“Is the Recession Over?” AJ Osborne’s Riveting Take on What’s Next for the U.S.
AJ Osborne, the visionary behind Cedar Creek Capital, recently launched the podcast “Saving Capitalism.”
In the episode “Is the Recession Over? What’s next for the U.S.?“ Osborne discusses the key ingredients to success with house-flipper-turned-entrepreneur Ryan Pineda.
Osborne began by addressing how high-interest rates have affected the housing market and concluded by discussing the importance of entrepreneurs understanding their motivations and what drives them to succeed.
It’s a Seller’s Market Again
Osborne believes that, after a brief period of buyers hitting the pause button on buying properties, they have now grown acclimated to high-interest rates for mortgages. “Whereas a 6% interest rate was a shock to the system before, now everyone is coming to grips with this new reality,” he said.
Pineda, who turned an initial $10,000 investment into a house-flipping business to become a millionaire in less than three years, agreed, “Here in Vegas, inventory is dropping every single week. It’s back to being a pretty good market as a flipper.”
Don’t Try to Time The Market
Per Osborne, no one could have predicted how quickly the housing market would return to favouring sellers, which is why he stresses the importance of resisting the temptation to try to time the market.
“People tend to time it wrong,” said Osborne. “You know when people found out when the bottom of the 2008 recession was? One or two years after it was already over.”
The idea of trying to time the market also tends to catch on with investors who are still novices. It doesn’t align with common sense for an ordinary individual to believe they can successfully predict the market’s timing, especially considering that even experts in the field struggle to do so.
Focus on Long-Term Gains, Not Short-Term Losses
According to Osborne, investors should have a long-term horizon in mind. Instead of focusing on what you stand to lose now, focus on what you stand to gain in a decade or more.
“If you examine what the hedge funds were doing in 2010, back then you might’ve thought, ‘Why are they overpaying $10,000 for a house at auction?’” he said. “But in reality, what they were thinking was, ‘If I don’t buy this house today, I’m losing out on $300,000 in appreciation in ten years.’ And they were right.”
Osborne added that’s what separates those who succeed at real estate — the ability to think long-term and not make decisions from an ‘emotion-driven’ place. Osborne gave a personal example of this. In 2009, when he bought his first big storage deal, it was worth three million dollars.
“I was so worried about spending what I thought was so much money back then,” he said. “But I’m glad I did because today it’s worth 15 million dollars.”
Develop a High-Paying Skill Before You Diversify
Both Osborne and Pineda own several businesses — from education-focused companies to architectural firms — and make seven figures or more in revenue. But neither got their start juggling several enterprises at once. For Osborne, his bread-and-butter business was selling insurance before it became investing in self-storage.
According to them, entrepreneurs should follow these three simple steps: First, develop a skill set that will lead to high earnings, “at least $250,000 a year.” Once that’s been mastered, move up to the ‘management stage,’ which means focusing on assembling a team to help you scale. After that, stage three is becoming an investor, which means delegating the managerial decisions so that you can focus on investing in more businesses.
“It’s part of a philosophy I have called, ‘make, manage, multiply,’” said Pineda, “Basically, it’s a three-step process for what your growth as an entrepreneur should look like.”
That’s one of the lessons Osborne wants future entrepreneurs to take away from this episode, to carefully choose the skill set to cultivate.
“When I was starting out, I thought to myself, ‘I’m not a rocket scientist, I’m not a doctor or engineer, so what skill set could I develop?’ Selling insurance was it,” he said. “Because sales are one of those fields where they’ll never cap your income. The more you sell, the more you make. But when you’re working hard in a career that has a low ceiling, there’s no upside. After you specialize, then you can branch out and diversify.”
Understand What Drives You
Per Osborne, entrepreneurs should define ‘the why’ behind their drive to succeed, because that’s the greatest motivator to keep reaching new heights. For example, his ‘why’ is his desire to teach people how to thrive in a capitalist society.
“In this country, the top and the bottom service capitalism the most. My mission is to bridge that gap and save it from the ground up,” Osborne said. “Capitalism is the most amazing force the world has ever seen. And you need to be actively participating in it, investing and gaining assets, not just drawing a salary every month. We can save capitalism by teaching more people how to take advantage of its boundless opportunities.”
About AJ Osborne
AJ Osborne is the CEO of Cedar Creek Capital and has an impressive 20 years of experience as a self-storage owner, operator, and developer. He is a founder and board member of the largest self-storage co-op, Storelocal, as well as Tenant Inc. — a SAAS company supporting self-storage facility management. AJ has also written the No. 1 bestselling book on self-storage investing and hosts the top-rated and listened-to self-storage podcast, Self Storage Income. Accredited investors can find more information here: cedar.cc