Chad Wittfeldt - Teenage Landscaper to $30M in Real Estate Investments
LISTEN TO THE FULL EPISODE ON:
Chad Wittfeldt started his entrepreneurial journey at a young age by turning 2 businesses into 6 figure endeavors. He started a landscaping company and electronic arbitrage business, and found success in both. Chad later became a full time investor and real estate entrepreneur in his twenties. He has also investing in cryptocurrency and builds systems and processes to acquire accredited investors. Today, he's partnered on over $30,000,000 in real estate syndications.
In this episode hosted by Mike Swenson, we discussed:
- The inspiring entrepreneurial journey of Chad Wittfeldt from landscaper to $30M in Real Estate
- The importance of partnerships in business and how they can help you achieve your goals faster and more effectively.
- Proper structuring techniques for successful partnerships and unlock the secrets to maximizing your collaborative efforts.
- Uncover the potential of investing in real estate and cryptocurrency to diversify your portfolio and build long-term wealth.
- Find out how to effectively balance your work and personal life, allowing you to enjoy the benefits of entrepreneurship while maintaining a fulfilling personal life.
The key moments in this episode are:
00:02:23 - The Path to Entrepreneurship
00:04:55 - Taking Action Without Experience
00:12:51 - Lessons Learned from Partnership Misalignment
00:13:29 - Importance of Partner Selection
00:16:41 - Venture into Cryptocurrency Investments
00:18:52 - Future Goals and Staying Open to Opportunities
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Minnesota Real Estate
Read the full transcript here:
Mike Swenson
Welcome to the REL Freedom Show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson.
Chad Wittfeldt
Let's get some REL Freedom together.
Mike Swenson
Hello, everybody. Welcome to another episode of REL Freedom, talking about building time and financial freedom through opportunities in real estate. I am your host Mike Swenson. And today we've got an awesome story here. We've got Chad witfeld. Chad is a serial entrepreneur. Actually started his first business as a teenager and eventually worked into real estate, real estate syndications, which we'll dig into a little bit deeper, also does cryptocurrency, helps building systems and processes for people. So just a serial entrepreneur that dabbles in a lot of different things. And that's the beauty of being in real estate, is you get to dictate what you do when you do it and how you do it, for better or for worse. And so we'll talk with Chad here today. Chad, we're so excited to have you on the show.
Chad Wittfeldt
Absolutely. I appreciate you having me on.
Mike Swenson
Go ahead and give us a little bit of a background about you so folks know, and we'll dive in deeper from there.
Chad Wittfeldt
So I grew up super, run of the mill, middle class, midwest, Michigan upbringing, right? And in that place, you're really only destined for one path, right? And that's typically going to be go to school for four, five, six years, get a degree in engineering or finance, go work for one of the large motor companies, automotive companies. At the height of your career, you might make 50, 60 grand, settle down, buy a boat, get the white picket feds, and do that whole song and dance. And at a very young age, I was exposed to the other side, right? I started working at a country club with a lot of affluent gentlemen who lived a life that I never even was exposed to before showing up on a Tuesday afternoon to play golf with their buddies in their new Ferrari that month. And I really quickly learned, just through being perspicious enough to ask questions, none of them were trading time for money. They all owned things and operated things, right? And so I got the knack for this other side of life at a very young age through that experience.
Mike Swenson
And then out of curiosity, did you always feel yourself, okay, I've got to get a good job, get stable benefits and all that? What prompted you to move forward on that entrepreneurial path? Because we mentioned about you starting a company at age 16 or so. Is that kind of what flipped it in your head, mentally and entrepreneur after that?
