\n<\/p>\n
How much billionaire advice<\/strong><\/a> have you gotten? Ever decided to look up the wealthiest people in your area and give them a call? What type of tips could they give you for success? What business ideas <\/strong>would they push you to try? And how would your life change?<\/strong> Instead of speculating, at a young age, Andrew J. Abernathey<\/strong> tried out this strategy, and much to his surprise, he got the billionaire mentor <\/strong>he always dreamed of.<\/p>\n Before that, Andrew was just a simple farm boy<\/strong>. You know how it goes: tending to the field, ordering supplies, and trading futures at ten years old<\/strong>. Yep, you read that right. Andrew was making trading calls on grain prices at only ten years old, a skill that his father helped teach him<\/strong>. At fourteen<\/strong>, Andrew decided to put some money in the stock market<\/strong>, and a year later, walked away with an $80,000 profit<\/strong>. And like all young boys, he knew exactly what he wanted to spend his money on\u2014a million-dollar apartment complex<\/strong><\/a>!<\/p>\n Picking up on a pattern? Andrew has been making incredible moves<\/strong> at almost unbelievably young ages. But we haven\u2019t even touched on the most incredible part of his journey yet. In this episode, you\u2019ll hear how Andrew made wild real estate profits at sixteen<\/strong>, met his billionaire mentor by offering him some pie, and went on to build hundreds of millions in self-storage<\/strong>. It\u2019s all true, and it\u2019s all coming up in this episode!<\/p>\n David: Andrew: David: Henry: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: David: Andrew: Henry: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: Henry: Andrew: Henry: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: David: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Henry: Andrew: David: Speaker 4: David: Andrew: Henry: Andrew: Henry: Andrew: David: Andrew: David: Andrew: David: Andrew: David: Andrew: Henry: David: Henry: Andrew: David: Henry: David: Andrew: Henry: Andrew: David: Henry: David: Andrew: David: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/em>sponsor page<\/em><\/a>!<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast show 695.<\/p>\n
But between 10 and 14, I was really getting into books and really obsessed with Warren Buffett. And when the market crashed, it was all over the news. And that\u2019s when I was like 14, like what\u2019s the stock market? I mean, I was already doing grain and I was doing other things. And so I went and just threw $4,000 into Ford at 99 cents. Bank of America at $3, just bought a bunch of random stuff. And that\u2019s $4,000 between 14 years old and about 15, 16. So like a year and a half went to $80,000.<\/p>\n
What\u2019s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, the biggest, the best, and the baddest real estate podcast in the world. Here today with an amazing show that is sure to blow your mind with my co-host, Henry Washington. In today\u2019s show, Henry and I interview future billionaire, Andrew Abernathey out of North Dakota of all places who is building a business and real estate empire based on sound principles and smart business choices. And we share all of it with you today. Henry, what are you thinking after just talking to Andrew?<\/p>\n
Oh, no, I think this was a phenomenal conversation. Man, it reinforced a lot about\u2026 Well, for me especially, I got into this business to improve the lives of my family and he was a beneficiary of some fantastic financial knowledge imparted on him by his parents at a very young age. And it was imparted on him in a way that it actually stuck and he started to implement it at a young age. And the lessons that he learned then have just created this stair step that he\u2019s used to build this real estate empire that he has now. And it started with this foundation when he was probably younger than most people would think you would want to start educating some people on advanced financial topics. And so it just reinforced to me that I should probably spend more time talking to my kids about the intricacies of what I\u2019m doing and not just showing them through my actions.<\/p>\n
Yeah, that\u2019s a great point. I mean, we\u2019re going to get into that more in the interview, but I like what you said about his stair step because Andrew just got started early with a great foundation and never stopped climbing. He just keeps going. Every time he hits a new level, he says, \u201cOkay. What would be the next step?\u201d It\u2019s always very practical and even simple in some ways, and anybody can follow that path. Now, not everybody\u2019s going to go into want to climb to the levels that Andrew\u2019s at, but everyone can be climbing higher than where they are right now. Today\u2019s quick tip is very simple. Consider bringing your kids into your world in ways that you might think they\u2019re not ready for. Andrew tells a story about being 10 years old and being introduced into stocks and 14 years old buying his first property. And that sounds crazy to hear right now, but when you consider the mentorship that he had from the people that were in his life and his father, it actually doesn\u2019t sound that crazy. And he makes a really good point too.
He always looks for people\u2019s passion and he only hires people that are passionate about what their job is to do. If you\u2019ve got kids that are passionate about business, that like looking at spreadsheets or they like looking at CRMs or they like being involved when you\u2019re meeting new people and networking, bring them along with you. Kids don\u2019t like it when you make them do something that they don\u2019t enjoy, but if they enjoy it, they probably want to be a bigger part of your life. And for some of them that could be real estate.
And before we get to Andrew, if you\u2019ve got a quick second, please go give us a five star review wherever you listen to podcast. We want to stay the biggest, the best and the baddest podcast in the world. We can\u2019t do it without your help. You, us, we are in a relationship together and we need your support just like you need ours and bringing you this information. So if you could just go to wherever you listen to the podcast, Apple Podcast, Spotify, Stitcher, whatever it is, and leave us a five star review. We really appreciate it. All right. Let\u2019s get to Andrew. Andrew Abernathy, welcome to the BiggerPockets Podcast. How are you today?<\/p>\n
I\u2019m good. I appreciate letting me on. I\u2019m excited.<\/p>\n
Yeah. Well, thank you for joining us. We\u2019re excited too, because you have an incredible story. I don\u2019t want to beat around the bush. Okay. Take me back to the first time that you decided that you were going to make money through investing. Okay. Where were you, what were you thinking about, and how old were you?<\/p>\n
Oh, good question. Yeah, I was the ripe old age of 10 years old, family farm in North Dakota. And my dad noticed I enjoyed numbers. I was a little bit of a nerd and he started having me doing the marketing on the family farm, selling grain futures, puts calls, all the goods.<\/p>\n
Okay. So you knew what puts and calls were at 10 years old? We need to unpack this.<\/p>\n
I learned it at that point.<\/p>\n
Did you just say you were 10 years old and you talked to your dad and then started trading puts and calls? When the kids in my neighborhood are thinking about making money, there\u2019s a stand outside and they\u2019re selling some random lemonade juice from inside the house. But you started trading stocks, puts and calls? I need a little more information there.<\/p>\n
Little more detail. Yes. So I love numbers. When I was before 10, like six, seven, I would take stuff from one sibling\u2019s room and sell it to another, right? So just always obsessed with it. Dad\u2019s like, \u201cHey, I\u2019ll give you $5 an hour if you want to do the marketing.\u201d And I thought I was doing it all on my own and making the calls to the brokers. Found out later on, my dad was calling the broker after like making sure they were good trades and stuff. But just the learning experience was phenomenal.<\/p>\n
Why don\u2019t you unpack what a put and a call is for everyone listening who doesn\u2019t know what the heck we\u2019re talking about here?<\/p>\n
Yeah. I mean, basically it\u2019s buying on paper, right? So you either write it or you don\u2019t. So if you\u2019re buying a put, you expect the markets to go down. If you buy a call, you expect it to go up, you pay a premium to have the option. If the market does the opposite of what you thought, you\u2019re out to your premium. That\u2019s it. And if it does the opposite of what you thought past your premium cost, you make profits. So some guys actually write the paper, there\u2019s a lot more risk on that end. We were just trying, so we had a few hundred thousand bushels of commodities on the farm at all time. And then we would buy some on paper and sell it on paper too. So we were dealing with both concrete grain and also paper grain.<\/p>\n
So you were basically speculating what the market\u2019s going to do?<\/p>\n
Pretty much. Yeah. And the nice thing is what we always did is the opposite, so it\u2019s almost like an insurance policy, right? So I said, \u201cI\u2019m going to buy a put on this so if it goes down, that must mean that there\u2019s a lot of crop in out there, which means that we have it.\u201d And if it\u2019s a drought, it means the crop\u2019s going to go up, which means we\u2019re not going to have it. So we\u2019ll make money on the paper. So it\u2019s basically an insurance policy on what we were growing in the fields because usually it\u2019s the opposite of what we would produce.<\/p>\n
So you were hedging?<\/p>\n
And you were being taught how to hedge at a very young age by your dad, is that right? Was he your first mentor?<\/p>\n
Correct. For sure, 100%.<\/p>\n
All right. Now this is cool because the family business is a farm, right? It\u2019s funny that you mentioned Warren Buffett because you\u2019re in North Dakota and he\u2019s in Omaha, Nebraska. And this is probably not cool to admit, but in my head that\u2019s like the same thing because I\u2019m in California and we don\u2019t know-<\/p>\n
It\u2019s Midwest,<\/p>\n
\u2026 how the Midwest works. That\u2019s exactly right. Omaha and Fargo. I might have thought that\u2019s just a different name for the same city. I\u2019m Joking. I\u2019m not that-<\/p>\n
I\u2019ve heard that before. That\u2019s all good.<\/p>\n
There\u2019s something about very, very powerful minds that come out of these places. So that\u2019s what we\u2019re trying to dive into today. So here\u2019s what I\u2019m curious about. I\u2019m imagining that your dad has a strong emotional connection or relationship with the family business that\u2019s a farm. So he\u2019s constantly thinking like any good owner or investor would be, \u201cHow do I protect myself from the downside while maximizing the upside?\u201d And that\u2019s where you\u2019re being taught these concepts like puts and calls and insurance policies and hedging and all this stuff at 10 years old.
