RG 326 – How to invest during a recession with Jake HarrisRG 326 - How to invest during a recession

With the US heading into a recession, how do you prepare for a distressed market?

Jake Harris is the founder and managing partner of Harris Bay, a real estate investment and management firm that helps investors find opportunities in secondary and tertiary markets. He is also the author of Catching Knives – A Guide to Investing in Distressed Real Estate, a regular podcast guest, and a high-value coach.

Jake started his real estate journey by learning about the trades, specifically construction. Over the years, he hustled his way through his first million before the age of 30. But then, he hit rock bottom. Jake lost everything and had a negative balance. Then, he started reinvesting and built his business from the ground up.

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Today, Jake enjoys the fruits of his hard work. Let’s hear what Jake had to go through to get to where he is today, including the ups and downs of his career. We also talk about what system he applies to run his properties, his strategies for investing in a distressed market, and what went into writing his book Catching Knives.

Furthermore, we go back to Jake’s biggest mistake: prioritizing money. Listen to how he changed the trajectory of his life to pay more attention to the most important things in life in this week’s must-hear episode.

Key Takeaways

  • Knowledge of the trades is a critical skill that can help you find better investment opportunities.

  • Look for established markets and then find opportunities in those markets.

  • There are always going to be buying opportunities in distressed markets.

  • Don’t trade your time for money—make your money work for you.


Be Bold, Be Brave and Go Give Life a Crack!

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Podcast Transcript

Reed Goossens (00:00):

Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you maybe aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show.

Jake Harris (00:39):

I, Matt Robert Kiyosaki. I’m at Rich Dad Radio. I’m meeting him, I’m talking to them and I’m like, hustling. And I became a millionaire before 30 and I’m just like, I am king dingling man. Like, you just don’t know. I am super smart. And Robert Kiyosaki is like, Be wary young man. Easy. Come go. There’s a crash coming. And I was like, What do you know old man? I’m super young and smart and just, uh, the market would have to go down more than 20% before it touched where I bought it, cuz I was buying it at a discount. Well, he was right. I was wrong. And actually, I was sitting on a street corner in Tucson. I’ll tell you this, it was like, this is my, my, at the time, my rock bottom. I was crying.

Speaker 3 (01:40):

Welcome to investing in the US a podcast for real estate investors, business owners and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews, go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (02:00):

Good day good day, a ladies and gentlemen on welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, reed goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned into it to learn from my incredible guests and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us. How they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.

Reed Goossens (02:47):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the, the nuts and bots. Now, if you do like to show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, Click on the video link and take you to the video recordings of these podcasts. But you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show

Reed Goossens (03:34):

Then. The show are the pleasure of speaking with Jake Harris. Now Jake is the founder and managing partner of an award-winning commercial real estate firm. He has also authored the number one best selling book called Catching Knives. You definitely need to check that out on Amazon. He has been featured in many publications, including the New York Times, Yahoo Finance, and is a frequent podcast speaker and a highly valued coach. To top it all off to date, he’s purchased and sold over 1200 properties in 23 different states and amassed a commercial real estate property, uh, portfolio should say, of really iconic properties in those states. I’m really pumped and excited to have him on the show today to share he’s incredible knowledge with us. But enough, Adam, me, Let’s get him out here. Good day, Jake, Welcome to the show. Head in today, mate. Hey,

Jake Harris (04:15):

Good day mate.

Reed Goossens (04:17):

Justin in the green room. Tell the listeners where you were back in the day.

Jake Harris (04:22):

Well, so it was interesting cuz I asked you, where are you from? And you said Queensland, and I was like, Oh, I’ve actually been to Queensland. I’ve been, it was in Townsville. And you’re like, I was born in Townsville. And so I was like that. It’s actually, I don’t know what’s, what’s the size of that city? Well, how big is it? Oh,

Reed Goossens (04:39):

I don’t even know. Two, 300,000 people maybe. I don’t know. I I wouldn’t even guess I couldn’t tell you. That’s that. I, I’ve never, since I was born, they’d never been back. So, Dunno,

Jake Harris (04:49):

Well, it, not, not a major city very, you know, kind of thing. Super random that, uh, I have been to the place that you were born. Uh, I was in the Army, so I was, uh, in an, an aerosol inventory unit. And so we were doing some jungle training, uh, with the Australian army. Uh, there’s a, a lot of cool things. Um, , we did something called co. And so CO is what the, the Australian, uh, they call. And so they would have their, the, the privates hang upside down on a tree and wrap their arms around, uh, on the tree. And so they’re upside on the trunk. And then they would hang there for as long as possible and whoever hung on for the longest, you know, one. And so of course, you know, we’re competitive, we do those things. But yes, we did jungle training. There’s like legit jungles in Australia. Mm-hmm. , I thought it was just like giant desert, you know, uh, kind of area and sharks out in the Great Barrier Reef. Uh, turns out there’s a lot of other things that I don’t know or didn’t know about Australia and the people love drinking and having a good time. Uh, I think there was was a a, a rugby team there that, that

Reed Goossens (05:59):

Townsville, uh, cowboys.