Chad Wittfeldt
Well, I think from the day one that I came out the womb, I had a larger wrist appetite than the average person, right? So five, six, seven years old, I was the kid smashing his head on a curb because I fell off my bike getting up with a bloody face. Like, that was fun. Let's do it again. And so I had that appetite in my genetics very young age, and I think that was a huge testament to it. And then also just being living in such a young impressionable age and going through the duality of worlds, right? Going from super average, then going to work and being surrounded by extremely affluent people, you go through the duality very quickly, day in and day out, and you realize money doesn't necessarily buy happiness, but it certainly solves problems and it certainly allows you to afford a life that can make you happy. Whether the meaning of life is for you, oftentimes it does revolve around having some substantial amount of liquidity and net worth, right? So that spiraled me into being a money hungry little kid, right? And I had these two gentlemen. I was 1718 years old. I had these two guys sitting at my bar. One of them had to leave because he didn't want to go and get in the dog house with his wife because it was taking him too long to finish remodeling the backyard. Right? And without thought, I saw a problem that needed fixing. I said, John, I know you just live right down the street, right? Let me stop by. I bet you I can get that handled for you a lot quicker than you doing it by yourself. You got better things to do. That was like, the first time I ever sold something, right? It was probably a $4,500 landscaping gig. And I called three of my buddies and said, meet me here tomorrow at 06:00 a.m.. Bring every single tool that you have in your parents garage for gardening, and I'll pay $25 an hour. And I ran that company for a couple of years. It did six figures a year at a very young age, but it never outlived me, right? At that point, I was so young, I didn't understand building a team, building systems, processes, being a leader and all of those components to build a company that's bigger than you. But it was still nonetheless a fantastic learning experience and really the first step into what I call my new world.
Mike Swenson
Had you had any exposure to landscaping? Had you seen it before? Because I know for the people that don't just take action, they might be thinking all these things of what would stop them. And I'm just curious to kind of hear your thought process of how did you come up with $4,500? How did you know what to do? How did you know how to put the plan together?
Chad Wittfeldt
That's a fantastic question. Truth be know, I was shaking my head no. Like, I had zero experience with landscaping, and that is true to an extent. However, my mom had me out picking weeds in the backyard, right? Like, she had me out mulching the front island. Right. She put me to work because that's what you do as a Midwest boy. You just work and you do what Mama told you to do, right? And so that was my only experience. But no, I just picked a random number that was enough money that I thought would make sense at the time. I was probably making 20 $30 an hour as a bartender or something. And it was just a number that made sense in my head. And you know what? I didn't really care. That's the other thing too, is even if I ended up finishing that out and had no idea what I was doing, I had no idea what materials were costing, whatever, I just didn't care that much because I'm willing to learn. I'm willing to put myself through something, even if I don't necessarily know exactly what monetary value is going to come out the other side. Sometimes you just have to have faith in yourself enough to figure it out. And that's essentially what I did. And so I didn't really put much thought and merit into it.
Mike Swenson
Well, and that's awesome to hear because I hear so many people, especially those investing in real estate, they give a ton of reasons why they can't do something. And you saw the value of learning in the education. And I tell folks a lot of times, let's say you started out by doing a flip on a property and you broke even. Well, you learned a lot, and that's going to help you make more money in the future. And so I love that approach of I didn't really care because you're going to get experience out of it.
Chad Wittfeldt
Yeah, 100%. And I honestly just think that's like the dark horse crutch in the modern day journey is becoming a real estate entrepreneur, right? And I call it my mental masturbation theory. And we see this play out time and time again and ultimately it just ends up leading to amateur saturation in really any strategy, any market. And these are the guys who say, I'm going to get into wholesaling, I'm going to get in fix and flipping. I'm going to syndicate apartments, I'm going to do airbnb, whatever. Who cares? They go to seven different conferences that year. They buy three different coaching programs. They update their Facebook and their banner and this website and a logo and all this crap, right? And they get to the end of the year and you say, Mike, how many deals did you close this year? And I didn't close any deals. I didn't close any deals because of the interest rates. I didn't close any deals because the leads suck. I didn't close any deals because of this, because of that. But how many people did you call? How many brokers did you go take out to lunch? How many agents did you take out to dinner that week or that month or that year? How many conversations did you have with affluent, accredited investors that you can offset your wholesale dispos to, right? Zero, zero. And so, yeah, ultimately I think an overwhelming majority of people perpetually fall into the trap of learning by education and not by doing. And you just don't know until you.
Mike Swenson
Get reps. Yeah, it's difficult because people want to be viewed as the expert and you can't really be the expert until you do it. So it's kind of that balance of, yeah, you got to get some experience first. Now, how did that transition for you into getting into real estate? Did that come next then, after your landscaping business?