Tell us what those of us who did not grow up on a farm don\u2019t know about farms. Like the business side of this, because when we picture farming, it\u2019s like, oh, you get up in the morning and you milk a cow and you got a John Deere tractor somewhere in the front yard that you sit on your grandpa\u2019s lap and he\u2019s got his coffee and you\u2019re listening to George Strait as you\u2019re plowing a field or something. I have a feeling that there\u2019s a whole lot more entrepreneurialship and numbers that go into it. Can you share with us that are ignorant of how farming works a little more what that lifestyle is?<\/p>\n
First off, I love George Strait. You got that part right. But yeah, so my dad always said back in when we started back in the early 1900, it was whoever could just work the hardest, right? That was farming. It was just 99% hard work. And then in the \u201950s and the \u201960s then it was like, \u201cAll right. You really got to be really good at business, but also 70% work still hard.\u201d And nowadays, and I\u2019m not saying farmers don\u2019t work hard. They do, but what I\u2019m trying to say is 90% of the money now is made in the office, right? It\u2019s a globalized economy. It\u2019s become more globalized as technology has come around.
So yeah, I mean, you\u2019re in the field, you have to be a mechanic, you have to know how to market, you have to know how to pick which crops you\u2019re going to put in. You have to know how to negotiate with vendors on input costs. I mean, you basically have to wear 17 hats. It\u2019s one of the most unique things ever. And it\u2019s really cyclical. I mean, it\u2019s one of those businesses where you\u2019re really reliant on weather and cyclicality. So you\u2019re literally putting all your money out, going to hedge as best you can and hope the weather doesn\u2019t mess it up. So when we were young, news was always on the weather and my dad was pretty good, but his mood was dependent.<\/p>\n
It\u2019s so crazy. You\u2019ve got all this money invested into this asset that you have no control over, the main thing which is weather, which is probably the most volatile thing in nature, right?<\/p>\n
Yeah.<\/p>\n
You think about the market can shift with real estate investing or the economy can shift, nothing changes as unpredictably or wildly as the weather and that\u2019s the baseline that you\u2019ve built this entire thing on. What does that do to someone mentally to have to live with that level of uncertainty when they have this much money invested into an enterprise?<\/p>\n
Well, though are some of the first\u2026 And that leads me some of the first books that I was reading in 10 to 13 was human nature because I think every dollar behind it has a person, everything\u2019s human related. So that all leads to that point is I learned how to manage emotions and I learned the different mental states you have to be in, right? I mean, you can\u2019t control the weather. If you\u2019re stressed about something, focus on things that you can control and your stress lowers. And I had to learn that at a young age with weather and prices of crops and all of that. I mean, you can\u2019t control it. It is what it is.<\/p>\n
So I imagine that\u2019s where the hedging really came in for your father in teaching you, because if you\u2019re reliant on something as unpredictable as weather, then you darn sure better be playing both sides in the event that the weather doesn\u2019t do what you need it to do, that you\u2019re not just out all of your money, that you hedged against it and then hopefully maybe you break even?<\/p>\n
Yeah, you try to have as much upside as possible with protecting your downside. And also vertical integration was something I was introduced to early. My dad started selling fertilizer, drive fertilizer and hydris. Anything that he could do, he started selling seed. Anything to cut our costs down on our input costs, anything that we could do in-house.<\/p>\n
Because that\u2019s how one of the ways that you protected your downside, right?<\/p>\n
Correct.<\/p>\n
Now, I don\u2019t want to gloss over this. This is actually wildly intelligent. This is what business is, for people that are in their business, they understand it is all about maximizing upside while protecting downside. In fact, it makes me think a lot about poker. One of the things you learn\u2026 And I\u2019m not a super good poker player, I play once every four years, but I play enough to understand how the game works. It\u2019s not about winning more hands, it\u2019s about when you win, how big was the pot that you won. Okay. You could lose 20 hands in a row and win one big one and you\u2019re now in the best position on the table. That\u2019s what business is. And I think a lot of analysis paralysis comes because people are looking to eliminate risk. And if they see risk, they\u2019re like, \u201cOh, I don\u2019t want to do it.\u201d
Whereas the successful athletes, entrepreneurs, business people, they know you don\u2019t eliminate risk. Their confidence comes from their ability to reduce it while maximizing the upside, because if I can hit a home run on a couple deals, I\u2019m not afraid of taking an L on a couple other ones. And it separates you from the power of the fear where you\u2019re like, \u201cOh, God, if I lose everything and I can\u2019t lose.\u201d I see you smiling. It sounds like this is something you got introduced to at a young age. Can you tell me, am I on the right path here with how your brain works?<\/p>\n
100%. And it\u2019s Warren Buffett would say the best thing about investing is it\u2019s a sport where you have more than three strikes. In baseball, if you strike out three times, you\u2019re out. Well in investing, you can watch 1,000 deals fly by before you take a swing. So you always try to take calculated risks, stay in your circle of competence, the basic stuff. I\u2019m more of a baby boomer than a millennial, I tell you that much. But no, you\u2019re absolutely correct.<\/p>\n
Yeah, that\u2019s just something I want everyone to notice because you had a huge advantage getting taught these lessons at 10 years old when your brain is forming. And I can only imagine how comfortable you got with this concept of risk and how to manage it versus you at your whole life, and no one really gets introduced to risk on purpose when they\u2019re young. You go sit in class and you get good grades by just memorizing what you\u2019re told and waiting for a bell to tell you where to go, right?
