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Finding Your Why: The Core Of Real Estate Success With Steven Pesavento

I’m excited to have Steven Pesavento. He’s the host of The Investor Mindset Podcast and an active real estate investor. He flipped over 200 homes within his first three years in business before pivoting to commercial. Based out of Denver, he now manages teams out of state as an expert in not only finding, but also funding deals. Through his top-rated podcast and private membership community, he brings together real estate investors focused on growing their business and their lives, uniting around the belief that investing in yourself is the biggest ROI. Steven, welcome to the show.

Thanks for having me. I’m grateful to be here. I love the stuff that you’re putting out into the world. I’m grateful to be able to come here and serve because that’s what I do.

For those in the audience that don’t know your story, tell us a little bit how you came from a professional background to flipping homes, to now syndicating deals and managing commercial projects.

My story is similar to what a lot of people are going through in life. I had read Rich Dad Poor Dad at seventeen. I got bit by the bug early by that book and Tim Ferriss’ The 4-Hour Workweek and some stuff from Tony Robbins. It made a huge impact early but I never took action right off the bat. Something always held me back from getting into the game. It took nearly a decade before I finally had my first deal under my belt from a purchase perspective. I went to a phenomenal university, Saint John’s University up in Minnesota. It’s prestigious in the Midwest. I graduated and I went right into management consulting. I was making phenomenal money working with some of the biggest Fortune 500 companies and doing process improvement.

I’m getting deep into understanding how do things run and how can we make them run more effectively. I loved the role but I mostly love the title and I love the paycheck, but I wasn’t passionate about it because the people around me weren’t quite passionate about what they’re doing. Many people were showing up for that paycheck so they could spend more time with their kids on the weekend. I thought to myself, “There’s got to be a better way.” I started down this path of searching from different company to different company looking to find a way to create that passionate environment. I started working in the startup space doing digital marketing, working for a number of different companies, and starting my own. I’m working on that for a year with some other graduates from Stanford. It’s what I would call a huge failure, but it was a huge lesson learned during that entire thing.

I’m glad it was pre-raised before we raise that capital from other people, so we didn’t have people breathing down our neck if we weren’t going to deliver. Coming full circle, when I finally dove into real estate, I went in headfirst. I said, “Finally, now is the right time,” and I burned the boats. When I finally dove in and I started investing in real estate, I remember jumping up off the couch saying, “Now is the time and I’m deciding now.” The big key takeaway for me in this whole thing was that once I made that decision, it was a foregone conclusion. It was happening and I was there, but all the way up to this point, for all of those times that I went and looked at houses, made offers, and all those times that I thought about going down this path, I hadn’t quite decided.

When I did decide, things ended up working out well. That first year, I went from zero deals. I never even owned my home, all the way up to 75 houses in my first year, 150 in second and 200 in third as we scaled back and started focusing on multifamily. It’s such an interesting path to be able to go on and say, “I am going to go all-in with everything I have to make this work.” When you go and do things like that in life, things start happening for you.

You talked about Rich Dad Poor Dad. I remember when I was in the bookstore in Charlottesville, Virginia, I picked it up for the first time and somebody said, “Have you read this book?” I was looking through the financial stuff. Tim Ferriss’ 4-Hour Workweek. I talk about it in my book and how I’ve implemented a lot of those processes. I imagine from a management consultant perspective, he walks through a similar thought process. The one that hit me was talking about Tony Robbins. Tony talks about taking massive action. I want you to tell the audience when that decision was made. When you said, “I’m now going to shift from thinking about this to taking massive action doing it,” you said you jumped up off the couch. What inspired that? 

I haven’t shared this story a lot but I was in this place where I was in incredible pain for about two years or a little bit longer than that. I had these awful headaches. They were tension and migraine style headaches that never went away. Every single day, I was waking up with a level-3 or a level-4 on a 10-pain scale. If anybody has been in chronic pain or ever understood that scale is, that’s not a good way to live. You end up starting to think and believe that there’s no way out of this. Thank God, I had stumbled on to some of these amazing people like Tony Robbins. I was searching for a way that I could get rid of this pain. I tried everything I possibly could from pain management specialists, physical therapists, acupuncturists, massage therapy, to every single thing you could imagine in between. It gets to a point where self-medicating was the only way to be able to socialize and interact because there’s always this pain there. I’d almost come to this point of accepting it. Thank goodness I didn’t.