Chad Wittfeldt
I did the landscaping stuff for a couple of summers. It was good, it was fun. Made some money, learned a lot, went off to college, did that for four years. Didn't care to take the landscaping business with me because up in the Upper Peninsula, northern Michigan, it's extremely cold for like 70% of the year, right. So that wasn't going to work. So from there I just arbitraged electronics. And essentially all that looked like for me was being a kid walking around with a stack of cash. If you had a broken iPhone, iPad, laptop, whatever it was, I'd buy it. I'd buy anything. And then I would go sell it on ebay, as simple as that. Wouldn't fix them, wouldn't part them out, nothing. Just sell them as is for parts on ebay. And another business, did six figures for two, three years, but again, never really grew outside of me. It was just a hustle, right? Got into another business at 21, failed that company. 23, failed my second company. That one left me pretty penniless and broke. Was on my way, moving from Michigan to Denver, Colorado, when I found out that a disgruntled business partner essentially robbed us blind. So here I am, denver, Colorado, broke as a joke and lost. Have no idea what I'm going to do next. And as I alluded to earlier, I've been into bikes and toys and all that kind of stuff, and at this point I couldn't even begin to think about what I needed to do next. My entire life's work was just gone, right? So I need to clear my head. So I go to this bike park with my mountain bike and truth be told, I strike up a conversation with a guy, I was just looking for a friend, right? And he's just getting started doing apartment syndications with a group of guys, and I end up going, meeting those guys, working with them, closing my first deal within that year's, 83 unit apartment building, and we've just been rocking ever since.
Mike Swenson
What was your role in closing that deal? So you mentioned you had partners. Was yours finding and underwriting deals or what was your role in that first property?
Chad Wittfeldt
I'm an integrator, so building out systems, processes, marketing channels, filling them and optimizing. And so that was seven years ago, right? So at the time that was me just like throwing up a landing page, writing Facebook copy for some posts and running an email list. Right. We've gone through probably 20 different revisions since then and have now built things out to a remarkably robust process fueled by data. Right. But yeah, it's just funny to think about where it all started to be honest with you. But yeah, we'll build system and processes to acquire accredited investors into real estate funds and syndications and then also support our acquisition guys when they're systems and processes to manage brokers relationship and deal flow.
Mike Swenson
How did that grow for you then? I mean, we talked offline about what criteria did you guys have, who came up with that criteria, kind of how did you land on your sweet spot of where you're at?
Chad Wittfeldt
Like I said, I was never really the underwriter or the acquisitions guy. Right. So I really relied heavily on that knowledge and education from my partners. But ultimately I think a lot of it, especially right now with the way interest rates are moving and just over the last several years, a lot of new operators came to the space not really knowing what they were doing and now are in negative equity with their investors money. That's a really scary place to be. My expertise is not going out, picking the perfect market, underwriting the data perfectly, that's not my expertise. I don't really prefer to talk about that very much. However, what I can say is given that dynamic, knowing that about thyself, I know who to partner with. Right. I know how to vet and underwrite an operator who knows how to actually take down deals. Right. And kind of alluding back to the amateur saturation again. You just got to be careful with who you work with. Regardless of the industry, there's a lot of fake until you make it out.
Mike Swenson
There well, and I love that you understand yourself and you understand what you're looking for in others to find a fit. I talk about this when I work with investors or work with agents that want to work with investors, and they're so hung up on the perfect deal, the perfect market, and I want to bring them back to, like, what are you looking to get out of it? What's your time commitment? What's your money commitment? What are your goals? And then you're looking for that yin to your yang. You're looking for somebody that values what you don't have, and hopefully you can add value to where they're looking for value, and that creates a good partnership 100%.
