LUR 125 Ray | Investing In Arizonav

 

Lisa Hylton sits with Raymond T. Hightower, a tech company founder and commercial real estate investor operating in the State of Arizona, USA. Raymond shares how investing in Arizona was the best decision he ever made. A huge part of his success is partnering up with great real estate entrepreneurs who love what they do. Learn from the mistakes they’ve already made. Another important thing is how their energy and positivity rub off on you, even during distressing moments. Join the conversation and learn valuable stories about investing in Arizona.

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How Investing In Arizona Was The Best Decision For Real Estate Syndicator Raymond T. Hightower

I have on the show, Ray Hightower. He is a tech company Founder and commercial real estate investor operating in the state of Arizona. Growing a technology company for 21 years and ultimately selling it gave Hightower a boots-on-the-ground education, business execution and vanquishing obstacles. In 2017, he launched Bridgetown Partners. It is a buyer of commercial real estate in Arizona and Texas with a special focus on 50 to 120-unit multifamily properties. I’m super excited to have you on the show. Welcome to the show, Ray.

Thank you so much, Lisa. I’ve listened to your show and I’m honored to be here.I’m honored to have you.

It’s amazing. The first time we met was at BEC in Denver in 2020. I tell people that it’s a journey but they don’t believe me because, at the time, you lived in LA and then you lived in Arizona. We are getting into the journey of actively investing in real estate and your path. I like to open the show with a little bit of personal stuff. We touched on where you live. It’s in Arizona. What do you like to do for fun?

I like to do a lot of things for fun. I like jazz. I restarted piano lessons so I could get more proficient with jazz. That’s something I hadn’t done in a long time. I studied martial arts for several years. I’m not actively studying martial arts but that’s something I’m passionate about. I like to explore Arizona. I enjoy road trips and driving in the desert. I posted to my blog about a balloon ride I took in the middle of the Arizona desert. I like to do a variety of all wild and disconnected stuff.

Before I started that company, I spent time as a commercial real estate broker for about five years. Prior to that, I was in a Corporate America with a technology company. I’ve bounced back and forth between real estate and tech for 40 years. I got my first programming job when I was eighteen. That was an internship and then bounced back and forth. I was always interested in investing. I’ve always been fascinated by the idea of compound interest. That example that they give you when you take any type of financial course when you’re a teenager? It’s probably in Rich Dad Poor Dad too.

That example is where if you save $1,000 per month and do that for X number of years starting at age eighteen. Let’s say you do it for 10 years, from 18 to 28, you stopped doing it and let it collect interest. It will blow up when compound interest blows up and kicks in. I love that example. That’s a part of investing that blows me away. Albert Einstein said, “Compound interest is the most powerful force in the universe.”

You got started in bouncing between both of them and then ultimately when you sold your business, does it make sense to go back into real estate? Why into real estate this way into syndication?

There are some motivations there. When I was in real estate, back when I was in my twenties, I was a broker. I was doing crazy random deals. I did vacant land, industrial property, warehouses, apartments, restaurants and one single-family house but it was all random commercial stuff. It was crazy. I didn’t do as well as I wanted to financially. I closed a bunch of deals but I didn’t do as well as I wanted to do financially. I had a background in technology. That’s when I decided that I was going to start a technology company again. I remember after I started my tech company in 1994. I was walking in Chicago.

“Compound interest is the most powerful force in the universe.” - Albert Einstein Click To Tweet

I haven’t thought about this in a long time but you’re causing me to think about something. I was walking across the Randolph Street Bridge, where it goes over the Chicago River. I was walking Eastbound. Someone that I tried to do business with as a broker was walking Westbound. We walked past each other. He said, “How are you? What form are you with?” I said, “I left brokerage and started a technology company. When I come back to real estate, it will be as an owner.”