Jake Harris (06:01):

Yeah. So they were just finishing up. They had a game, they’re out. So we’re out drinking. And what’s interesting, and at least I found at the time they were, uh, hard liquor is on tap. It’s not beers. Everything. All the beers, like all the hard liquors on tap, and they’re just like, and that tipping’s not customary. And so we’re out there tipping and throwing out money. And so a bunch of Joe’s running around throwing money is they were, uh, we are very accommodating to us . And he goes, Awesome. I don’t know that everybody made it back to where we were sleeping in the hotels that night. Um, and the, and the women in Australia were are quite beautiful as well.

Reed Goossens (06:40):

Yeah, yeah. Well for those people who dunno where Townsville is, it is, uh, call it Northern New South, sorry, far north Queensland. And, um, it’s pretty remote little town and, uh, but obviously big, big army base up there and be the equivalent of your army bases here that you’d see in the us. So, um, so awesome stuff, man. But, so to, before we get into that, let’s rewind the clock even further. What, what, what did you do making money as a kid, as you growing up?

Jake Harris (07:08):

Yeah, so it’s, uh, it’s interesting that you asked that because I, I did, and not too dissimilar to what I do today is I would buy things at a discount and then sell them at, at a, a kind of, you know, retail price. And so back in the day it was m and ms. Mm-hmm. . So there was a, a discount grocery store, grocery outlet. And so they would sell boxes of them and I think they probably were expired, um, or whatever it was. But I could buy them, uh, in, in a box and I could buy them for 25 cents and then I would sell them for a dollar at school. And so I always, so what I did was I got peanut butter mm-hmm. , M and ms. Mm-hmm. , not the peanut, not the plane. And so even some of the other, uh, kids at school were selling them to raise money for the, the cheerleader and the sport teams or whatever.

Jake Harris (07:59):

And so I was, I was the only one that sold peanut butter m and ms. And so, and now, I don’t know, maybe they were new or you know, whatever it was, but at least I had those and it was a dollar. And I was going to the charity of Jake, you know, like there was no, I wasn’t funding any sports teams. I was just funding my, uh, you know, consumption of m and ms, uh, or, or other things that I felt, uh, fitting. And I remember is, so I wanted to buy a 13 inch color TV with a remote and it had a VCR in it. And so it was a combo thing, and it was a hundred dollars that Mon Gum Rewards was the company was the, you know, they’re out of business now, but they’re one of the, the retailers kind of discount retailers.

Jake Harris (08:43):

And so I had this and I would save up money and actually I would iron the money, I would take the dollar bills and I would iron them out and I’d put ’em in a box and I had like those little box in my closet. And so, so then all the ones were then ironed out. Occasionally I’d get a five and I’d have some of these others. And so then I had this stack of this perfectly crisp dollar bills in this box. And then I was like, I got a hundred bucks. I was like, I told my mom we went to the store and I spent and bought my money with my TV and then, you know, the thing. And that ended up being what I played, you know, my Nintendo on and other things. And, uh, that kinda really created the, the, the precedent of what I’ve done throughout my entire life, um, of buying things and finding something that was on a discount that I could sell for a higher price.

Reed Goossens (09:30):

It’s so important that the reason I ask all that question to all my guests over the years is to really get that sense of how you, your relationship with, with money. And I sort of sounds like I was in a very similar household growing up, you know, earning that, keep putting it away in a shoebox and then then going out and, and, you know, buying the, the prize. And it just teaches you so much value in, in and around how kids use money. And I think it’s still valuable to this day. Um, but, but walk us through the timeline. We obviously spoke a little bit about your time in the Army, but what got you into the real estate space and and what was that that, that that, that moment that you said, I’m, I’ve had enough of the Army I wanna get into real estate.

Jake Harris (10:07):

It was a, um, very common story, at least I found out is I was getting ready to get outta the army and somebody threw me a book and they’re like, Hey Sarge, you should read this book. And so I, it was a purple and gold book

Reed Goossens (10:22):


Jake Harris (10:23):

and be like, just by naming a purple and gold book, a lot of people are already gonna know it’s rich dad for dad. So Robert Kiyosaki

Reed Goossens (10:30):

Wrote, Don Get at Yeah. .

Jake Harris (10:31):

Yeah. And it was like, no, like Rich Dad for, and it was just like, Yes, this is it. And so it was that Rich Dad poor dad. And, and it’s not like it’s very technical in the details of it, but it is like, it creates that light bulb moment where you’re just like, aha. And so I was trying to figure out what I wanted to do and I was actually, you know, also I had some business stuff that I was doing and I had a kind of a retail business and it was like I wanted to be a businessman, but it was not really driving with what I wanted to do. And it was like that Rich dad, poor dad, that real estate that I was like, No, this is what I really wanna do. And then the reality is like I see the through line is we fixed up an old house.

Jake Harris (11:14):

And so when I grew up as a kid, we lived in a 16 foot camp trailer, a family of five. We bought this old farmhouse that was built in 1888 and like he didn’t even have a foundation. It, it had just sat on rocks. And so we, you know, took it down to the studs, we jacked it up, we poured a foundation. I’m a little kid so I’m not really doing much of these things, but I have photos of me like carrying sheets of plywood with my brother when I was a little kid. So I kind of grew up on a construction site and I grew up in that. And so the fact that I then, you know, got into real estate is now, you know, 20 some odd years later, or maybe it was 15 years later from being a kid to connecting that, it was like, ah, this makes a lot of sense.

