171 – How To Fail Your Way To Success with Rod Khleif

Synopsis

Rod is a rock star multifamily investor. During the 2008 financial crisis, he lost over $50 million, but he was able to recover after losing all that money. Mindset matters a lot, and that’s what we go over in today’s episode as Rod talks about the true meaning of success.

Key points

The Beginning

Rod grew up in a poor family as his mother tried to make ends meet. His mother bought the house across the street from them for $30,000 and in a few years, it had gone up in value by $20,000. After that, he decided to pursue real estate.

Finding Success And Losing It

In his first year, Rod made only $8,000. In the second year, he made $10,000. But in his third year, he made over $100,000.

Rod attributes his success to mindset. He later owned over 2,000 houses which he rented and increased his network by $17 million in 2006. This led to him becoming arrogant until the financial crisis ended that when he lost $50 million in 2008.

Recovering From A Huge Loss

Human beings have a reticular activating system that acts as a filter that directs us to our past experiences that it believes we should focus on. This is why goal setting is very important. Rod gives us steps about a powerful way to set goals.

First, write down things you want to have – the material things, the amount of money you want to have in 3, 5 years, the experiences you want to do, the things you want to learn, the places you want to travel to, and who you want to help.

Next, put a time limit for each goal. Take note that we tend to overestimate what we can do in a year and massively underestimate what we can do in 5, 10, 20 years. So do not limit yourself.

Then put your top 3, one-year goals on a separate sheet of paper. Write a paragraph under each goal on why you have to achieve it. Use emotion or emotionally-charged words to describe why it’s important to you.

After that, you have to put in some pain. Write down what happens when you don’t reach the goal.

Then, get pictures. If there is something you want, go out to experience it like go to an open house if you want to own a house or test drive the car you want to own someday.

Do not underestimate the power of having pictures of the stuff you want, so keep them in front of you.

His Real Estate Investing Journey

There were many factors that contributed to him losing $50 million in 2008. But it basically was related to not having the cash flow. His cash flow was affected by higher property taxes in Florida, which has no state income tax, the higher insurance he had to pay for his properties in wind and flood zones, and the difficulty of doing maintenance for 800 houses.

Even though his loan-to-value ratio was 30%, his renters were either in retail or contractors, so they had no income to pay the rent when the financial crisis struck.

Also, his portfolio value went down by 70%. He couldn’t hold everything together anymore. So he had to stop making payments and had hundreds of foreclosures. Later on, he became careful with demographic research.

Moving Forward From His Loss

Real estate goes in cycles like life, which comes in seasons. Rod believes that the greatest opportunity in our lifetimes is coming soon in our future.

Where focus goes, energy flows. So focus on what you want and not what you don’t want. Rod was able to recover because he reassociated with what he wanted and got back on track.

Rod told us to avoid creating stories that justify the lack of success. Don’t wallow in your failure.

Living A Transparent Life

In an effort to be authentic, he shares about the worst moment of his life. Rod shares that we shouldn’t fear failure but fear regret.

Because it is only a failure if you don’t get back up. When something doesn’t work out, there’s feedback. It could be constructive feedback or painful, expensive feedback.

There’s no straight line to success. If something doesn’t work, change your approach, and focus on the goal. If that doesn’t work, change your approach again and focus on the goal again.

Repairing His Reputation

Rod started his businesses on his own. He had bootstrapped everything. So he is confident that he deserves what he wants and that he won’t make the same mistake twice.

Lessons He Learned

It’s never about the goals, it’s about the progress. Happiness comes from growing and making progress.

You should never achieve a big goal without having other goals lined up behind it.

Do something for someone else. After feeding a woman with five kids living in a unit that’s barely a one-bedroom, he got hooked to helping people. He realized that he was successful but unfulfilled.

Success without fulfillment is not a success. Rod feels bad about the people who are focused on themselves and do not add value and give back. You don’t have to wait until you have the money to give back. Give back now and then success will come faster.

Key Takeaways

Set powerful goals. Any failure you experience is a lesson that’s going to make you successful later on.

Achievements are good, but you’ll only be happy when you’re fulfilled. You can get fulfillment by helping others.

Tips For Brand New Investors

Learn as much as you can but ultimately, you have to take action.

You have to learn the business. Don’t just dabble.

Stay focused on your goals and don’t get discouraged.

Resources

References

• Loan-to-Value Ratio

More from our guest

• If you want to learn about multifamily investing, join his Facebook group.
• For free resources, go to Rod’s website.
• Prepare yourself for the incredible opportunities that are coming by joining Rod’s boot camp for only $97. Just text ‘ROD LIVE’ to 41411 or go to Multifamily Virtual Bootcamp