At the time, I started my tech company. I was 30 years old at that point. I wanted to be in a position of more influence and control. Fast forward, twenty-something years after I started running and sold that company, I’m back in commercial real estate and loving it. You and I are both syndicators. You’ve also launched a fund too, which is fascinating. I would love to ask you questions about that but you’re not going to let me ask you questions because it’s your show and you’re in control. His name is Stewart. He is a good guy, a wonderful guy and a very wealthy investor at the time. I told him, “I’m not coming back broken. I’m coming back as an owner.” Here I am.

Before we get deeper into real estate, can you talk a little bit about the tech company like what it was? I don’t know if you can. Sometimes there are rules around privacy. If you can, I’d love for you to talk about that business.

I enjoy talking about that as much as I enjoy talking about real estate. The company was called Wisdom Group. We have our domain at WisdomGroup.com. The old website might still be up there. One of the things I loved about Wisdom Group was the way we would solve problems. I started it as a company to build local area networks for small businesses. In the beginning, the dominant network operating system was put together by a company called Novell and their product was called NetWare. It was out there. You’d buy and put it in place in your small business and all of a sudden, your PCs could talk to each other and your printer. This would have been early to mid-90s’. Novell NetWare was the dominant operating system.

Microsoft had a product too. They had DOS and a product called Windows. They built a network operating system called Windows NT or New Technology, which was very robust. Novell NetWare was a dominant network operating system. Everyone assumed that Novell would continue to dominate on the networks and Microsoft would dominate on individual computers and that would be the definition of the world. What Microsoft did was very smart. They built networking capabilities into their operating system, the ability for the PCs to talk to each other. Slowly but surely, Microsoft steamrolled over Novell NetWare to the point where if you sell your Novell NetWare to a person younger than 40, they’ll have no idea who that is.

We were part of it in this way. Microsoft recruited a whole bunch of small companies like ours. I never had more than nine employees at Wisdom Group because I’m not a big company kind of guy. One of the things that Microsoft did that was so smart is a backup. In Novell NetWare, if you wanted to learn how their software works, you had to buy a two-user license and machine to run it on. If you wanted to buy a license for more than 5 or 20 years, you’d have to shell out a lot of money. It was thousands of dollars, which would have been a lot for a small company like ours when I was first starting it. I started as an individual.

Microsoft’s strategy was this. They would give you a 25-user license of their product, not only their operating system but their email product called Microsoft Exchange and their database called SQL Server and a bunch of other products. They give you those for free if you went to one of their seminars for a full day, sat in a seat in an auditorium and let them brainwash you for a day. All you had to do was to come to the brainwashing and got all of their products for free as a network engineer.

Companies like my size, what are we going to recommend to our clients? Are we going to recommend Novell NetWare that would take us thousands of dollars to buy and then eventually learn and, “We finally know it,” or are we going to recommend this product that we got for free that we happen to be used inside of our businesses and that we know very well because we’re using it ourselves?

LUR 125 Ray | Investing In Arizona

Investing In Arizona: The key question we’re answering with underwriting is, “How do I take this piece of real estate and turn it into a business that makes money?”

 

Microsoft put together a program that was called the Microsoft Certified Solution Provider Program. All you had to do was go to their brainwashing. It was either a 2 or 3 of your network engineers certified in their technology. You’d have to pass the necessary exams. The annual fee was only about $1,000 a year or something like that. It’s something crazy small. You could get that free software before you became a Microsoft-certified solution provider. That was the gateway to preparing yourself to learn the technology well enough so that you could pass the exams, get the certifications and get into their ecosystem. Not only were you part of the brainwashing but you also had a fancy certificate and plaque on your wall that’s certified that you knew the product well and you were certified brainwashed.

That was the first ten years of running my company from ‘94 to about 2004. We had a website very early but websites weren’t very exciting until you could put a database behind them and do something business-oriented. In the late ‘90s, we started dabbling and building database-enabled websites for clients late ‘90s or early 2000s. We did that with Microsoft technology.