I was going through this exercise that Tony talks about in Personal Power II. The last time I did this, I shut my startup down. Whenever you go through these exercises, big things happen. I had this realization that I needed to make a big change in my life. Fortunately for me, I had this spiritual experience. This healer did some of his magical work and the headaches were gone. I haven’t ever gone back to that again. That’s a story for another time. What had happened there was that I had spent some time getting extremely clear on what it was that I wanted and why I wanted it.

Once I got clear on exactly what it was that I wanted to accomplish and why that was important to me, it ended up becoming an extremely easy decision to be able to look and say, “That’s exactly what I want. I need to find a way how to get there.” The how came after. The how was not something that I knew when I made that decision but because I knew exactly what I wanted and why I wanted it, when I made that decision, it was a foregone conclusion. You can start figuring out that plan of exactly what you’re going to do after and everything started building from there.

I see your book in the background, Start With Why by Sinek, and that’s another great book. You said it’s a story for another day but I’d love to go a little deeper here. I talk about in my book the loss I experienced in my life. I lost my father at an early age of five, but an impactful moment for me was when I lost my best friend. I just turned nineteen and he was only eighteen years old. It took me a little while to process through that, but that’s when it hit me. I didn’t wake up one day. I finished a bike race, that’s what I was doing at that time and it hit me. I was like, “This isn’t what I’m supposed to be doing. I’m supposed to be honoring the life of my friend and getting the most out of this.” Do you mind sharing a little bit about what your ‘why’ is and what drives you? Because 75, 150, 200 homes and flipping those homes, for anybody in the real estate space, that’s a ton of work. What drove you to do that and get to the point where you are?

There’s always this feeling of not enough growing up and a lot of people can relate to that. Maybe it’s not enough money or not being enough. If people are true with themselves, it ends up coming down to a handful of things that almost everybody has in common. Most people don’t talk about it. Maybe they’re not open-minded enough. They haven’t gone deep enough to understand this stuff but those who have, they ended up coming to a point where they realized some of these things. There is this burning desire to live a life of success. I look at my grandfather who was very successful. He was a teacher originally, then he started a Dairy Queen. He started and bought an insurance company. He was successful.

My parents are both amazing people, but we didn’t grow up with a lot of money. My mom was a bartender. Now, she owns a bar so she’s an entrepreneur on her own. Growing up without a lot, I always knew like, “That’s the view of what the good life is.” If I can be an entrepreneur, if I can build my own business, I can have the ability to get rid of all of the stress, fear, anxiety, and emotions that go along with not having enough money in this case. For me, in this situation, what had happened was that I had met this spiritual healer. That person came into my life by the universe or God’s good graces at the exact right time. I was living in California. I had previously been working for a company called Growth Hackers which was started by the director of marketing for Eventbrite and Dropbox.

I was sitting on the beach with my friend and he mentioned that this person was going to be coming into town, and he wanted to know if he could stay with us. He was coming from Richard Branson’s Island where he was healing Richard. He’s coming to work with Oprah and Maria Shriver. Long story short, this person does incredible work stuff that I would have never believed in or been open to before. My sister had introduced me to this stuff because she was big into it and having this experience. That person came in and he did some work, which is very difficult to explain. The long and short of it is coming out to the other side.

He essentially told me, “Steven, because you won’t stop asking me what it is that I did, your mind and your soul we’re out of alignment. You were believing that you needed to go out and do something or be a certain way in order to live the life that you wanted. I put that back into alignment, now you’re good to go and you can move forward.” There’s more to the story than that but at the end of the day, that coming into alignment and getting aligned on that what, not why. Most importantly, getting aligned internally, getting to that center place, when I made that decision, there was nothing in my way. I was able to move straight forward towards success because there was that much clarity. Whenever I feel like there’s a lot of tension or a lot of resistance, I have to remind myself to go back there and I don’t always do it perfectly. When I do, that’s when good things typically happen.

I’ve had manual work done since I was young. My wife and I live in Asheville, North Carolina, which is a spiritual place. A lot of people move here intentionally. If people are reading and they’re like, “Whatever.” Whether you believe in this or not, or you take it as a metaphor, if you’re in alignment whether it’s a car or a human being, you perform way better. I appreciate you sharing that story, especially for people that have been through pain or suffering whether it’s physical, mental or spiritual. I think a lot of people are shaking their heads up and down.