Jake Harris (11:58):

And then what happens is, is, you know, I didn’t really get going and started in that right away, but I went out of the army, I started bartending at a country club. I started bartending at a country club cuz I wanted to be a bartender. And I thought that was kind of cool, but I didn’t wanna go spend all my time in, in the nightclubs and being out all night long and be kind of a zombie. So I was like, Ooh, I can’t afford to be in the country club, but at least I’ll get to serve them and hang around rich people and you know, you know, smart guys or you know, things. And so I would just, uh, pick their brain, ask them questions, serve them, be alongside of them, see what they talked about, how could I create and add some value to them.

Jake Harris (12:38):

And then I would ask them questions. And so the, what they said is, um, get into construction. The guy gave me advice, he was a developer and he said, Get into construction. Cuz he is like, everybody can learn it through the books, but the guys that come from the trades know what things cost and, and, and let’s be honest, the contractor and an investor or developer are really competing off the last remaining dollars once you get past the materials and the cost to affix them. What’s left over is then divvied up between the contractor and the investor developer as a whole. And contractors wanna make as much money as possible and they wanna take as much time as possible. And you know what they, they sometimes you can go over budget is then the investors left with no money where they lose money, Contractor got paid.

Jake Harris (13:31):

And so they said understanding that critical piece of the dynamic is going to be very, very beneficial for the long term success of you doing this into the future. So that’s why he was like, my advice is go learn the trades. And so that’s what I did. I got into doing commercial construction. I started working at as an estimator. I talked myself into a job that I was definitely not qualified for. I had no idea what I was doing. And you know, they’re like, and, and really I did, I was, because I’m super persistent. I was like, see I kept bugging the out the, uh, the uh, CEO of the, the commercial construction company every time he play golf. And I’d be like, Hey, let me go play golf with you. Like, hey, let’s go hang out. And I was like, Hey, I see you have this job opening.

Jake Harris (14:12):

Like, hey, I applied did, nobody responded like, Hey, what do I need to do? And uh, after some time I was like, Hey, I have three days a week, I can just come in here, work for free for you. I’ll come do your job. I’ll do that job. Cuz I was like, I just have a a, a supreme confidence in myself that I can figure things out. Um, I just believe that I can learn anything. If someone else has been able to to do it, I’m pretty good monkey see monkey do. And so then it’s like, okay, I’ll just come do it for free. And he is like pretty persistent. And I was like, Yeah, that’s actually one of my superpowers. And uh, so then I went in and she’s like, I’ll actually pay you. Come in on Monday, I’ll hire you. And you know, so I, I came in and it was for a job if as an estimator and I had no idea what to do and I was like, I don’t know what takeoffs are.

Jake Harris (15:07):

And this is before Google. Like, I don’t know what takeoffs are because I’m like, Oh, here you go, do some takeoffs for this building and do the thing. And I’m like, what’s the take off? Yeah, well what uh, what? And I was like, and I was like, Do you have any previous examples of this ? Uh, maybe I can, uh, see the format in which you put it on. And uh, wow. So ultimately, you know, takeoffs if, if people that don’t know, but it’s basically just calculating like the square footage of the carpet and the walls and the baseboards and you know, you’re, you’re creating a, a, a list of what you’re going to need for this remodel or the new construction or whatever it is. And so I was like, Ooh, math, I’m actually good at math. I know how to do this geometry, you know, measuring like, ah, I’m good at this.

Jake Harris (15:52):

I know how to do that. So I took it to it like a fish to water and quickly and I was landing millions of dollars worth of projects. Then I moved to a superintendent and a project manager and then I moved down to Phoenix where I bought a house and started flipping houses. And then that happened to be early two thousands that I was buying. And I was like a mad genius, like, look at this. I’m making so much money. I bought this house, I sold it for $75,000. I painted the kitchen. Like look how genius I am. I’m smart. I met Robert Kiyosaki, I’m at Rich Dad Radio, I’m meeting him, I’m talking to them and I’m like, hustling. And I became a millionaire before 30. And I’m just like, I am king dingling man. Like you just don’t know. I am super smart.

Jake Harris (16:37):

And Robert Kiyosaki is like, be wary young man. Easy come ye easy go. There’s a crash of coming. And I was like, what do you know old man, I’m super young and smart and just, uh, the barca would have to go down more than 20% before it touched where I bought it cuz I was buying it at a discount. Well, he was right. I was wrong. And actually I was sitting on a street corner in Tucson, I’ll tell you this. It was like, this is my, my, at the time, my rock bottom. I was crying, I was broken in every single aspect of my life. And my brothers who had lived with me and helped me, you know, do this flipping house, become a millionaire. They left, they moved back to California from Arizona and they’re like, Hey Jake, you’re an. You’re just focused on money.

Jake Harris (17:30):

Like that’s all you wanna do is make money, make money, make money, do the thing and nah, we’re out. You know, you’re dick. And so they went back, the girl I thought I was gonna marry had broke up with me like man, this is not working, you know, thing my health, I was 265 pounds, you know, I was 75 pounds overweight, you know, or you know, maybe, uh, 80 pounds overweight. So like health wise, stress levels. And not only that, the subprime meltdown was happening. And so I was coming out of pocket to every deal and trying to buy out of it and sell off my portfolio and liquidate and liquidate and liquidate and then I ran outta money. And so now, not only that, I had good credit up to that point, but now I have a negative bank account. So they were honor payments out to some of these banks.