I’ve always been a fan of hiring interns. I love interns because they’re young, college-age or late high school college-age. They know everything or at least they’re convinced that they know everything. In many cases, they have some new and unconventional ideas that help our company. I had one intern back in ’97 who was, at the time, a senior at Whitney Young High School. He is a smart and sharp guy. He talked a whole lot of trash during his interview with me.

I pushed a PC in front of him and said, “Show me.” He showed me all the stuff that he was trashed all got about. I sat back and said, “You’re on the team.” I’ve had multiple interns like that over the years. That intern guy named Sharif Harris back in ’97. I always hired a bunch of interns. In 2004 or 2005, somewhere in there, we hired a pair of interns, a couple of guys who had gone to high school together. The first one was a guy I knew through scouting. I’m very active in the Boy Scouts of America.

He turned out well. The clients loved them. He came to me and said, “I want you to hire my friend from high school.” I said, “I didn’t even want to hire you. I was ready to go to China and teach English.” That’s another thing. He said, “You should talk to him.” He was great at networking. His friend turned out to be great with the web. One day, his friend, who was good with the internet and web, said to me, “I’m playing with this framework called Ruby on Rails.” This is 2005. I said, “What’s Ruby on Rails?” “It is a framework for building web-enabled applications that enable developers to do more work in less time.” That ended up being the foundation of our company from 2005 until I sold it in 2016.

I ended up hiring him full-time with me until we sold the company. Remarkably, he is a bright guy named Kevin Zolkiewicz. The guy who recommended them to me was Carl Jackson. I hope they read this so they can read what I think of them. When I hired them as college interns, they were a couple of young, smart college students who talked a whole lot of trash but were very valuable to the company because I got very energized working with them. They both are very successful in information technology and other worlds. It was a pleasure working with them.

The question I wrote down as you started going down this path was building that first business is helping you to build the business that you’re building in the real estate space. I’m glad you shared all of that because the reality is I have a feeling that a lot of the things you’ve learned from that first business, 21 years building and pivoting, changing, recreating and all that stuff impact the business that you’re building. Some of these people reading might be interested in being active in the active space. They want to know the story of someone. Your story is fascinating because you started here in LA. Can you talk a little bit about your focus in the syndication space?

When you and I met at the Best Ever Conference in late February 2020, I was just starting to hear about this thing called syndication. Sixty days before you and I met, I thought, “I’m in LA, buy a 6 or 10-flat and go from there.” I had some money set aside to do that. I was looking at deals in LA. I thought I would do that in Los Angeles. I attended the Intelligent Investor Real Estate Conference. It’s Hunter Thompson’s conference.

For investors to trust you, you need to trust yourself. Click To Tweet

My mind was open to this idea of syndication. I’d heard the word syndication but it’s one thing. They hear the word and then the other thing to be exposed to it. Also, at iREC, I heard about a conference called Best Ever Conference. While I was there at iREC, I pulled out my laptop and bought a ticket for BEC in Colorado. January was iREC. February was Best Ever Conference in Keystone, Colorado. I got to ski afterward. That was a lot of fun and then March was COVID in 2020.

I remember I met you there and you told me that that was your plan. You are telling me that you were looking to buy multifamily here in LA.

You probably said, “Why are you thinking so small?” You understood syndication’s code back then and you were a big visionary and all that. I looked up to you and say, “She’s so awesome. I should listen to her.” I met you, John Casmon and a bunch of people. I can’t remember if I met them there or elsewhere because it all runs together. I ran into a friend of mine named John Sebree at Marcus & Millichap.

John and I worked together at Marcus & Millichap back when we were both in our twenties in the early 1990s. He started M&M a year before I did way back then. I ran into all these people who are opening my mind to this idea of syndication and then COVID hit. It was a terrible disease. A lot of people died from it. The blessing that came from it is that I was able to attend meetups, conferences and events with people all over the country who talked about syndication. My mind was opened and blown.