Chad Wittfeldt
And oftentimes, I think, one of the most challenging things that I've ever gone through in business, and it's happened multiple times now. And I like to think, by God will, it that I've learned my lesson this time. But ultimately I think a misalignment in partnership can lead to the demise of indie Kingdom. And I just think it's a challenging thing, especially getting out the gates, especially if you're just trying to get into your first deal. You're not really thinking about these types of things. And truth be told, I think anyone out there in that position, you're just doing a really massive disservice to your future self. Of all the conversations I've had with high level seven, eight figure entrepreneurs, they're very particular about who they partner with, why they partner with them, and what that looks like. So just to unpack that really briefly for anyone listening, first and foremost, you don't ever need to partner with somebody who has the exact same set of skill sets as you do. It doesn't make sense, right? So you want to obviously find someone who's complementary to your weaknesses, not complementary to your strengths. That's a waste of equity. Component number two to that is don't value the equity you're giving up. At today's valuation, you'd be thinking 8910 years down the road, right? Right. Now, your company might not be worth anything, but ten years down the road, when you got a couple of hundred million dollars in assets under management, that 50% of the company is worth a lot more down the road. Right? So put a future valuation on it. That doesn't necessarily mean the bank is going to give you that valuation, right. But for yourself, it can be a really important thing. And then component number three, properly structuring out your operating agreements, right? Rules, responsibilities, having KPIs Metrics to hold people accountable to and claw back their provisions when they don't meet or exceed that level of productivity. Right? Happens all the time. I've seen it happen all the time. Guy gets into business with so and so and so, goes through a life event, basically just leaves the business high and dry and still bleeds to 50% of its equity. Don't find yourself there either.
Mike Swenson
Now, I know for some people in syndications, talking about maybe the general partner side, some people like to stick with the same group of people. You work well together, you've kind of got that shared vision. Some people, it's deal by deal. Some people are in the middle of another deal, so they're not available for this deal. So some people kind of just pair up for one particular property. What's been your experience? Are you kind of sticking with the same group or are you kind of putting them together based on the individual situation or how does that look?
00:15:18 - Chad Wittfeldt
Yeah, so we work with a multitude of groups and we come in as growth partners and waterfall into equity, into either the fund or the deals. And so every group that we've worked with since the beginning, we still work with today. Right. And a large component of that is just like, I'm not an operator. An operator, right. I'm not the guy who's going to manage the manager. I'm not that guy. Right. We come in and support oftentimes. I have found that a lot of the companies we work with are still on fairly archaic systems and processes. We've worked with a company who had over $100 million assets under management and they're managing their capital stack with an Excel sheet. Right. Not a good place to be. So it allows me to come in, repeat our process and capture upside for providing the value to the team.
Mike Swenson
You had mentioned before, apartments and self storage are typically where you're sticking to.
Chad Wittfeldt
Yeah, so it started with apartments. A good friend of mine down in Texas doing developments. I came into one of his deals as a limited partner and really enjoyed having more of an intimate look on the process behind it for the first time. And, yeah, it just led me to really enjoy the asset class and so we started working with it a little bit more intimately.
Mike Swenson
And then you had mentioned too that you also do crypto or maybe some additional investments in addition to that. How did that come about and how long have you been doing that for?
Chad Wittfeldt
It really came down the model of just from real estate, like the monthly recurring revenues. Right. And so about two and a half years ago, I went home to Michigan to visit for like Thanksgiving or Christmas. And a really, really good friend of mine, he's the one who got me into Bitcoin at a couple hundred bucks when we were kids. He was just the nerdy kid who geeked out over the dark web and the Silk Road. Right. And that's how I found out what Bitcoin was. So long ago, he had a single family rental property and I wanted to go check it out. And turns out instead of releasing to his tenant that year, he just decided to start mining ethereum in this house. And I will never forget it for the rest of my life. I walk into this house and there is cords and ethernet and fans and just everywhere it looks like an alien hive out of a movie. And he pulls up his operating system and just shows me the numbers, just show me the money, right? And I was like, yeah, well, I wouldn't have rented this either. And just having such an intimate look to see how much money he was making fairly semi passively mining ethereum, I was just hooked. And I flew home, bought my first mining rig, set it up in my house, and pretty quickly that scaled into a much larger operation with a partner. We did that for about a year and a half, made an exit and it was easily the best cash on cash return I've ever experienced out of any investment I've ever made. Unfortunately, the party just had a stop and I just chose to leave the party before it was a little too late. And so, yeah, I made a nice exit on that. And so I just think for me it's just about being aware of opportunity and see what's in your wheelhouse. See what you can make sense of and being able to manage your risk accordingly is really the name of my game.