You just follow rules and to succeed. And then you get out of school and you get into this what we call the real world, and no one cares. And following rules doesn\u2019t get you wealthy. It can actually keep you trapped. And so you have to learn how to do the stuff that you\u2019re thinking and I think it\u2019s amazing that you learn this. And I hope more parents are teaching their kids how to do this at a higher level than just the lemonade stand that we typically expose kids to. Now, you also learned a little bit about managing money, right? So my understanding is you were making $5 an hour when you were young. Tell me what this work agreement was that you had and what you did with that money.<\/p>\n
Yeah. So 10 years old, I mean, I was not only marketing grain, but I was running grain cart combine in the field and I was getting $5 an hour. And during harvest and springs work, I\u2019d be taken out at lunch, my brother and I from school. And so we were getting 12, 13, 14, 15 hour days in during the busy times of the year. And then I was cleaning equipment at the local John Deere dealership for seven, 25 an hour. I was flying out to Rehoboth Beach, Delaware, working at a Chinese restaurant in a bed and breakfast for cash onto the table. I mean, anything that I could do to get cash. And anyways, by 14 I saved up $6,000. I actually only had $4,000 left because I bought a go-kart for $2,000, a red go-kart. I mean, can\u2019t really blame me, I was 14. But-<\/p>\n
Of course.<\/p>\n
\u2026 the $4,000 I had left is actually when I entered the investment market. I wanted to have my money work for me and that\u2019s when it all began.<\/p>\n
I\u2019m falling in love with North Dakota right now. You guys have John Deere dealerships.<\/p>\n
John Deere-<\/p>\n
It was the worst job. I mean, a great dealership, but cleaning combine sucks. I mean, oh, my God.<\/p>\n
I think of a dealership like a Porsche dealership or equipment.<\/p>\n
Yeah, mostly equipment. They were possible the same as a Porsche. But yeah.<\/p>\n
So they have the showroom tractor, like the big-<\/p>\n
Oh, yeah.<\/p>\n
\u2026 shiny cool one that has all of the cool attachments that you could buy with. That\u2019s like what they\u2019re upselling you, right?<\/p>\n
My job with waxing that thing, making it pretty.<\/p>\n
If this was a transformer, it would turn into this. That\u2019s really funny.<\/p>\n
Only $500,000.<\/p>\n
Yes, you got to take a huge loan out to get the John Deere $4,000 that can\u2026 It\u2019s got this rating of it can do this many square feet of hoeing in a certain period of time. This is hilarious to me being in California and not exposed to that. So you got exposed to hard work managing money, learning a lot of cool business principles at a very young age. At what point did you transition into actual real estate investing as opposed to go-kart investing?<\/p>\n
I love it. So actually, so the market crashed when I was 14. It was about March 2009 is my 14th birthday. And fortunately that was only a few days after the bottom of the market. Again, lucky didn\u2019t know, but between 10 and 14 I was really getting into books and really obsessed with Warren Buffett. And when the market crashed, it was all over the news and that\u2019s when I was like 14, \u201cWhat\u2019s the stock market?\u201d I mean, I was already doing grain and I was doing other things. And so I went and just threw $4,000 into Ford at 99 cents, Bank of America at $3, just bought a bunch of random stuff. And that $4,000 between 14 years old and about 15, 16. So a year and a half went to $80,000.<\/p>\n
Geez.<\/p>\n
And that\u2019s when I took it out and got into real estate.<\/p>\n
Henry, you had a strong reaction to that. Tell me what you\u2019re thinking.<\/p>\n
Yeah. Yeah. So I think what\u2019s going to happen is a lot of people are going to hear this story and first they\u2019re going to make some assumptions, right? They\u2019re going to make some assumptions that you were some rich well-off kid whose dad just gave you a bunch of money to play with. That\u2019s not the case, right? Your parents taught you about financial education and then you went and worked your butt off to save money and then you were smart enough to\u2026 Yeah, have some fun, but then put those principles to work by investing. But then you also had the good fortune of entering the market at a good time. And some people will see that as luck. And sure there\u2019s some element of luck to the timing, but had you not done all those things before, had you not positioned yourself to be able to jump into the market at the time you did, you wouldn\u2019t have done it, right?
And so it\u2019s not just all luck that you jumped into the stock market at that time. It was the culmination of all the lessons you had learned previously, all the information that your father had passed onto you and then you actually applying it and implementing it and you still had to have some discipline to go ahead and be able to take the money you worked hard for. And as a 14 year old, think I can\u2019t spend all of it. Right? That\u2019s super powerful And I want people to understand that when they hear this story because you get a lot of naysayers, it\u2019s like \u201cAh, well his parents did it for\u201d, that is not the case at what\u2019s happening here. And you didn\u2019t get lucky by entering the market at that time. You had put in the work, you had put in the effort, you had put in the discipline to be able to be ready to invest when you did. And it just so happened to be a really good time. So I think that\u2019s super cool and I want to make sure people really understand that.<\/p>\n
I appreciate that. Yeah, success is when preparation and opportunity meet. I spent four years preparing and looking for opportunities in 2009 and opportunity came up and I jumped on it.<\/p>\n
There\u2019s something else I\u2019d like to dive into with this with you being 10 years old, 10 years old, 14 years old.<\/p>\n
Yeah.<\/p>\n
Either you\u2019re some kind of savant Doogie Howser esque. Do you know who Doogie Howser is actually?<\/p>\n
Yeah, that\u2019s actually my nickname from my friends.<\/p>\n
You look a little like him.<\/p>\n
Yeah, they call me Doogie.<\/p>\n
Neil Patrick Harris, right? That\u2019s the actor\u2019s name from How I Met Your Mother. He was in this really old TV show where he was a doctor at 14 years old or something like that. And the movie or the show would portray the challenges he faced as a young kid. And I remember at the end of every show, he\u2019d be like typing on his computer because computers weren\u2019t very common when I was really little talking about what he learned in journaling. But he was this pheno, either you\u2019re that or teenagers and preteens are capable of more than what we think. That\u2019s what I started thinking about, right? We typically take kids, send them to school, say whatever your teacher teaches you, whatever curriculum they have is all that you have to do. I\u2019m not responsible for educating or training my kid, I just go to work and do my own thing.
I put them through the system and I hope that they turn out well. But I just think some kids can understand deeper concepts than what we think. If you\u2019re at 10 years old able to understand puts and calls and you\u2019re watching your dad playing on the computer and he\u2019s talking you through the logic of how he\u2019s looking at this or you\u2019re learning how to take apart complex machinery and clean it and put it back together when your brain\u2019s being formed, it\u2019s learning mechanical aptitude and how several pieces fit together, which is actually a very important thing if you understand how the economy works. And we\u2019ve already talked about mitigating risk and increasing reward. It sort of sets this example that young children and teenagers are actually capable of dealing with some adult level stuff if you introduce it to them in the right way. I see you smiling at this comment. Is this something you also believe? Is this something you plan on training your kids in when you get them?<\/p>\n
Yeah, 100%. And I just want to add, I\u2019m a big believer in passion. I hire based on passion and I think kids should be directed on passion. What I mean by that is\u2026 There\u2019s six kids in my family and I remember as a kid we\u2019d sit around the dinner table and my dad would throw out topics, random topics, farming topics, money topics, whatever it may be. And whoever\u2019s head turned the kid wise, and you could see their eyes would change, spark and their voice would change, you could tell they were intrigued. And then he would spend one on one time with them on that topic because his belief was I want to help my kids find their passion at an early age and do what I can to help them down that road.