I don’t know if I would have woken up to that as quickly if I had stayed in LA. During COVID, I figured out, “I’m not going to invest in California. I’m going to invest in Arizona.” I was doing road trips back and forth between LA and Phoenix. One day I woke up and said, “I’m spending all this money on travel, hotels and Airbnbs. Why don’t I just move to Arizona?” It’s the best move ever.

Four months after I got here, I was partnered on a 93-unit deal in Tucson, Arizona with Vertical Street Ventures, Kyle Mitchell, Jenny Gou and Steven Louie. They are fantastic people. We’re partnered on another deal. I’m part of their academy and speaking at the conference. They’ve become wonderful mentors to me. I’ve met their spouses, who are wonderful people across the board.

Can you talk about the first deal? You moved to Arizona from LA. That makes sense. You’re making those trips and all that stuff. In four months, you’re on a deal. Can you talk about how the logistics all happened and some of the lessons you’ve learned from the acquisition aspect of the deal?

It’s a little bit weird. When I started my technology company, I was fearless because I had nothing to lose. Fast forward a couple of decades later, I’ve got substantial savings and investments. I don’t want to make a mistake or mess up. I don’t know if it was you or someone else I met in the community that advised me along these lines but I decided that before I became a syndicator myself, I wanted to become a limited partner, invest in someone else’s deal or deals and know what it was like to be on the investor side before I dug into the operator’s side. I met Kyle Mitchell, Gary Lipsky, Steven Louie and Jenny Gou. They were doing this deal in Tucson, Arizona.

LUR 125 Ray | Investing In Arizona

And It Came to Pass – Not to Stay

What was wonderful about that is there’s a story behind how they acquired the deal and essentially, the previous owner had bought it two years before and it was student housing. He bought it for $8 million and put $1 million worth of capital expenditures rehab into it to make it better student housing and then COVID hit, the students didn’t come back. When your tenants don’t come back, you don’t make money and do not collect rent. The owner was in trouble. Kyle was at dinner with a broker who mentioned, “We got this property. It’s on the market. Do you want to take a look at it?”

One of the things I so admire about working with Kyle, Steve, Jenny, Ronnie and all the people at VSV, when an opportunity presents itself, they move quickly. Their team is underwriting a whole bunch of deals. You’ve heard the story that you have to underwrite 100 or 200 deals before you get one. They had gone through and done hundred plus deals of underwriting so they looked at that and were able to see that the opportunity was there. They were able to acquire that property at $8 million, even though it was a $9 million property because the previous owner bought it for $8 million and put $1 million of CapEx into it.

They were able to be acquired for $8 million and put substantial CapEx into it. I went in as an LP and put a good chunk of money into it as an LP. I’m learning so much. Whenever I’m with them, I want to walk through and say, “Tell me what you’re doing with this unit. Why are we doing this?” There’s a plan to add units and start at 93. It’s going to be 105 units because, for some of the 4-bedroom units, the team is able to split those up into a 2 and a 1.

It’s smart asset management. That’s what I’m learning from the VSV team. Each one of them has its gifts and focus. Steve and Ronnie are great at their investor relations and capital raising. Jenny is awesome at asset management. When I did my first GP deal, Jenny is very active. VSV is an investor in that too. I learned so much by listening to Jenny and interacting with her when she was playing the asset management role.

Kyle was on acquisitions. I’m talking to him about underwriting, the nuances and putting together a business plan because when we’re underwriting, the key thing we’re doing is answering this question, “How do I take this piece of real estate and turn it into a business that makes money?” I love watching how Kyle does that when he’s underwriting. If there’s any success I’m enjoyed in Arizona, I could point directly to VSV and the opportunity I’ve had to learn, listen and challenge them. I don’t just listen when somebody tells me something. I always push back because I just do, “What do you mean? Why do you want to do that?” There have been a few cases of the decision about what property management company we hire for your particular asset.

They wanted to go one way and I wanted to go another way. I listened to them and they listened to me. We went back and forth. In the end, they were right. I had one position and they had another but I had to pause and think they’ve been doing it longer than I have. Also in our conversations, they have very sound, logical and rational reasons that they had for going in the direction that they wanted to go in. I came on board with it. I could not refute the logic. I’ve enjoyed that relationship with them.

