>> Vish:

And that is how I look at it. When you do spartan races, you are able to cross some obstacles. You're not able to do Some obstacles. Now the next time you do the same race, you figure out how to do that obstacle.

>> Joanne Schmidt:

Exactly.

>> Vish:

So it's not a failure, it's a feedback. It's a feedback why you fail.

>> Joanne Schmidt:

It is.

>> Vish:

So with that, said. So, what would you be doing if not for real estate? You quit your W2 to become a full time real estate investor. Now if not real estate, what, what is your passion? What, what would you be doing?

>> Joanne Schmidt:

Well, the two things I really love doing besides real estate were working with people in a public health capacity. And I did that for a really long time. I always really enjoyed like adult education with a wellness component to it, you know, just sharing from an educational angle to just, you know, sharing what I've done in my life because I've, you know, worked on health and wellness a lot. and then I also have had a long career as a professional planner and there's a skill set associated with that that really has a fabulous crossover and so much added value to real estate. So if I wasn't just doing real estate now, I would be spending more time, I would say working in a coaching, mentoring or teaching capacity as it relates to planning and project management or health and wellness. I would love to be a coach.

>> Vish:

Well, that's interesting. So that's planning. Planning. Does that mean it's like a city planner or is a planning subdivision? Right?

>> Joanne Schmidt:

Yeah, yep.

>> Vish:

So, so, so that way you can just use that one in real estate. Also to the point. So do you have any plans for developing a subdivision or do you have any plans for ground up development in future?

>> Joanne Schmidt:

Well, I do have a planned community that we created and had fully permitted in 2016 and have built one unit, started a second and we have 10 more lots in that property. And then I have a, another commercial property that is half an acre and I can build there 12 like regular two, one, you know, two bedroom units or 20 micro units. And that is close to downtown Juneau. So I'm thinking about how to.

>> Vish:

Scope.

>> Joanne Schmidt:

that project, and then, and bring in partners of course, and not take it home for myself. And then there are actually some opportunities up in Denali in the, in the city of Healy, related to workforce housing. So I think that in the past couple years I have tried to navigate the real estate space a little bit differently insofar as I've learned that there is so much more applicability to the professional, you know, skills and things that I have done, for my W2 or just outside of real estate that actually give me quite an advantage and, lends itself to me being a valuable team member, if you will, on real estate deals. And, you know, so. And I'm, you know, a real estate professional, also. So.

>> Vish:

For anyone, any of my audience who are looking to do some business in Alaska, is it okay for them to reach out to you?

>> Joanne Schmidt:

Certainly, absolutely. I'm also working on a deal in Iowa and I'm looking at a deal in Pennsylvania. So working, pretty heavily in the current asset class that I've been in in the past couple years, most heavily, which is RV parks. But I have been in multifamily and apartments, for over 20 years.

>> Vish:

But so would you, would you, given your background, would you consider building a RV park ground up?

>> Joanne Schmidt:

Would I consider.

>> Vish:

Yeah, because you, you own a few, you own an RV park and you manage a few and you have experience, on all spectrums. So with that, what is holding you back from building an RV park?

>> Joanne Schmidt:

Finding land.

>> Vish:

Finding land. Okay.

>> Joanne Schmidt:

All right.

>> Vish:

So if someone has land, can they come to you for your legal and advice?

>> Joanne Schmidt:

No. Legal advice, however, development advice. Certainly.

>> Vish:

Yes. Okay, sorry. let me Correct that. Developmental advice. Okay.

>> Joanne Schmidt:

Unofficial, cheap legal advice, maybe.

>> Vish:

Well, that's, another thing. So with that, so what are you planning to do next one year in terms of investing? Do you have anything coming up or do you have planning anything? Next one? Yeah.