Because if you do something that you\u2019re passionate about, the odds of you succeeding are much higher. So for example, one of my sister is a doctor, one works at the church, one\u2019s a teacher, my brother farms, I\u2019m in finance. My point is we all followed our passion and we\u2019re all wildly successful at all of our fields. And it\u2019s not about the money, right? I mean, luckily what I do is makes money, but my sister, she\u2019s an amazing teacher and finances are different. So we were taught to follow passion, not money. And I think that kids have so much ability if the parents can do that.<\/p>\n
So we had started to get into how you started investing in real estate. The market had crashed. You said you were 14 years old and you got your first property, is that right?<\/p>\n
Yeah. So yeah, I turned the $4,000 $80,000 and I realized I wanted to be in real estate. This is funny story. So I go and I grab the $80,000. So my brother and I were renting my grandma\u2026 Grandpa\u2019s and my dad\u2019s equipment in custom combining in South Dakota trying to make some extra money. I mean, there\u2019s a lot of little things that I was doing during this time. And anyways, when we were driving back through Bismark, the state capital North Dakota, three hours south of where we lived, I was 15, 16, I saw this apartment for sale. It was a 16 plex, two buildings, $1.2 million. Nice old couple. I called him up like, \u201cHey, like to buy your building.\u201d \u201cGreat.\u201d So I sell my stocks, I put $20,000 earnest down nonrefundable. And I go back to Mohall, my small town of 800.
And I go to my buddy\u2019s dad, he\u2019s a banker and I\u2019m like, \u201cHey, I need a $1.2 million loan, here\u2019s $80,000 down payment.\u201d And I\u2019m like 15, 16. He\u2019s like, \u201cAndrew, that\u2019s awesome, but you need another $300,000 and a balance sheet.\u201d And that\u2019s when I was like, \u201cWell crap, now I got to raise money. How do I do that?\u201d So I went and printed off Warren Buffett\u2019s original 1956 partnership agreement and whited the names out, because I couldn\u2019t afford a lawyer. And I went to Crosby, a local town and I convinced someone to invest $300,000 in the project with me.<\/p>\n
Okay.<\/p>\n
So I\u2019m going to stop there.<\/p>\n
So first of all, here\u2019s my first takeaway. You turned $4,000 into $80,000 and your first thought is not let\u2019s run it back in the stock market, but let me pull it out and go invest in some real estate that I have never done a transaction in before. And so what spurred that thought versus just continuing to invest in the thing that you had success in?<\/p>\n
Yeah. So I went and I thought real estate was going to be a good play. So anyways, I mean, stocks are great. There\u2019s a control issue, there\u2019s the leverage issue. And Charlie Munger when you read that he actually got in with Warren later on, but they were friends and they say the quickest way to make money is in real estate, but at some point there is a diminishing returns. Once you get billions and billions and billions, there\u2019s diminishing returns due to scalability.
So I knew that the quickest way to get a jumpstart was real estate. So that\u2019s why I wanted to get into real estate. And then I\u2019m also a history buff. And in 1980 the oil boom hit for the first time in North Dakota and real estate markets were flying up in the \u201980s. Williston went first, mine at second, Bismarck third. Well, in 2000\u2026 Well this is probably 2010, when I did these apartments, Williston was inflated because the Bakken hit. And Minot was 90% inflated and Bismarck was sitting there like nothing\u2019s going on. So I\u2019m like, \u201cI got to buy some real estate in Bismarck. I mean, if history repeats itself, that\u2019s the place to be.<\/p>\n
Man, that\u2019s super cool, because it sounds like you did a ton of research, right? Then trusted that research and then acted on it. So you take this $80,000 and you see and you\u2019re like, \u201cOh, there\u2019s an apartment building in this town where I feel like they\u2019re going to have an appreciation pretty soon.\u201d And then you go and you put $20,000 down nonrefundable before you have the rest of the money, which-<\/p>\n
That\u2019s risky.<\/p>\n
Which forced you because you put yourself in a position where you had to go find it, you had to go raise the money. And so there wasn\u2019t this thought of \u201cI can\u2019t do this\u201d, there was a thought of, \u201cI absolutely have to do this\u201d, right? Which is I\u2019m sure what made that transition necessary is I think the word I want to use there. And so then you thought, \u201cOkay. I\u2019ll go ask people with money.\u201d And I think you used the word, \u201cI convinced a guy\u201d.<\/p>\n
It\u2019s convinced is the right word.<\/p>\n
To loan on this project. So go into the details there, what does convinced mean? What were you, 15, 16?<\/p>\n
Yes, 16 I think now.<\/p>\n
How did this 16 year old convinced this wealthy\u2026 What was he? A farmer to invest in your real estate deal that you just drove by and saw on the side of the road?<\/p>\n
I made it a no-brainer. I mean, I literally went to him and said, \u201cHey, I\u2019m going to throw an $80,000, you throw in $300. I\u2019ll work for free. And the first $80,000 we lose if we do can be mine.\u201d So I\u2019m first out of the money if something happens. So the guy sitting there, like, \u201cWell geez.\u201d I mean, how do you turn that down, right? I mean, it\u2019s hard real estate. He\u2019s going to do all his work for free. $80,000 is first money out. Pretty good cushion.<\/p>\n
Yeah. Yeah, that is a pretty good cushion. That\u2019s a creative way to think about the solution. I talk to people all the time about borrowing money. So I\u2019ll talk to different private money lenders about borrowing money and it\u2019s similar to me. I\u2019m trying to make this a no-brainer for you. How can I creatively structure this to make it seem like, \u201cHey, if anybody\u2019s going to lose here, it\u2019s not going to be you, it\u2019s going to be me because I\u2019m going to make you whole.\u201d Right? And you can get creative when you\u2019re using private money to be able to do that. I think that\u2019s super cool.<\/p>\n
Exactly.<\/p>\n
And how old were you? Remind me when you\u2019re putting this deal together.<\/p>\n
I was about 16.<\/p>\n
Okay. 16 years old. Now, did you have your dad or anybody else advising you like, \u201cHey, here\u2019s how you should structure this or here\u2019s how you should present it\u201d?<\/p>\n
No, because I mean all the family did was farmland. So when I went and did this apartment thing, it was actually a foreign concept really. I mean, I was really just going off reading and I watched some Harvard classes on YouTube and learned some stuff. But yeah, no. So anyways, we got the apartments, 16. I felt like the history was going to repeat itself. And again, I hate to use the word locking call what you want. It happened, I mean, the Bakken formation hit in a city. So I bought these apartments. There was six apartments right next to this middle school in Bismarck. We owned the two right in the middle. And I got a call from the city saying, \u201cHey, we need to buy your apartments. We\u2019re doing an addition because of all the kids coming in from this oil boom.\u201d
And they said, \u201cWe\u2019ll give you $1.5 million.\u201d And I said, \u201cNo, no, I\u2019m good.\u201d And this was like six, seven months after we bought them for one too. And then anyways they bought the other ones, they tore them down. We were the last man standing. Finally, I accepted an offer. I think it was about $2 million. So 15 to 16 months we owned them. I was a junior going into my senior year in high school. After paying the loan off, we had $1 million from that original $380,000 roughly a little over.<\/p>\n
Yeah. Speechless here. I mean, I\u2019m just trying to think of what I could even compare this to you, like how you hit this many grand slams your first time.<\/p>\n
I know, it was weird. I have some losses later, so don\u2019t worry about that.<\/p>\n
Okay. I was about to ask, have you lost yet?<\/p>\n
Yes.<\/p>\n
Because without any losses, you might just be floating in space with any form of\u2026 I don\u2019t know what the word I\u2019m looking for here. There\u2019s no framework to put this in. So I\u2019m glad to hear that you\u2019ve lost in some way. Not that [inaudible 00:28:52]<\/p>\n