I’ve enjoyed the relationship with Kathy Jang. She is another investor in Arizona and partnered with us on a deal in Phoenix. She is an amazing investor. She’s been doing it for some number of years. Kathy Jang, Kyle Mitchell and I all moved from California to Arizona within a few months of each other. We didn’t coordinate the move. We just looked up and said, “What are you doing here?” I’ve learned so much from Kathy and Kyle.

When you think about building the first business over the 21 years, all the different pivots and then building your current business, it would appear to me as someone looking from the outside and you can correct me from wrong that this business has the difference. Building a real estate business in this way is being around other people who are also building the business together. As a result, it can help you build your business faster because you’re around other people who are also helping you to build your business.

The interest rate influences what your cash flow will be. Click To Tweet

You said so much in that last sentence. One, you are around other people who can help you to build your business because you’re learning from them. You’re not making the same mistakes they’ve already made. You’re making some brand new mistakes. When Nikki Giovanni was talking to young people, she’d say, “I don’t want you to make the same mistakes I’ve made. I want you to make some brand new mistakes. Impress me with something new. Don’t make the same mistakes I made.”

The other thing is you want to be around other people that are doing it because their energy and positivity rub off on you, even in the midst of disasters or something that’s happening that you don’t want to happen. I’ve watched my mentors go through the tough stuff. We see what happens in the market. Market shift.

We have no idea what direction interest rates are going to go in and what direction cap rates will go in. There’s a lot we don’t know. It is very educational to me to watch someone like Steven Louie, Jenny Gou, Ronnie Gou, Kyle Mitchell or Kathy Jang and watch them deal with all of this and how they reason through. It’s very helpful in my mental learning and also the spiritual, emotional gut learning, the part where you build your courage. It’s helpful in multiple ways. What you said is powerful.

Building from there, one of the things that came up for me as I think about this is your superpower. What would you say is your superpower or value add that you seek to bring to the teams that you’re involved with?

I didn’t know this until I started talking to people that I’ve met since becoming into multifamily who noticed this in me. I didn’t see it but I’m seeing it now. There are two people I’m thinking of, Ryan Magianos and Troy Trecroce. We are both part of a mentoring program together out of Florida, the Warrior Program with Rod Khleif. One thing that Troy and Ryan mentioned to me is that they saw me as a capital raiser.

That fits because when I ran my last company, you beautifully connected the dots between Wisdom Group, my last company and my company, Bridgetown Partners. The connection is when I was running Wisdom Group, my primary responsibility was finding new businesses for us to do our stuff for and that needed us to install the network, build a website, web application, mobile application software or whatever it is we were building. That transforms directly into capital raising for what we’re doing with multifamily. That’s where I spend a lot of my time.

I’m also spending time on asset management because I’m a fan of the people who do it well. I love watching them do it. I’m learning it. I’m a more effective capital raiser because I understand how asset management works. I spend time with people who are gifted in acquisition. Let’s face it, when we’re raising capital, we are asking our investors to trust us. For them to trust us, I need to trust myself and my evaluation of this deal.

To trust my evaluation of the deal, I have to have done the underwriting or reviewed the underwriting and ask hard questions about the underwriting and the business plan. Even though my superpower and my focus are capital raising, I have a strong mega appreciation for asset management and acquisitions. I get involved with those two. I like them. The three pillars of what we do are fun. I focus on capital raising because it fits my gifts.

LUR 125 Ray | Investing In Arizona

Investing In Arizona: Wealth is about being able to live so many days forward without having to go and work at a regular job.