Jake Harris (18:19):

And so I have a negative bank account, so I can’t even use my bank anymore. Like I can’t use credit cards, I can’t use anything cuz I have a negative bank account. So I have to work on cash and cash only. I owe hundreds of thousands of dollars more on these properties than I have. So I have no money, negative money and a negative net worth. The girl I thought I was gonna marry broke up. And me, my family’s all gone. I’m sitting on there and here’s where it even gets worse. I’m doing work on this Adobe house and I’m cleaning it mud walls for people that don’t know Adobe or mud wall houses, you know, specifically in the southwest of the United States. And I’m doing construction, just trying to get by, trying to do anything to make a buck, just trying to figure out how am I gonna get back, you know, to to this week, to next week to figure things out.

Jake Harris (19:08):

The girl that I was, you know, I thought I was gonna marry, you know, my first real heartbreak of my life at, you know, 28, you know, 29 years old, broke my heart. She felt bad for me. So she recommended to her new boyfriend that I could be the contractor to fix up the house. And so he’s the investor and he doesn’t know our previous relationship. And so as I’m working on it, he and her walk through the house and this is still pretty fresh and I’m sitting there and I’m fixing up this house and I get to see it and feel this heartbreak and feel this emotion and feel like everything is completely falling all apart. And they leave and they go thing. And I have nobody to even call. I have nobody to sit there. And then I’m sitting out on that straight corner and I just cry .

Jake Harris (19:56):

And I was like, God, can I be worth no money? Can I start over at zero? Just zero would be awesome. You know, just have and clean the slate and be at zero. And that would be really awesome if I could be at zero. So that was my, from being a millionaire before 30 to I wanna be worth no money. That is really what started my next phase and my journey of writing that book of catching Knives. The best time to invest is when there’s blood in the streets. Even if the blood’s your own mm-hmm , that’s the love it Blood was my own. I was literally sitting in the street crying about and losing houses going through foreclosure. And then I came back and I was like, I started investing again. And I, that’s made my entire life. I started building that foundation, that rock bottom and I, you know, was, didn’t figure it out there.

Jake Harris (20:50):

I still had months and months and, and then creating systems around what I do to start investing into distress commercial real estate and invest into, you know, distress real estate in general and then involve that and grow that. And that’s obviously subsequently, you know, 15, 20 years later you read my bio. We’re doing lots of different projects and it, it is really fun and exciting on what I do every single day. But it started with getting over the tip of my skis, making a lot of mistakes falling down and then hitting that rock bottom until I, you know, retooled and, and picked myself up.

Reed Goossens (21:25):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multifamily value add deals, then head over to reedgoossens.com and sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up date now back into the show.

Reed Goossens (22:00):

That’s an incredible story my friend that’s, Thank you for sharing that with me. I, uh, I do wanna just for those listeners out there, one thing that you mentioned that was super inspiring cause I did exactly the same thing except I came through and I’ve said this to a number of people, you, no offense to lawyers and finance guys love them, but they, if you come through the tools, you you will be a better developer or a real estate investor. You just know what things cost. Uh, I’m a structural engineer. I, uh, in 2014 when I moved to the US or just after I moved to LA I pivoted out of engineering cuz I still stay in this country. Cause he didn’t have a green card yet. Cause I didn’t marry my girlfriend yet. And I went and work for a developer. I happened to be the structural engineer doing the design for a multifamily project in Long Beach.

Reed Goossens (22:45):

And I just said, I’m, I’m over, I’m over this. They wanted to get me, get my pee license. And I said, Hell no. I’m not going back to fricking do these exams. God no, I’m, you know, I’m, I’m, I’m on site and I’m talking to the freaking developer and I’m like, What are you gonna rent this place for ? You know, He’s like, What, what about the bolts in the, in the columns? Like, yeah, don’t just put four of ’em up there. Um, don’t worry about it. You know, So it was, it is very similar that you were, you found something that could be valuable in learning to, to continue your pursuit of where you needed to go. And it’s, it so many people do, I don’t wanna skim over that because it is a very vital point when people getting into this business. They think, What, what skillset can I do?

Reed Goossens (23:24):

And you, you, you, you said you were good with math. Well then you went out and found something that you could learn and continue acquiring skills from and get paid to continue moving that, that, that ball down the fairway. So I just wanna mention that because I’ve, I’ve done exactly the same thing and it was been very powerful in my career. Obviously you then went up and uh, and became too big for your boots. But, uh, but that’s, we’ll get into that. So with all of that being said, what are you doing today with, you’ve written the book catching knives, you’re actively doing real estate, and I also love, and I’m sort of jumping ahead here, but I wanna get to the point of what you think is coming, um, you know, given your experience with, with Richard Port ad back in the day in Rob Kiyosaki, what do you think is coming down the right road? But, but, but let’s just, let’s just summarize where you are today in the business. What does it look like? What are you doing?