I got my tissue kicked in 2017, so we\u2019re good there.<\/p>\n
Okay. And that brings some balance to the force and gives you\u2026 Probably makes you succeed even more.<\/p>\n
But the nice thing is when I went back to this guy that gave me the $300,000 he\u2019s like, \u201cAndrew, that was impressive. How about this-\u201d<\/p>\n
Do it again.<\/p>\n
Yeah. He said, \u201cThere\u2019s $1 million here, give me $500,000. You keep $500,000.\u201d Even though I was supposed to only get like $200,000 or whatever that number was, $250,000. So he gave me $500,000 of the million and then he is like, \u201cAnd keep my $500,000 and I want you to invest it and charge me this time.\u201d So that\u2019s how that was left off.<\/p>\n
What kind of people are in North Dakota that they\u2019re willingly giving up their profit? You\u2019re going to have a rush of people, like I want to raise money out there. Now I\u2019m guessing this person probably knew you knew your family, right?<\/p>\n
Yeah. I mean, farming communities, again, I found an opportunity and I bounced on. I mean, farmers are very niche. You are a farmer, you\u2019re not, they\u2019re very\u2026 Some guy coming in from New York could never raise money. It\u2019s just they\u2019re very a niche thing I guess.<\/p>\n
So I know at one point you had some success, but you said that you weren\u2019t really being fulfilled. What was that like to win this big, that young?<\/p>\n
Yeah. That is tough, right? Because it\u2019s like a drug. I mean, you get these hits and then\u2026 Because I\u2019m a big believer in slow and steady wins the race, but you get these grand slams and you get these highs and then all of a sudden normal life doesn\u2019t feel that exciting, and I mean that in the best way. Not like I was depressed or anything, but you know what I mean. Gosh, you get those highs before you\u2019re 18. Like gosh, that\u2019s a high benchmark.<\/p>\n
Yeah. So what were you going through? What were you feeling when you actually had that happen?<\/p>\n
I mean, the toughest thing too was not being really normal. My siblings were all really good in school and popular and good at sports, and I really wasn\u2019t any of that. And so I think just being different was tough. But again, looking back now I\u2019m blessed. I\u2019m so glad. But in the moment, it is tough to not really know who you are.<\/p>\n
So what did you do when you decided you were going to niche down? How did that decision come to fruition?<\/p>\n
Well, when I went to Fargo and I decided I didn\u2019t want to farm, so my brother and I are partners in the farm, but I\u2019m not an active involvement, and that was my big decision to tell my dad. And that\u2019s tough in the farming community to go tell your dad that you don\u2019t want to farm and you\u2019re one of the two sons, but he was very understanding. And that\u2019s when I figured out that I need to raise so much money to follow my dream, right? Because that\u2019s my answer is just follow my dream, be me and don\u2019t pretend I have to farm. Because up until 2013 I felt like I just had to farm. This was going to be a side hobby when really my hobby is what I love the most. So that\u2019s really how I just jumped into it two feet.<\/p>\n
So did you end up going to college?<\/p>\n
I did for about two semesters and then I dropped out. So my dad called me. So when I was a year into college, I already had a $15 million raised because I kept raising money. And my dad called me and said, \u201cAndrew, you either need to give the money back and go to college and I don\u2019t blame you because I went to college and I had fun. Or you need to get out of college and manage this money because these people that invested in you deserve your full attention.\u201d He said, \u201cMake a decision. I don\u2019t judge you either way.\u201d Well, I decided to drop out and here I am.<\/p>\n
You didn\u2019t figure you\u2019d make a $500,000 net from getting your first job out of college?<\/p>\n
Correct. Yeah, I figured pass that.<\/p>\n
So what was your real estate investing like during those times?<\/p>\n
Well, that was actually my confusing years a little bit. So I went and raised a blank check fund where I basically could invest and do anything I wanted. So I raised about $15 million and I went and bought an equipment dealership in Great Falls, Montana, Warren Buffett play. I bought insurance company out of Alabama that was on the Nasdaq and actually I became the largest shareholder through stock purchases and I had to change the laws in Alabama to become a board member when I was only 23 at the time. And then I bought some HUD building commercial\u2026 That was the point, right? Those are my last years. Everything I was doing was working, except for the helicopter company. I lost my butt on, lost 15% of our portfolio, but we don\u2019t need to talk about that right now. But anyways, everything was working. But that\u2019s when I called Gary, I did my cold call and that changed my life.<\/p>\n
So what do you mean? So everything was working, you were seeing the success you were hoping for, you had raised the money and then you thought, \u201cI need to call somebody and get some help.\u201d?<\/p>\n
Yeah, I wanted to call Gary because when I look at billionaires, I read something once that billionaires are created on focus and its wealth is preserved on diversification. So I looked at people in even Fargo, Ronnie Offutt, John Deere dealerships, Harold-Newman-Signs, they all became very successful on one thing. They were the best at it. So I cold called Gary Tharaldson, he\u2019s a North Dakota billionaire. I actually called the top 10 wealthiest people in the state. He was the only one that really called me back and gave me any time, which I\u2019ll take the richest one I guess.
And I called his secretary, said he is not in, I just called his office because he didn\u2019t know me from Adam. I mean, I grew up six hours away from here in a small farm. He didn\u2019t know who I was. And she\u2019s like, \u201cYeah, yeah, he\u2019ll give you a callback.\u201d And I\u2019m like, \u201cOkay. Sure. Yeah, okay. Sounds good.\u201d So I leave my number and my name and a month later I get a call from this Vegas number and I pick it up. I thought it was the telemarketer. I was about to be like, \u201cDon\u2019t ever call me again.\u201d But before I could say that, this old raspy voice comes in, it\u2019s like, \u201cHey, this is Gary Tharaldson giving you a call.\u201d And I\u2019m like, \u201cOh, Gary.\u201d Right? That hit, I\u2019m just speechless. And then that\u2019s when we talked for like 45 minutes.<\/p>\n
So what do you say in that\u2026 You cold called him, he called you back and you\u2019re in shock. And then what is it you say to keep the man on the phone?<\/p>\n
I think I blacked out because I was so shocked. It\u2019s like when you ask your wife to marry you, but I said things just like, I like, \u201cHey, I\u2019m from a small town.\u201d I knew a lot about him. I creeped on him a lot. Similar things, \u201cHere\u2019s what I\u2019ve done. I\u2019m in Fargo, I\u2019d love to just have some pie.\u201d And Gary\u2019s the guy that I later on learned, loves to share his story and he loves young people that have ambition. I was the perfect person to tutor for him. I mean, it was great. Match made in heaven.<\/p>\n
That\u2019s perfect. It\u2019s super cool. The reason I was asking those questions is one of the marketing methods that I like to use, and especially that I encourage younger investors to use is network marketing. So sending out marketing with the intention of making a connection and networking with somebody more so than the intention of buying their property. Because when you can network with\u2026 And I specifically tell them, you look for older people who have a handful of properties who have owned them for years. And the idea is that you connect with these mom and pops, right? And then you have lunch or coffee instead of saying, \u201cHey, I want to buy your place.\u201d You say, \u201cHey, I want to talk to you about real estate.\u201d Because that group just is wildly passionate sometimes about younger investors going down the same path and you\u2019re able to build this strong relationship.