 

The three pillars that you’re talking about in capital raising are investor relations, asset management and acquisitions. When people are on a team that understands all of the different roles and how they work but then get clear on the role that they’re good and play deeply in that, that enables you to have a very strong team because people know their swim lane and they’re very strong in that lane but they also know how strong they need to swim to help their teammates to get where the entire team needs to go. That’s powerful as well. You mentioned asset management a few times here and the deal that you’re on. Could you talk about some of the lessons that you’ve learned overall from the first deal that you’ve gotten underneath your belt in the Arizona area?

In my first GP deal, there are many lessons. First lesson, the property management company that you hire is hypercritical. We’re working with CALCAP and they are awesome. We do a weekly asset management meeting with them. The meeting never lasts more than a half-hour. What we reviewed with them is, “What’s happened at the property over the last weeks? How many new residents did we move in? How many residents have decided that they’re not going to renew their leases? How many new leases were signed? What is the status of our capital expenditures budget and the repairs that we were making to the stairs?”

“How far along have we got with that? What’s going on with anything that we’re doing a rule for HVAC, fences or landscaping? What have we done to improve curb appeal? How many phone calls have we gotten on the property? How many people have reached out to us about the property via the website? What is the status of the website? Have we added the floor plans for all of the different units to the website?” That’s a tiny tip of the iceberg of the kinds of questions that we discussed during our asset management calls. What’s wonderful is that we’re doing the asset management calls via Zoom.

Technology has made this business so streamlined. What I’ve learned about asset management is it’s very much a dance between the asset manager and the property manager. The property manager is there day in and day out. They get to know the tenants, their residents or their kids by name. They get to interact with what’s going on on the property.

The property managers are such a vital part of the team because we wouldn’t say succeed without them. They’re the ones who take that call. When that call comes in at midnight and there’s a leak or some type of emergency, they’re the ones who come in, take that, handle it and keep the residents happy. They’re also the ones that identify us as asset managers.

They say, “We could probably serve our residents better if we improve the curb appeal of this property,” because everyone wants to come home to a property that they can smile at and feel happy about. They’re the ones who were responsible for making sure that the trash management company comes on-site and on time to empty the dumpster in a timely fashion so that the trash doesn’t pile out and spill out.

They’re also responsible for the budget and making sure that when we’re spending money on capital expenses, we do it in a business-like way and in a way where we get a return on investment. “Does it make sense to put washers and dryers in this unit? Is the market demanding that? The residents that we bring in here, will they want to pay more for the unit if we put a washer and dryer in there or do they not care? Do they just drop their laundry off at a laundry mat somewhere and let someone else do it?” Asset management is very much a dance between the property managers and the asset managers.

I love the answer you gave there. There’s so much detail in terms of some of the things that you guys are doing and covering. It’s been a good experience to be involved in all of this and see that. When I think about dance because I dance the tango, I always know that as the lead, you start to lead the direction of the dance. You feel how your lead is translated into the body of your follower. Based on that, that’s how you then determine what you lead next.

When we do business with each other, we are less likely to drop bombs on each other. Click To Tweet

When you say dance, I can feel that. Also, being in the real estate space myself, seeing that you have ideas probably as an asset manager of where you want to lead the property but then also having those conversations with your PM and seeing what the reality of things on the ground day to day and whether what you think you can do is going to be able to get executed.

Before I pivot off of this, in terms of asset management, one of the things that is top of mind for a lot of people is the state of the market. You have interest rates that have risen faster than what most syndicators or people, in general, felt they would have moved. They knew that they were going to increase at some point but they have by and large increased faster than what people have anticipated. These things have impacted returns and cashflow. I was curious about what you’re seeing on the property that you have. Do you think about going into more deals and what you’re seeing there as well?

The big thing about interest rates is it goes up. Fewer people can buy a given asset because the interest rate influences what your cashflow is going to be. I was talking to a broker about a deal. They are seeing fewer offers on deals because people can’t be crazy throwing money at any deal that moves out there anymore, even the slight uptick that we’ve seen, as people being a little bit more cautious.