I could say that I didn’t believe in any of it myself. My sister passed away. She was tough but she was a spiritual healer herself and big into massage therapy and all these things. I’m a business person. I’m a logical person. I used to joke with her because she’s my younger sister that this is witchcraft. She started doing this stuff on me while I was having these terrible headaches and it was giving me relief, but only a little bit. She didn’t quite have the power that this person was bringing to the table. Thank goodness because I had almost come to the point of accepting that I wasn’t going to be able to do thinking work because I couldn’t use my brain.

Bringing it back to real estate, at the end of the day, the most important thing that I can recommend to anybody is to get clear on what they want and why they want I. They then can put together an action plan about how to get there. The key thing here is a narrow focus because oftentimes, people want to do everything but then they’re not good at anything. I see it happen every time I go to a real estate meet-up and I hear somebody tell me that they’re doing more than one type of real estate at a time. Unless they’re telling me that they’re an absolute expert or they’ve been doing this for twenty years, I usually write them off. I recommend that they go down a path to get more focused because once you get focused, things start happening in the right direction.

Let’s talk about you were in single-family then you made the switch to multifamily. You’re going from one area of expertise to the other. I’m in the middle of your series on Single Family VS Multifamily. Tell the audience a little bit about why the switch.

I highly recommend to you if you want to listen to this series that Chris is mentioning, head over to The Investor Mindset on your favorite podcasting app and go take a listen or head over to TheInvestorMindset.com/Multifamily where we’ve got a whole list of resources available to you if you’re looking to invest passively or actively and learn more. Why did I make the switch? I was flipping many houses, wholesaling, and running this big team. I had spent over $1 million in marketing in two years and had huge overhead. I was running this business where I was learning so much, I was growing so much, the team is growing, and we’re making great money. What I was also realizing was that I was getting farther and farther away or I wasn’t getting myself closer to that ultimate goal of building passive wealth and income. I also realized that there were some limits in my ability to scale because the type of business that I was in was a hustle business.

Going out and flipping houses or wholesaling is a business that has a low barrier to entry, meaning anybody can go in and get started. To build a company as I did, it’s a little bit more challenging and most people aren’t doing that. What I realized was that if I wanted to build the passive income that I wanted, I was going to need to buy a lot of rentals. I started going down this path of buying a lot of rentals. I had this pipeline and we’re buying between 5 and 10 houses a month, and we’re then reselling them. It was becoming difficult to find properties that the numbers are penciled or that made sense. My main market of operation is Raleigh, North Carolina. I’m based out of Denver, so I invest remotely and it was hard because many people wanted to buy and own there. The market economics weren’t making sense. I was looking at how can I scale up and take advantage of some of the economies of scale?

I remember going to a conference. I had met some amazing people. I’d been introduced to some of the benefits of multifamily. It immediately clicked for me that in order to be able to scale and hit those goals that I wanted to go after, why not go after a much larger asset? I’ve been through the extreme amount of work that it takes to go by one single-family home. Why not go buy 100 units at once rather than go try to buy 100 single-family homes. I had this realization and instantly realized that this was going to be the future of our focus at VonFinch Capital and for The Investor Mindset but I wasn’t going to make a rushed decision and shut everything down.

Over about a year’s time, I slowly ramped back my production on the single-family front and have stopped flipping houses altogether. We still wholesale a few deals here or there. We still work with sellers buying their home and selling them to other real estate investors, but we’ve stopped flipping because we realized there are many advantages on the commercial side. Why not jump into that space and go and partner with people who have a lot of experience the same way I was able to scale up in single-family, but moving over to the commercial side.

I couldn’t have said it better myself. For anybody that follow us regularly, they know we’re big fans of multifamily here. I talk about in my book the reasons that I moved from single-family into multifamily, but talking about scaling up management, what are the three things that if you’re talking to somebody that says, “Should I flip homes like you or should I get into multifamily?” What were your reasons for getting into multifamily specifically?

Regardless of what type of real estate you’re interested in, there are benefits to multifamily and there are benefits to single-family. One of the big benefits to single-family is that it’s easy to get started and there’s a low barrier to entry. Most people have lived in a home that they’ve rented. Maybe they’ve owned a home themselves. They’re able to understand that asset because it’s something that they’ve personally gone through. Everybody’s lived somewhere at some point, but the difference is once you get past that 1st, 2nd, or 3rd single-family deal, you quickly realize that the ability to scale is going to be tough and you’re not able to set-up anything in a passive perspective. One of the big advantages that drew me to multifamily is that the barrier to entry is higher.