And then they always know all the people, they always know old so and so down the road, who\u2019s got this business or this thing, they\u2019re looking at selling or got this opportunity and you can go learn this. And they\u2019re so connected and you can gain so much just from those networking relationships. And I think 100% totally agree with you that there\u2019s a lot of people who are older who have been around the block. And you can use your youth as an advantage because you have the drive and the hustle. They see a lot of themselves in you at that age. And you can use that to your advantage, not in a bad way, not taking advantage of anybody, but you can use building that relationship to your advantage greatly. And then the idea is that when you get there, you do the same thing. You give it back to somebody who\u2019s got that same ambition.<\/p>\n
Exactly. And that\u2019s what they love. When you get older and you make a lot of money, normally the thing that they want is to leave something behind a legacy. And they want someone that wants to learn, they want somebody to want to listen to their story really.<\/p>\n
Well, they want to feel significant. And that creates significant. So they know if you can learn from my story and the lessons I went through and you don\u2019t have to go through the same, then that it\u2019s a rewarding feeling for someone. It\u2019s hard when we\u2019re in the grind or the struggle for money or building mode. It\u2019s hard to even conceive of what it would be like to not have money on your mind. And I don\u2019t mean money is in greed. I mean, once you build a decent amount of wealth, I\u2019m sure this is probably where you\u2019re at, Andrew, you seem like someone who\u2019s halfway into offense. How do I build, how do I scale? And that\u2019s my next question for you. But then you\u2019re halfway into defense. How do I protect what I\u2019ve already got? How do I not lose it? And so not all of money is about greed and yachts and super cars and trying to look cool.
A lot of it is just, \u201cOkay. I\u2019ve got responsibility for all of these people that work for me and people that have invested in my company and my family that leans on me and I don\u2019t want to lose what I\u2019ve already created.\u201d And so it just occupies a lot of the space in your head. And you get to a certain point of wealth, like your mental, you\u2019re a billionaire where\u2026 I mean, if you think about being a billionaire, no one actually knows what their net worth is when they\u2019re a billionaire because it\u2019s not being measured in money in a bank. It\u2019s various companies that are worth different things. And all of that\u2019s fluctuating as far as stock values and the reports of what revenue was for that quarter. It\u2019s like billionaires, it\u2019s very tricky to know how much money they actually even have. They have so much of it that it doesn\u2019t mean the same thing to them that it does to us.
There\u2019s not a connection anymore between buying something and having a price you paid for it. So obviously their mind\u2019s going to be focused on different things. And I think it\u2019s fascinating to see if I didn\u2019t have to worry about money, which most of us will spend our entire lives on earth without having that luxury, what do I think about? And it sounds like what this person was thinking about was legacy and significance and wanting to feel like their life mattered and shared something. What were some of the biggest lessons that you took from those conversations with Gary?<\/p>\n
Yeah, I\u2019m glad you said that. So we started, he said, \u201cYeah, let\u2019s meet up.\u201d So every week we were meeting up having pie at the Village Inn in Fargo. And we started just talking. And I actually, when we first met, I asked him to invest in me. And he\u2019s like, \u201cNo. I\u2019m like, \u201cOh, okay.\u201d So then I\u2019m like, this is more of a mentorship, sounds good. But what I learned was he saw me, we talked business, him make mistakes, all that. And his model was very simple. In the 1980s, Gary wanted to print an asset. He said, \u201cBillionaires, no matter what they\u2019re in their manufacturers.\u201d What he means by that, he\u2019s like, \u201cI was in the hotel business, but I manufactured hotels. I printed hotels.\u201d He opened a new hotel every eight days in his peak. He built 500 hotels and only sold 100 of them to continue to build.
But he also vertically integrated. He was the best in the business. He didn\u2019t touch anything but hotels. He used the Marriott brands for branding. He owned the construction, he owned the wiring company, he was the realtor, he was the best at it. And that\u2019s what he taught me. So when I was doing all these things and making money here and there, and then I went and invested 15% of our portfolio in a helicopter company for all things and it went bankrupt and we lost 15% for the first time. Our share value actually dropped some and it wasn\u2019t a kill the business investment, but it was a good drop. And I was at [inaudible 00:40:28] and I told Gary about it and he looked at me and said, \u201cAndrew, you\u2019re good at a lot of things, but you\u2019re not great at anything.\u201d And that sunk in. And that was when I knew that I needed to figure out who I actually was instead of just dabbling in a lot of things.<\/p>\n
So how did you make the decision of what you wanted to be great at?<\/p>\n
Yeah, good question. So I asked that question to Gary, \u201cWell, what do I do?\u201d There\u2019s so many ideas. He said, \u201cAndrew, everybody in the world thinks that there\u2019s the idea. They wait around until they\u2019re 50 until the idea pops up.\u201d He said, \u201cThere actually isn\u2019t the idea.\u201d He said, \u201cThere\u2019s millions of ideas, you just got to pick one, focus on it, put your blinders up and make it the idea.\u201d So I took that and I said, \u201cOkay.\u201d
So the next week I came back and I had two asset classes I had interest in. One was self storage because it reminded me a lot of the hotels in the \u201980s, it\u2019s very fragmented. And at that time in 2017, public storage, the Marriott of storage for the first time was allowing people to use their brand just like Marriott did in 1982. And so storage was one of them and assisted living was one. And Gary just said, \u201cWhich one feels better to you?\u201d And I said, \u201cI\u2019m a simple farm boy. So I like storage, there\u2019s no toilets, there\u2019s very little people involved. It\u2019s simple, it\u2019s scalable.\u201d And he said, \u201cSounds good, let\u2019s do it.\u201d So we jumped on his plane, went out, met with Public Storage and Extra Space and started discussing third party management agreements. We were one of the first 50 to sign up.<\/p>\n
Okay. So that makes some sense why you\u2019d want to get into self storage. What was the benefit of signing up with a company that was going to let you use their brand?<\/p>\n
So Gary\u2019s big model, so he pays Marriott 12% and he still has to run the hotels. So he\u2019s got 3,000 employees today for his hotels and he pays Marriott 12% for the name. Public Storage and Extra Space and Life Storage, they just started this model in 2017 for the first time in history and they were only charging 4% to 6% of revenue, and they would manage the facility and brand it and use their algorithms. So Gary said, \u201cI\u2019m a big believer in being the best developer and owner there is. Let the people that have been doing it for 50 years that have built a brand that have $2 million views on their pages a day, that have the algorithms, let them do all the management for that. I mean, we\u2019re not making much money. And second off, what do you want to do? Don\u2019t swim against the tide. You\u2019re going to go try to recreate their algorithms. What\u2019s the point? Just be the best owner and developer you can be and own the rest of the process.\u201d<\/p>\n
So that\u2019s what ultimately you became great at was owning real estate and developing it. So tell me, from the perspective of becoming a billionaire, what are some things that you want to focus on within the project or the asset class or the business that you\u2019re taking on?<\/p>\n
So what we do now, so fast forward, we\u2019ve raised\u2026 Because Gary did finally invest by the way. So that\u2019s nice. So we\u2019ve raised about $120 million in cash and then we go and leverage, Gary and I are the only personal guarantees on the loan. So his PGs on the loan, so is mine. So we\u2019ve got about $1 billion in projects in the works here over the next five years. All self storage. So next year we got $100 million in Arizona breaking ground. So Abernathey Holdings, which is Gary and I and a hundred other people, I still own control. The other 100 people have thrown in anywhere from $300,000 to $5 million each. We own the construction company, we own the equipment dealership, we own the garage door dealership and we own the asset. So each building we builds about $13 million. The bank needs $5 million down. Gary throws in two and a half million cash. Abernathy Holdings throws in two and a half million cash, but we get to pocket $1 million from our vertical profits. So really we\u2019re making 40% return before the doors even open on our projects.<\/p>\n
I like that you point out about how you\u2019re making money before the doors open because a lot of what I\u2019ve heard about building self storage is that you\u2019re not making a profit until year three, maybe year five. And so how are you deciding where it makes sense to do this? And then how long does it actually take from the doors open to when you\u2019re actually seeing a profit on your income statement?<\/p>\n
So we try to focus on recycling cash. So it\u2019s cool that we\u2019ve raised $120 million in cash. But the problem is if\u2026 I mean, my goal someday and my team\u2019s going to listen to this and laugh because I\u2019m the dreamer, but it\u2019s like I\u2019d like to be building $1 billion a year in storage. Right now we\u2019re at the $100 million, I\u2019d like to be doing $1 billion a year. Well, in order to be doing $1 billion a year, you need a lot of cash. So my goal is to recycle the money as quick as possible. So with our current model, if we own 50% of the property and we have a syndication partner that owns 50%, we owe two and a half down. Syndication partner owns two and a half. But if Abernathy Holdings, me and my investors own 100% of the verticals and have exclusivity to do it, our profits actually take half that out.