Jake Harris (24:10):

Yeah, so, um, today, you know, so in, and to kinda give you, like you said, uh, 1200 flips and 23 states, you know, we have, uh, some commercial, um, real estate portfolio building a, a hotel on the Riverwalk in San Antonio, converting some historic, uh, office buildings to multi-family doing some land assemblage. Uh, have probably a couple thousand, uh, units worth of, of multi-family land. And downtown San Antonio really been focusing in on central Texas over the last seven years. Um, part of that is though I use a lot of data analytics to determine markets to where job growth, population growth, affordability, index and kind of a catchall of demographics is so run these analysis on these markets. And so, because the market is actually the, one of the biggest kind of drivers of what’s happening. And, and so think about this is is like the tide or the current of the river or something like that.

Jake Harris (25:11):

And so I’ve found that, you know, you don’t have to be Michael Phelps or you know, Ian, uh, Thor, you know, the torpedo, you don’t have to be the uh, uh, that world class Olympic swimmer to actually just go with the tide. And so what happens is the market is making up the vast majority of what is, you know, trending or swinging in the right direction. So you can just paddle, paddle, paddle, little gro on your, your board and let the market take you in that momentum. So when we look, we’re establishing market first and then we’re trying to look for good deals in those markets. And then, so that’s why we do, uh, uh, a variation of different asset types is because we believe the overarching market is going to have a, a rising tide that’s gonna raise all the boats. And so then we just need to find good deals in those particular markets.

Jake Harris (26:04):

And so we don’t necessarily even niche down to say, Hey, it’s only multi-family. It’s been super competitive on multi-family interest rates have been going up. Um, we’re in a recession, you know, I don’t know when there’s episodes going to air, but I was like, wait, are, you know, we’re in a technical recession. I don’t care how the government tries to redefine it, we’re in a recession. And so I wrote catching knives in 2020. I was like, this is it. We’re, it’s, it’s all crashing down. There’s gonna be blood in the streets. And then all real estate values tripled. I didn’t know that the government was gonna go print $20 trillion, um, and and raise the asset values on everything, but at some point some of these things are gonna come to roost. And so meaning that some of these assets are starting to transact, the, um, froth of the market has gone away.

Jake Harris (26:56):

Things are being discounted out. And I think we’re into a, a period over the next maybe six months a year, you know, where things are gonna kind of come, come to full fruition. And I think there’s gonna be some discounts in, in, um, you know, the market, the whole premise of catching knives and, and I have to explain the title. Oftentimes there’s a financial term that says do not catch falling knives. And so as a contrarian, and especially in commercial real estate is like, is like you have to be prepared to catch that knife before it happens. And so what happens because commercial assets and office building downtown or on the, the hotel on the river walk or you know, wherever your particular market is, maybe only trades hands once a generation. And so what happens is that works really well when you’re buying Tesla stock.

Jake Harris (27:49):

You can just wait until the market falls and collapse all the way to the bottom and then you pick it up and you can buy whenever you want. But when commercial real estate, it has scarcity to it, all you need is one other buyer to go buy it from you and it’s no longer available to you. Mm-hmm. . So it’s not a commodity. And so then really when you’re looking at that, something specific to that, you have to prepare ahead of time and then you have to have a business plan and then you have to have an exit strategy. That doesn’t matter if the value goes from $10 million down to $7 million, but if your plan is exit to add value to it and then sell it for 20 or you’re gonna do some forced appreciation or you’re gonna change the use or you’re gonna do some other things that are gonna drive some some value to it, you’re not looking at it what is it’s today value.

Jake Harris (28:36):

You’re looking at it what’s the future value? And then you’re gonna execute your plan. And part of what the book talks about too is developing your systems, developing your team, developing the things that you need to put in place before that distress ever even happens. And I go, and that’s not too dissimilar to everything in business. It’s not only about distress, you can do this in a, um, a rising market. And so what the reality is is just you have to be, um, more dialed in, in a distressed environment so that you know what you’re getting yourself into. But obviously where people get little alligator arms is when the markets pulled back, they get scared and then that’s where you can make your true wealth. And so that’s why I was like, that’s where the wealthy make their money is when the market is doing, Warren Buffet says like, most people sell when they should be buying and they buy when they should be selling. And like they do the opposite of what is smart as investors. And so that’s why I kind of take a contrarian approach to everything that I’m looking at is like, you need to be preparing for these downturns and getting your team and getting your house in order so that you can execute your business plan when the time is right.

Reed Goossens (29:50):

I completely agree with you, but I also would say you can’t always plan for, cause you’re set on the sideline for too long. Like so many people thought 2013, although people buying in 2012 and they’re gonna have this, this, this short term rate and it’s gonna go 2015, 16, it’s gonna be crash. That’s where it’s gonna be. And then it’s gonna be, well that’s gonna, it’s gonna be 17, 18 now it’s gonna be 20. Like you can’t all what you, you have to be active in every market I think is also probably what I want to, you know, come back at you out because you, you know, as an investor you are, you can make money in every cycle. You just gotta know how to make money and what’s your basis and what things cost and all that sort of stuff. So you mentioned earlier the froth has come off the market. We did go up a lot like massive values. You know, I, I own, I own in San Antonio I bought things at 60 70 k a door. I’m now, you know, trading at 140, 150 door. I wouldn’t buy it at one 50 a door, but, you know, Do you think we’re coming back down to 80 k a door or do you think you’re still staying up at that sort of, you know, the new AK doors one 20 or one 30?