That means it’s going to knock out a lot of people who are thinking about jumping in and trying to swim with the sharks per se, because the type of people who are succeeding in multifamily, these are elite investors. One of my philosophies has always been focus on my strengths and I look for other people who are absolute experts. What we’ve done is we’ve partnered with phenomenal operators who’ve got 5, 10, 15 years of experience or more in this space. We’re able to bring a lot of value to the table because we’re absolute experts at marketing. We’ve got this phenomenal thought leadership platform that brings in a lot of people. On the asset management side, there are some incredible things that you can do marketing-wise that old-school people are not aware of. When we can find synergies and come together, it makes a great opportunity for our investors. I’m happy to go more into some of the upsides of multifamily if you’ve got a specific question for me, Chris.

I encourage everybody to listen to your series because that goes through a lot of that. I’d love to hear more about how you’ve built out your coaching program and talk about The Investor Mindset Podcast and your goals on there. This is what resonated with me. I have two boys: 8 and 10. I tell them, “Your thoughts become words, become actions.” You have something similar that you say on The Investor Mindset. Do you mind sharing that?

We at The Investor Mindset are focused on helping people reach financial freedom through real estate investing. I’m a solid believer that the core to success comes with understanding your thoughts and beliefs and how they end up leading directly into the actions that you take every single day. You don’t need to join our mini-online coaching program where we do these monthly calls with extremely experienced coaches like Trevor McGregor who has over 25,000 hours of coaching experience with the Tony Robbins Organization coaching millionaires and billionaires. It’s amazing to be able to come in and have a curated set of people to learn from, listen to and fill your mind with that great stuff. At the core of what I want to point you guys do is to make sure that you’re doing it. Spend a little bit of time every day listening to something that is going to put you in the right state of mind.

That’s going to put those beliefs and those thoughts in your mind so they can start replacing the ones that aren’t serving you. One of the ways that I do this is that every single day as part of my morning routine, I am listening to something that is going to put me in that right place. I could be listening to an episode of The Investor Mindset. I could be going and listening to some Tony Robbins. I could be listening to anything that’s coming from a leader who thinks the way that I want to think. We can essentially install those thoughts into our brain so that we can make big things happen. If you are interested after interviewing over 100 people on The Investor Mindset Podcast, thought leaders like Chris Voss from Never Split The Difference, Jay Papasan who’s the author of The One Thing, Joe Fairless, Rod Khleif, all types of phenomenal investors.

What I realized was that there were five core principles, five things that end up making up the successful investor. One of them is getting focused. If you guys are interested, I’ve put together this free eBook. It’s 25 pages. It’s got some of the best information summarized in there. You can head over to TheInvestorMindset.com/principles. It’s got some good resources that I go back to myself to remind myself of the way that I need to be thinking and operating. Those five beliefs or those five ways of action can change the way that you invest in yourself.

Before we let you go, there’s one question we ask everybody on the show. If you can go back and give your 25-year-old self a piece of advice, what would it be?

It’s such a good question and it’s a question that I love asking some of my favorite mentors. The answer that I would give is because as you can see, I’m gung-ho and I take things seriously. The advice that I would give to myself is to take a moment. It’s okay to slow down. It’s all going to work its way out. I will remind myself that what you can accomplish in ten years, you would never ever imagine, but sometimes it takes a little bit longer to get to the place that you want to go. We’ve got to flow instead of being forceful. That would be the advice that I would give to myself. Slow down and enjoy the process as much as the destination.

Steven, I love your energy, your story and your content as well. I encourage everybody to check out Steven’s website and his podcast. Go on subscribe to that. You can also get our book at NextLevelIncome.com, click on the book link and you can get a free copy of that as well. Steven, we want to thank you so much for coming on, sharing your story with our audience and bringing more value to it. Thank you.

Thank you.

Important Links:

• The Investor Mindset Podcast

• Rich Dad Poor Dad

• The 4-Hour Workweek

• Start With Why

• Single Family VS Multifamily episode from The Investor Mindset Podcast

• TheInvestorMindset.com/Multifamily

• VonFinch Capital

• Never Split The Difference

• The One Thing

• TheInvestorMindset.com/principles

• TheInvestorMindset.com

• https://www.Instagram.com/steven.pesavento/

• https://www.YouTube.com/channel/UCVIYpUX9XqauGNi0P1e6gtQ

• https://www.Facebook.com/stevenpesavento

• https://www.LinkedIn.com/in/stevenpesavento/

• https://Twitter.com/stevenpesavento