Like I said, we get 40% to 50% of our money back before the doors open. The first step of recycling. Now the rest of it right now, we get out at stabilization. So to answer your question on the timeline, so when we find a site in Arizona, we have our own internal land crew about four guides. All they do is look for land, they find a site, they put an offer in, they spend about 12 months in titling it. And we do this whole process in cash. We\u2019ll buy the lot, usually a million an acre in Arizona and then we\u2019ll spend a quarter million or so on entitlement process. Lawyers, architects, engineers, things like that. Takes about 12 months shovel ready. And then we hand it to our in-house construction company. We have our own superintendents, project managers, they go and build it.
And in Arizona, that takes about 12 months at CO. That property that we built for 12 is worth about $17 million. So you had value creation plus, like I said, we got 40% of our cash back on what we paid our own companies to do the work at market rates. And now average in the industry is about three years to stabilize after doors open due to our lot selection, we\u2019re about half that. So this whole process start to finish in Arizona\u2019s three and a half years, we\u2019re looking to get into California, that\u2019ll be longer and cost more, but the upsides higher as well. So to me, what my focus on is recycling capital because if you can recycle your capital quick, then your upsides, your upsides is not as capital intensive, right?<\/p>\n
Yes. I mean, this is a very, very, very complex and grandiose per method in a sense. You\u2019re building an asset, you\u2019re stabilizing it, you\u2019re getting the money out, you\u2019re paying off your investors and then you\u2019re saying, \u201cHey, I got another place to put your money to repeat this process.\u201d<\/p>\n
But the cool thing actually is Abernathy Holdings is like Berkshire Hathaway. So we haven\u2019t done dividends in 10 years. So the company that I raised money for 10 years ago, we talked about this is the same entity and the same investors, it\u2019s just the business as morphed into a different model. So it\u2019s cool and unique too.<\/p>\n
You mentioned vertical integration quite often you talk about the verticals. What does that mean within the context of self storage?<\/p>\n
So only as much of the process as possible. So for an example, Henry Ford, he used to require the people that sent him parts to manufacture to build his cars. He required them to send them in wood boxes, not cardboard because he would then use the wood boxes to put the floors in the cars. So he\u2019d get it for free and then he would burn the extra and sell it for charcoal. I mean, again, he\u2019s vertically integrated as much as he can and you create a product, sell the byproduct. So in storage, for me, I want to own as much of the process as possible, but I also don\u2019t want a lot of headcount because again, employees are tough. Think it\u2019s going to get harder and people, that\u2019s where mistakes happen. There\u2019s a lot of friction there. So for example, we\u2019re our own garage door dealer because there\u2019s about $150,000 of upside to be the dealer.
And it takes one person that\u2019s already hired to push the paper. Pretty good. Net income per head. We\u2019re our own construction company save about $700,000 of building and we\u2019ve got one in a quarter guys per building because of project manager splits. And we are our own equipment dealership. We ship our own equipment site to site. We rent from ourselves. Very simple. You just move equipment once a year. Verticals that we do not do, thought about making our own signs, 50% margin. But now you\u2019re in the manufacturing business, you got materials, parts, you got to ship them, you got labor, you got heads. That\u2019s an example of a vertical we didn\u2019t do. So that\u2019s what I mean by that is we\u2019re bringing as much as we can in house, but I really don\u2019t want to have more than 50 people in my organization.<\/p>\n
So that was going to be my next question is about how many employees do you have and why haven\u2019t you looked into verticals that have to do with lighting and locks and all the other ancillary parts of the business?<\/p>\n
So we have 50 people. Everybody in our storage facilities are actually public storage employees. But we do pay through them through an expense. So I don\u2019t include them, but we have 50 staff. We open to a supply construction supply company. So we do bulk order some materials to get discounts. We also negotiate with architects and engineers to get maybe 30% discounts. So things that we haven\u2019t brought in house for various reasons we put on our negotiating hats or into our bulk ordering hats.<\/p>\n
So how are you structuring your companies or your deals so that everybody wins? Because I\u2019ve noticed that\u2019s come up a few times as you\u2019re speaking.<\/p>\n
So there\u2019s three people that I\u2019ve followed the model, Warren Buffett, Gary Tharaldson\u2019s simplicity approach, and then Trammell Crow, he was a big developer in the \u201980s. He had a partnership approach. So Jesus had 12 disciples. I\u2019ve got six guys because I\u2019m not as good as Jesus. So I have six people that I talk to on a regular basis. And it\u2019s a Warren Buffett style. So we have a guy that has been in equipment for 20 years and he\u2019s passionate about it, I mean he dreams about equipment, he runs that arm, that\u2019s his job. He\u2019s got his people, he runs it the way he wants. Him and I talk, that\u2019s it. We have a guy that runs a development arm. He\u2019s passionate about storage, he dreams about it. This passion is the focal point of our business. He has his people, so on and so forth. So I am the dumbest one in every room and I\u2019m proud of it.
I bring the money to the table. I\u2019m really good at connecting people and I\u2019ve got the energy and the excitement and the dream and the vision. So what I\u2019ve done is I\u2019ve surrounded myself with smarter people in their said field. And then what we\u2019ve also done is we give ownership to each and every said person through shares in the holding company. So a guy that came to us back in 16, he\u2019s now a millionaire and he started with $0. I\u2019m a big believer that the best ROI I\u2019ve ever made for myself and our investors is actually giving more to our employees. They do most of the work. And if I have to give up 15% of every building, so be it. My goal is to make 1,000 millionaires and I\u2019m only a handful in. So a lot of years left.<\/p>\n
All right, Andrew. So starting from scratch, somebody who wants to start a small business, maybe they don\u2019t want to be a billionaire, but they would like some advice for how to structure creating a business. Maybe they\u2019re good at buying rental properties, they\u2019ve got one or two or three, maybe they\u2019re a real estate agent that wants to grow their team or they\u2019re a construction worker who wants to start his own business. What advice do you have for people who are in the trade and they want to actually scale into running a business?<\/p>\n
No, I love it. Well, again, make sure you have the passion, but if you\u2019re already in the trade, you probably already do and follow the lead. And again, there\u2019s 1,000 ways to do it. So just because I did it this way doesn\u2019t mean it\u2019s the only way. But again, make a deal with someone. Make it a no loss deal for them, just like I did on my first deal. Work for free, work your butt off for equity, whatever it may be, do that and don\u2019t be afraid to call. Don\u2019t be afraid to ask questions. It\u2019s a numbers game. Call 20 people to do a deal with you and you hope to get one that, and I know it sounds simple and generic, but that\u2019s the biggest thing is you just got to get out there, start making calls, bring a deal. Don\u2019t take no for an answer and have good energy. I can\u2019t tell you how many billionaires have told me that my energy and excitement and attitude is a really big reason that they\u2019re attracted. So just make sure you have a really good energy and excitement.<\/p>\n
Henry, you look like you\u2019re deep in thought. Anything you want to add before we move into the famous four?<\/p>\n
Yeah, no, I mean, I totally agree. The energy is huge because people feed off every energy and you want to help people who are excited about what they\u2019re doing because you get to feed off that excitement. And so energy\u2019s big. I often, throughout the day today, I wasn\u2019t feeling like I was a bundle of energy and I knew that I had some phone calls I wanted to be excited about and so I do\u2026 I watched a couple of funny videos, something that\u2019s going to get me laughing. Get those positive vibes going to help me build that energy because it\u2019s important.