Jake Harris (30:51):

Yeah, so, um, I agree a hundred percent. Um, I I love Howard Marks, um, you know, mastering market cycles is, is a book is I’m a professional investor. I’m not waiting for only the market, uh, to be correct to what happens is like, think about this as being like a blackjack player, a professional kind of, uh, you know, um, you know, player is like, you know, when the deck’s a little bit stacked in your favor, you know, obviously if you’re playing like a, a single deck, you know, blackjack, you can count cards or maybe a couple decks, you can count cards. You know, when the, the deck stacks in your favor, you have the opportunity. You’re gonna split tents. You’re gonna be like, Man, we’re putting all the chips on the table right now because that’s where the distress environment is. But that doesn’t mean you’re just sitting off and not playing the game. And so like exactly to your point is you can continue to make money in every market up and down and left and right and so, but being an understanding how to counterpunch to what the market is giving you. And so people do have to take action. You have to be in the market all the time. But then there’s also times to when you’re maybe more conservative on your investments versus when you’re like, I’m leveraging the house, I’m, you know, leveraging my 401k. Um, back up

Reed Goossens (32:07):

The truck

Jake Harris (32:08):

. Yeah, back it up cause we’re, this is the time. And I was like, so I don’t see a whole lot of distress in real estate. I don’t see a whole lot of distress coming down the market in real estate as a whole. I think multifamily is gonna continue to grow and I don’t think it’s one 20 a door’s gonna go to 80 a door. I think it’s gonna go to one 30 or 1 35 or one 40. Your cost of capital’s definitely gonna, you know, stay up there for a little wa bit longer. But when I look at this over the next six, 12 months, there’s gonna be some buying opportunities as the people that shouldn’t have bought stuff got in trouble or maybe got into some bridge debt where they got into some things that they thought they could, you know, refinance out at a 80% LTV and they’re only getting 65 and then they’re like, Oh man, I’m in trouble because I can’t get out of this and interest rates are now seven or 8% and I was banking on it being 4%.

Jake Harris (33:03):

So those were gonna see who has their swim trunks on as the tide goes out, you know, who kind of got themselves in trouble. And so there’s gonna be some buying opportunities. But I actually think in 2008 and 2011 and in, in 2012 really we went to a different monetary theory, the mmt, the modern monetary theory and really that debts don’t matter, that they can print unlimited amounts of money and it doesn’t really affect anything. And so most of the economists that are in the government now or on that basis of mmt and so that’s why they printed in 2008, uh, you know, uh, that that’s why they printed here in Covid. And so what that does is it creates actually a, a low interest rate environment for elongated time periods. And you can see where they did this in Japan, you can see this where they did it in the, the yin.

Jake Harris (33:56):

And so I believe some of the inflationary pressures have been because of supply chain issues and the east versus the west challenges that are now starting to pop them their head up. And I think that’s gonna continue as the east versus west and supply chain. I think a lot of, uh, manufacturing is gonna be repatriated. I think there’s gonna be a lot of things that are coming to North America. And North and South America are gonna become a lot friendlier to as trade partners as geopolitical. Things start balancing out. So when that happens, and what I say is I think interest rates are gonna come back down and in 18 months from now they’re gonna be lower and that’s gonna continue to drive values up. And so if you can buy cash flowing assets and hold forever, do that, you know, it’ll make it make, it’s, it’s time inflation drives it up and down and, and you know, really almost always up.

Jake Harris (34:51):

And so if you can buy something that is cash flowing, do that and hold forever. And that’s the big, uh, thing is the, the next evolution as I was gone to, as I flipped a bunch of houses, I made money for Blackstone and invitation homes and the family office I worked for and all these things, but at the end of the day I didn’t own a lot of real estate. Mm. You know, we made money, but I was like, man, we paid a lot of taxes, we did a lot of these things. Like this sucks. So now it’s not, it’s about holding those assets now holding those assets and creating passive wealth. And we actually talk about, it’s like you need to stop trading time for money. Most people get really good at moving up the hedonic treadmill of life of, of Maslow’s hierarchy of needs of like, Hey, I’m paying the light bills now I’m doing a little bit of other things now I have this making 200, $300,000.

Jake Harris (35:41):

I’m making a million dollars a year. And so a lot of people that reach out to me is like, they’re a doctor making a million bucks a year, but then they wanna go, now be a real estate investor. Ah, that’s it. I’m gonna quit my job. I’m go be a real estate investor. And I was like, that’s his trading one job for another job. And actually you, you wanna make a million dollars. Okay, do you have $10 million liquid to invest into real estate because let’s say 10%, the average kind of return that you can make off of, you know, capital, do you have $10 million? And they go no. And be like, okay, so you’re gonna take a million dollar income job and you’re gonna go be a real estate investor. You’re gonna go make a hundred thousand or $200,000 a year if you can live off of a hundred or $200,000 a year budget, just live off of that hundred or $200,000 a year budget and go invest $800,000 a year into real estate as a passive investor until you start building your passive wealth machine. Until you start building that investment that is trading, not trading time for money, but your money is getting a compounding interest upon itself is that’s really how you unlock the next levels of what you need to do. And then your investments, your portfolio is generating enough cash flow that it supports your lifestyle. And those are the things where I was like, people need to stop trading time for money cuz then it’s gonna unlock your ability to live a life of freedom and purpose and legacy.

Reed Goossens (37:01):

With that being said, have you reached that point in your, in your life? Because the people I interview in this show are all type a high achievers really going after it and they you preach that, but how are you practicing that in your life today?