>> Joanne Schmidt:

Yes. So for the next 12 months, my real estate goals are to sell my park in Tucson. It's a 34 space park in northeast Tucson. going full cycle on that. I've had it three years. it's in a good place, for the next investor to take on. So I'm going to sell that and then, from the proceeds of that, I'm hoping to put some funds into at least two more parks. And then, in the spring of 2025, the park that we own in Denali, we have plans to build at least a 20 unit motel room, I mean a motel building. And then we, need to put up some cabins. We have plans to put between four and six sort of like glamping style cabins on, the property. So there's that. And then I'm continuing to analyze deals, other RV park deals in a few key states. Though I will say my deal flow as of late has been a little bit thin and so has my networking. So I feel like I've been a little bit distracted from a couple of my deals recently. But I'm trying to, to re, engage with my investor colleagues and friends and get back out there to. To see what's going on in the market. Though I know, you know, already things have been rather slow. So, you know, when in those situations, when we're in the middle of a kind of a unfavorable cycle in the market or, you know, things aren't really moving, which, you know, I know a lot of people right now are waiting for interest rates drop, and there are a lot of sellers holding onto their deals. So in those cases, I just pivot to, my land and development deals and can work on those.

>> Vish:

All right, thank you. Thank you, Joanne. And then I know the 75 hard one of those things, you got to do is read a book, right? 10 pages or 20 pages a day? So.

>> Joanne Schmidt:

Yes.

>> Vish:

Which book are you reading right now?

>> Joanne Schmidt:

Let me tell you what books I've been reading. Okay? So I'm just now finishing, the book called Right Thing Right now. And it's written by the guy, Ryan Holiday, who wrote the Daily Stoic.

>> Vish:

Okay.

>> Joanne Schmidt:

The Daily Stoke. I'm a huge fan of, and I actually started a Zoom Call four years ago where we have

a call every morning at 7:

30 and we read the Daily Stoic. It's fabulous. But, I think I read six books. I think I've read six books. Let me tell you which ones I read, because I got. There were some really good ones I found this year. Let's see. I read 75 hard again by Andy Frisella. I read Be the Unicorn. This is a fabulous book. a guy who. He's an executive, not a headhunter, but he. He hires people for Fortune 500 companies, CEOs. So he interviewed 3,3000 people and identify the top 10, abilities or characteristics that really set them apart as the unicorns that transformed the businesses that they were hired to lead. Or they just, you know, when they showed up for the interview, just were real standouts. Another, book called Own the Room was fabulous. And that's about identifying and even recreating our signature voice. How do we want to show up? What is the impression we want to make on people and the message, basically, that we carry, like, who are we, we, and how can we show up authentically? I mean, that was really, I think, important, important book, like, professionally.

>> Vish:

Well, well, that's interesting. Do you belong to Ryan Holiday's Mastermind.

>> Joanne Schmidt:

Group or No, I don't, but I'd like to. Oh, another crucial conversations about, just having those tough conversations, whether it's with, you know, a family member A co worker, an employee, or just whatever. Millionaire success habits by Dean Grazioti. I read that, too, in the beginning. One of the first books. the fourth quarter of your life. Now that I'm not in my fourth quarter yet. But that's about really understanding the value of time and how we. How we live and show up at different phases of our life. Right. Like, the first quarter when we're 0 to 25, then in 25 to 50, you know, we're having kids in our career, things like that. it was really.

>> Vish:

So, finally, have you. Have you found your superpower? What is one thing you can really be good at? You don't need any motivation. You don't need any discipline. You don't need any likes. You don't need any comments. You will do it because that is you. So what is your superpower?

>> Joanne Schmidt:

What is my superpower?

>> Vish:

Right. You would do it no matter what, even if nobody is watching you.

>> Joanne Schmidt:

You know what I really have found myself? I really enjoy doing. I like coaching people, and I do it, like, in a little m. Micro way on Facebook. Like, I always encourage people, and that must have come from when I was a counselor for a really long time. and just giving people prompts or giving people messages or, you know, the attaboys. Trying to provide, like, content that is positive and uplifting and probably also just as a person who's been on a long journey of personal development, you know, be the person you needed when you were younger. I think that's one reason why I've done it, too.

>> Vish:

All right, that's great, Joanne. Thank you. Thanks for taking time to be a guest on outrunning failures. Remember, setbacks are just only opportunities in disguise.

>> Joanne Schmidt:

Yes.

>> Vish:

So let's keep, pushing forward. There's no looking back. You. It's like you're running a marathon. You crossed halfway. There was no point going back, Right? Yeah. M. You might as well finish it strong. You might take a little longer, but it's your race. It's your journey. So let's, There's no point looking back. We got to get a little more stronger and finish strong.

>> Joanne Schmidt:

Exactly.

>> Vish:

Thank you.