I think too many times we will get caught up in the negative energy or just say, that\u2019s my mood for the day. I\u2019m having a bad day. And you don\u2019t understand how much of an impact that can have on you as a business. So being intentional about keeping your energy up, there are some things you can do to control that. But I really, really enjoyed this conversation and I love the outlook that you have on life. I love that you took some lessons at a very young age and actually put them into action. I wish I was as smart as you. I wish I was as disciplined as you when I was 15 or 16 years old. I don\u2019t know that I would\u2019ve reinvested $500,000 if it fell in my lap as a junior in high school.<\/p>\n
I appreciate that. Yeah, it\u2019s the funny thing is I don\u2019t know any different, been since I was 10. Everybody\u2019s always laugh. I don\u2019t remember when I was nine, so I mean I just always been like this I guess.<\/p>\n
All right, we\u2019re going to move on to the last summit ever show. This is the famous four.<\/p>\n
Famous four<\/p>\n
And this segment of the show, Henry and I will fire questions off at you. They\u2019re the same four questions we ask every guest every week. I\u2019m excited to hear your answers. So Andrew, first question, what is your favorite real estate related book?<\/p>\n
So I would say the Trammell Crow building an Empire is a great one, it\u2019s very expensive, but it\u2019s classic learning how to grow through partners, partnerships. Gary Tharaldson actually has a book about his life, Secrets of Success: Gary Tharaldson, it\u2019s a red book with his face on the cover. And then another one I like is Shoe Dog. It\u2019s about Phil Knight\u2019s story. I just love all his attitude and all the things that he overcame. So I\u2019m going to throw those three out.<\/p>\n
Perfect. I\u2019m not even going to ask you the second question because it\u2019s about what\u2019s your favorite business book and I think you just gave us some great ones.<\/p>\n
Yeah.<\/p>\n
So what are your hobbies?<\/p>\n
Good question. I got beautiful three boys under five, an amazing wife. So I hang out with them a lot. We\u2019re going to Disneyland actually next week. So I\u2019m jacked. I would say golf. Yeah, hang with family. I\u2019m pretty simple. I mean, business is my hobby too, so that takes most of my time.<\/p>\n
I got to ask you, I\u2019ve been considering golf, I never really wanted to do it was never exciting. But I went to top golf one time in Scottsdale and it was actually fun. What\u2019s your advice for me on if I should take golf as a competitive perfectionist? That\u2019s why I never did it because it\u2019s very frustrating and I just don\u2019t like sucking at anything or not being good at it.<\/p>\n
I have never been so angry and broke so many things and when I started golfing it was so bad and to me it was a challenge to manage my emotions because I\u2019ve been learning that it was probably the toughest emotional management I\u2019ve ever had, because I\u2019m just like you. So am I glad I did it. Yes, I\u2019m actually pretty good now, but it was the worst couple years of my life, but it was worth it and I think it was actually a pretty good life lesson really for managing my emotions.<\/p>\n
I had this theory about golf that it\u2019s one of the most insane things in the world to do. If you didn\u2019t know what golf was and someone said, we\u2019re going to put a hole this big 300 yards,<\/p>\n
Like an alien comes like-<\/p>\n
Yeah, that\u2019s exactly right. If you\u2019re an alien and you came and you said, so you\u2019re just going to put a whole, like imagine going to the desert, so we\u2019re going to put a whole 300 yards somewhere else. You\u2019re going to get this tiny ball and you\u2019re going to get this stick and you got to hit it and try to get it there in three to four tries. You\u2019d say, \u201cThat is impossible.\u201d It could not happen. And it\u2019s like amazing that human beings have both designed the equipment and practiced it to the point where this is even a thing that can happen. It\u2019s like a miracle. Every time I see a person playing golf and we just talk about it like, oh, it\u2019s just golf.<\/p>\n
What I love though is it makes someone hang out with me for four hours. So it\u2019s perfect. We can cover off topics. I mean-<\/p>\n
They\u2019re going to be investing with you by the time they get done there.<\/p>\n
Guarantee, my success rate. Oh gosh, got to be 99% at that game, the full deal.<\/p>\n
Do it, David, do it. I took it up recently. I love it. I\u2019m terrible at it, but it\u2019s so much fun.<\/p>\n
Okay.<\/p>\n
And there\u2019s so much, so many life lessons that you learn playing golf.<\/p>\n
Let\u2019s play in Scottsdale here. We\u2019ll go out.<\/p>\n
That\u2019s a good point. I mean that\u2019s Scottsdale is the Mecca.<\/p>\n
I will gladly embarrass myself in front of you.<\/p>\n
All right, my last question. In your opinion, what separates successful investors from those who give up fail or never get started?<\/p>\n
Focus. Ignoring all of the shiny objects out there, all the deals, especially with our intention spans, as you know, books are getting shorter, all of that. So long term investment, a big believer in it focusing and being the best at something and ignoring everything. That was the hardest part for me is ignoring all the other good deals I could have done. And then just attitude giving up. I mean, gosh, is that even an option? So I just think it\u2019s mindset, attitude and open to distractions.<\/p>\n
All right. And the last question is, tell people where they can find out more about you.<\/p>\n
Yeah, I\u2019m on Facebook, Andrew J. Abernathy, Instagram and I have a personal website, andrewabernathy.com. And then abernathyholdingsco.com is our company page. So any of those work?<\/p>\n
Absolutely. Henry, where can people find out more about you?<\/p>\n
You can find me on Instagram. I am @thehenrywashington on Instagram. What about you, sir?<\/p>\n
I am @davidgreene24, just about everywhere, including YouTube. Andrew, this has been fantastic. My mind is still spinning at some of the things that you\u2019re working with. You are clearly the Doogie Howser of real estate and I can\u2019t believe that we haven\u2019t had you on the podcast before. Now, is there anything you want to share with our audience before we let you get out of here?<\/p>\n
Just, I love it. It\u2019s an honor and I\u2019d love to be back if it ever works out. So there\u2019s nothing better than just sharing my story and talking to great people like you guys.<\/p>\n
Awesome. Well, thank you for that. And if you have enjoyed this episode, please go leave us a five star review wherever you are listening to this podcast. Whether it be Apple Podcast, Spotify, Stitcher, whatever it is that\u2019s your favorite flavor, please leave us a review there and then if you\u2019re listening on YouTube, subscribe to the channel. All right guys, this has been fantastic. I really appreciate your time. Andrew, we will have you on again. This is David Greene for Henry [inaudible 00:59:38] savant Washington signing up.<\/p>\n