Jake Harris (37:17):

So, yes, and so, and

Reed Goossens (37:19):

I don’t wanna say that you have already explained to us that your some of your other pillars in life, and I’ll just add this to to to the context business pillar is always something that I see so many people focusing on. I was guilty of it that I only focus up, you gotta have health and you gotta have what I call love or spirituality or religion, whatever you wanna call it. But there’s something else there that, that props you up because if you just have the business and it goes away like you did on the street, where you going, it’s down. So how are you spreading that out so you don’t replicate the same issues you had 25 years ago?

Jake Harris (37:52):

A hundred percent. And, and you know, to the the punchline to that story I is that money was the least important of all of those. Mm-hmm. , you know, money’s fake. I think the government just proved that to everybody. That money’s fake money. Doesn, you know, it’s, you know, its gonna be a million dollars to buy a Big Mac. Pretty it’s

Reed Goossens (38:10):

Tool, you know, it’s a

Jake Harris (38:11):

Tool for you. Yeah, exactly. It’s a storage of energy. And so to that point is I don’t have to work. I can sit back and not work, but I was like, I also found out that I’m the worst version of myself if I’m not pushing and achieving towards something. I have to be growing. I have to face challenges and I have to create those environments. And so I work because I enjoy it and I work because I’m challenging myself to do in the next level. And so every single year I’m looking for, I’m trying to better myself to next year, to next year, to next year. I’m compounding my growth, my mindset. And so, but I do, I carve out time. I’m now married, I have three kids. We go on an international trip every year. Um, my daughter, um, you know, I don’t know when this this airs, but she just turned one years old.

Jake Harris (39:01):

We have a big party that’s happening. We do family board meetings. So each one of my kids get a quarterly meeting. That’s their day. They get to pick out that particular day. And so here’s one of the most interesting statistics that scared the crap out of me. 95% of your in person time with your kids is from the ages of zero to 18. The remaining 5% of time is spread out over the remainder of your life. And at first I was like, No, that’s nots not true. And then I thought about it with my own parents and how much time do I spend with my parents in a given year? And so, you know, they got, they got divorced when I was 15. I went to the Army when I was 17. Now I think about this holidays, maybe some vacation, maybe it’s a, you know, uh, uh, um, a birthday, things like that.

Jake Harris (39:51):

Three year hours here, four hours there, half a day there. I was like, what is that? 30 hours a week or 30 hours a year? And it’s how much time that they have left. They’re getting older. Mm, my grandparents have are passed away. I don’t have grandparents. So then I was thinking about that and I was just like, I don’t accept that for my life. I am not accepting my life to be a statistic or to be averaged like anyone else. So I’m going to start architecting and creating my life on purpose. I’m going to create my activities. I work out every single day, almost every single day for three years now, coming up in another month it’ll be three years. So I work out, I do blood tracking every quarter. I have blood drawn on me. I go through and I have some, So Davidson Claire wrote a book Lifespan.

Jake Harris (40:42):

So like I’m starting to put regiment. I was like, I’m going to live another hundred years with an option to renew. And so I’m gonna do that. And so I’m gonna start living my life like I’m gonna live another a hundred years. I’m gonna start architecting my health around that, where I work out, what I eat, what I consume, how many hours I sleep. I’m gonna do that with my relationship with my wife. And I spend those times with her and create an impact to her. And then I’m also gonna start developing my purpose. And because the reality is, is that all of us are trying to unlock and discover what our own purpose is. And so we don’t actually need money to live our life of purpose. And then when you live your purpose in the service of others is when you unlock true happiness.

Jake Harris (41:28):

So I’m gonna say that again. I was like, the reason that God put you on this earth, or if you think it’s universe or spiritual thing was because you have some unique talent that you are special at that nobody else has. And then when you start using that unique purpose and talent in the service of others, you have unlimited happiness. And it has nothing to do with money, right? It has nothing to do with that. We get on this hedonic treadmill of life that think that we gotta make more money, make more money, make more money, and then at some time in the future. And that’s why so many people that have achieved levels of success in their life that has been pursuing and chasing money, that then they’re unhappy and unfulfilled. And then it’s like, oh, now I discover that oh, I’m supposed to be using my purpose.

Jake Harris (42:13):

The the things that oftentimes that make you successful are part of the reason that line up to what is your purpose. And then when you start discovering that you can use that to serve other people and and remove the financial equation. And then it’s also your self-actualization. Like you never never need the money in the first place. Mother Teresa didn’t need the money, the monks didn’t need the money. You didn’t need the New York Times best seller list. You could have done that way before, before the thing. All those limitations that you had were self limitations. There are all things that you put on yourself you could do that, you could have done that years ago. You just didn’t give yourself permission to. And so that’s where it is, is unlocking your permission to really live into your purpose and the service of other people is when you truly unlock that happiness.