Mike Swenson
And as you're thinking about the future here, are you still wanting to focus on putting together those syndication deals or are you looking into other things? What are your goals for the future?
Chad Wittfeldt
For me, there's a couple of different things there. One, yes, I am still very focused on acquiring more positions of equity. Right? Of course I am. Number two, I have such a hard time self limiting of what I will do. Right. And the reason why I say that is because if you asked me ten years ago that I would be here where I'm at doing the things I've done, I would be like, you're out of your mind, there's no way. Right. And so for me, I really try to just keep a very dynamic and open mindset to opportunity. However, at the same time, just knowing what to look for inside of opportunities because I get approached and pitched things almost every day. And so being able to protect your time, your focus, your energy is obviously extraordinarily important. But there's a balance between that side of it and being too close minded off to missing out on some serious opportunity eventually. The end all goal is to be a KP on commercial deals, right. Be the guy signing on the loan with his experience, his liquidity, and his net worth to move the deal across the table and taking a percentage for providing that service. That is the goal down the road. I still got some work to do.
Mike Swenson
Now, I know some people feel like, okay, when I'm young, I just want to push forward and grind as hard as I can. For some people, it's, hey, I want to do that. But at the same time, I want to enjoy the rest of my life and do things outside of work. Where do you fit on that spectrum? Are you just kind of a grind all day every day? Or is it stop and go out for hikes or go out and explore Hobies and that kind of thing?
Chad Wittfeldt
I live a very well balanced life. I don't spend 50, 60 hours a week working, that's for sure. Spend a lot of time on my hobbies, my passions, my relationships, my health, my faith, all those strong core components and staying grounded to the reason why I'm doing this in the first place. However, that's not always the case, especially in the beginning, right? I'm 30, I've been at this since I was a kid. And especially going through you go through seasons, obviously you want to eliminate those seasons, but for me, I had to go through those seasons and pulling myself out of a really cold, dark season was a very challenging one. And I look back on that and just for me, I think when you're young and you're in your twenty s, I think personally grinding and sacrificing and getting to that place as quickly as possible makes a lot of sense. Right. And I talk to young guys about this all the time. For me, that number was 100 grand cash liquid, right. Getting to 100 grand in cash as quickly as you possibly can, I think is a very valuable thing because at that point you're not necessarily worried about paying your bills for a while, you're not worried about spending $60 on a dinner. A lot of little clouding things go away. Right. And I think once you're there, you can start to flip the script and flip the mindset to start thinking more about abundance and making more long term decisions because your short term needs are met. And to be quite frank, when you make that decision to cut out the 20 to 25, those years of most people's lives is spent on crap anyways. They're out drinking, they're out partying, they're out doing drugs, they're out getting in trouble, they're out hanging out with people that they shouldn't be around in the first place. And so if you're a young man, I think you're going to be far better suited off sacrificing, grinding your life away for 60, 70 hours a week, saying no to a lot of the crap that's not going to serve you anyways. Get that capital. Stack 25 to 30. Building skills. Obviously you're doing that in the beginning too. Networks skills and putting deals together and starting thinking about larger long term value and opportunity.
Mike Swenson
Have you ever heard the phrase you're the average of the top five people that you hang around? Well, real estate agents, I'm excited to increase your five with you. We're launching the REL Freedom Investor Agent Tribe to help you get educated and connect with others, to build your real estate investing journey and also to help you along the way as you're working with real estate investors. So come check it out on our website, realfriedom.com. Go to the store. We have a membership, we have a mastermind group and private coaching to help you stay accountable to your real estate investing goals and to make sure that you connect with like minded people to accelerate your progress and to cheer you on along the way. Check it out. Realfreedom.com. Click on the store. Chad, thank you so much for coming on and sharing your story. For people that want to learn more about you and kind of what you're up to, how can they do that?
Chad Wittfeldt
Yeah, you can just find me on social media. It's at Chad Whitfeld and come say hello.
Mike Swenson
Well, thank you so much Chad, for coming on, appreciate what you're sharing and best of luck to you in the future.