Jake Harris (42:57):

And that’s why I was like, I am generally pretty hot happy. I’ve actually been accused of being, you know, um, I think it was, is it, uh, annoyingly optimistic? You know? And I was like, well that’s because, and there’s a book, Napoleon Hill wrote hills called the Outwitting the Devil. And it didn’t come out until recently. And so if you run Think and Grow Rich. And so part of the thing is the reality is like everything is both positive and negative. Everything is in balance. There’s positive electrons, there’s negative electrons, there’s a balancing out of a battery, the universe, the God and devil. There’s a balance, the the polarity, the things. And so everything is both positive and negative. But as humans we have the unique ability that we can curate the story and the lens in which we see it to as. So if we say it’s positive, we can say it’s positive, we can say, and then look at one of that negative thing that me sitting on a street corner crying was actually the best thing that ever happened to me.

Jake Harris (43:58):

That was a positive. Other people can say how, how terrible that was and what a negative. And then, so the reality is everything is happening for me, not to me. Mm-hmm . And so then when people start looking at that and they have the ability in your own head to re-craft your own message and your own story, and then that’s why I’m annoyingly optimistic was cuz I was like, dude, this, uh, this is my own journey. I’m the only one living up in my head. You’re the only one that’s living up in your head. You have the ability to author your own life.

Reed Goossens (44:31):

Love it. Love it mate. I can talk to you for hours and I haven’t even really spoken cause I’ve just been listening and absorbing all the awesome stuff that’s coming outta your mouth. But at the end of every show we like to dive in the top five investing tips ready to get into it.

Jake Harris (44:44):


Reed Goossens (44:45):

Mate. What’s the number one habit you practice to keep on track towards your goals?

Jake Harris (44:48):

Working out. And as far as, because the working out makes everything else easier cuz I eat better, I track better, it gets me sleep and everything. So working out my morning routine.

Reed Goossens (44:58):

Love it. Question number two is, who’s the most influential person in your career to date?

Jake Harris (45:03):

I’m gonna say Ray Dalio as far as, I don’t know him personally, but I’ve consumed a lot of his content and he allowed me to think bigger and especially, uh, about thinking about not just my lifetime, but then the history of Investing’s lifetime.

Reed Goossens (45:18):

Yep. Love it. Question number three is, in your business, what’s the most influential tool that you use on a daily basis that you can’t run the business without? Could be, it could be a physical tool like a phone or journal or it could be, you know, a piece of software that you just can’t run the bus, the business without. What is it?

Jake Harris (45:33):

I’d say the people. Mm, I mean like, it is not a tool. I mean, it it doesn’t well it is matter. Yeah. But it was like, but it’s them. They’re the ones that are, they’re helping to do this, to leverage and all these other things. We could swap out our computers or software videos. It’s the people

Reed Goossens (45:51):

Love it. Question number four in one sentence is, what’s been the biggest failure in your life and what did you learn from that failure?

Jake Harris (45:58):

I was like, maybe you haven’t noticed, I have a hard time saying one sentence of anything . I was like, so now I’m trying to think like, how do I condense it? I would say just stop trading time for money. Yep.

Reed Goossens (46:09):

Yep. Last question mate. Where can people reach you to continue the conversation that’ll be in your sphere? Where do they go?

Jake Harris (46:16):

So, uh, catch knives.com is where you can find the book, some other content that we’re putting out there, uh, at jake dot real estate at Instagrams where I’m most active. And then you can just take type Jake Harris at Real Estate. I pop up on YouTube and LinkedIn and all the other, you know, places. Um, you know, I’m, I’m not the, I’m not the Jake Harris that’s on the deadliest catch that’s out catching crab fish in Alaska. That’s not me. Jake Harris, Free estate. You can usually find me on most search engine platforms.

Reed Goossens (46:48):

Awesome stuff mate. Well go. I wanna thank you so much for jumping on the show today. I just wanna repeat some of the things I took away from today’s show. I think obviously your story about going to Australia and, uh, hanging upside down like aqui and a tree was pretty freaking awesome. But then being vulnerable with us and taking us through the journey of the early stages and how you grew really quickly, uh, and hit rock bottom, but realized you hit rock bottom and that, that all that helped you reset your life into what you built today. And then building, uh, I like what you said the best time is the time is the best time to be investing is when there’s blood in the street, including your own blood. I really, I love when you said that and then also talking more about thinking from a bigger picture, understanding that you, you’ve been put, put on this earth for, for a purpose. You’ve got a purpose and you, it is, it’s a sort of a, a tragedy if you don’t go out and, and, and pursue that in a way that that is really, really important. Um, I just love your energy that you bring to the show, mate, but did I leave anything out?

Jake Harris (47:42):

I don’t think so. I think, I think sounds awesome. I I kind of black out on these things so I don’t even know what I say half the time. So I was like, Yeah, that sounds like something, uh, I would say

Reed Goossens (47:53):

So I said, yeah, no, I’ve got a whole page of notes here, so if anyone’s watching this on YouTube, you can see I’ve been madly scribbling down some notes, but it’s been freaking awesome. Enjoy the rest of your week, my friend, and we’ll catch up very, very soon.

Jake Harris (48:04):

Cheers mate.

Reed Goossens (48:05):

Well, they have another cracking episode. Jump back with incredible advice from Jake. Please head over catching knives.com uh, to, to, to fight it out. It’s Jake Harris Real Estate. Google that, um, across the globe. He easily pops up. He’s not the catching crabs in Alaska. If you do like this show, the easiest way to give back is to give it a five star review on iTunes. All the show notes from today show will be up on my website at reedgoossens.com And we’re gonna do it only again next week’s. Remember, be bold, be brave, and go give life a crack.