In the ‘90s, we weren’t doing deals where interest rates were 8% or 10%. It’s crazy to me that interest rates are 4% or 5%, 3 1/4%, 3 1/2% or whatever they are, depending on the type of loan, whether it’s a Bridge loan, a Fannie or Freddie loan. It’s crazy that they are as low as they are. For someone who has only a few years of experience and has only been watching the market for a short period, a slight uptick from 4% to 4 1/4% can make a difference. It can certainly make a difference on the spreadsheet too.

I’ve invested in about six deals as a passive investor. I got a notification from one of my sponsors that’s on the property is a bridge debt. They purchased the cap and rates are increasing faster than they anticipated but they knew that this was going to happen. They have preemptively told investors, “If we do achieve the rate increases that the fed is seeking to push by the end of 2022, here are some of the sensitivity analysis impacts on your returns. This is what it could potentially look like at a higher interest rate if this is ultimately achieved. We have the cap in place so it’s going to cap it at this point.” When I saw that I was like, “That’s very powerful to get in front of something like that and have those conversations with investors.”

That’s a brilliant example that you cited because that is how you build the confidence of your investors. They weren’t born yesterday. They know the rain will come. What they want to know is, “Do you have an umbrella or multiple umbrellas? Do you have some other plans for shelter when the rain comes?” If you’re the type of syndicator who says, “It won’t rain,” then they’re not going to trust us if we know that rain is coming, which we do. We should have the umbrella and shelter plans. What you described was the operator of the deal that you’re in has a plan for shelter. That’s wonderful.

Before we run into the level of questions that I ask all my guests, I want to touch a little bit on achieving financial freedom through real estate investing. Specifically, this question is about achieving financial freedom in three years. A lot of people out there want to collapse timeframes when it comes to financial freedom.

That financial freedom in and of itself has a different definition for different people because for yourself or other people who have sold companies and done all these different things, I meet people every day who are “in retirement age “and building a full-on syndication business. They’re in their 60s and 70s. They want something to do and that’s what keeps them going. I’m curious about the question of achieving financial freedom in three years. What are your thoughts on that commentary?

LUR 125 Ray | Investing In Arizona

Investing In Arizona: One of the challenges in software is writing or building a product and running out of money before you’re done.

 

Whenever I see the words, financial freedom together or achieve financial freedom in some number of years, those become such marketing buzzwords. I don’t like to enter the conversation that way. I like to think more in terms of wealth. I think of wealth the way that our Buckminster Fuller thinks. You may be familiar with Bucky Fuller. Robert Kiyosaki considered him to be a mentor. He was an architect, an engineer and a curious mind who was constantly learning. I remember one of his books, And It Came to Pass–Not to Stay.

When he talks about wealth, he would say that it is having enough cashflow or resources to live so many days forward without having to go and work at a regular job. I’m paraphrasing the way he said it but I like his philosophy of it more than I like this whole financial freedom thing. When I pitched your financial freedom back in the day when people had cable TV and they did the late-night infomercials, financial freedom was always somebody sitting on a beach with a margarita out of a coconut or piña colada. We’re on the beach together and that’s financial freedom.

I can’t think of a more boring thing in the world to do. I’m always going to be doing something. In my case, one of the drivers for me to be in commercial real estate is there’s still software I want to write. How is software tied into commercial real estate? Bridgetown Partners were structured in such a way. There are three layers that we have. On the basis is our commercial real estate, everything we’re doing from the LP deals, I told you about the deal in Tucson. I’m in an LP and GP deal in Phoenix. There’s revenue coming from those as an LP and as a GP. That’s the base.

The next layer above that is software development. If you’re writing software for a client or building a product, one of the challenges is writing or building a product and running out of money before you’re done or before you have something that the client wants to pay for. I’ve been in that situation and with clients who were in that situation. It’s no fun to run out of money. I’ve run out of money before. I don’t ever want to run out of money before.

Commercial real estate provides steady, reliable, predictable cashflow so that while we’re building software, we don’t have to do anything crazy like go back out and do software consulting. We’ve got steady, reliable cashflow from here to provide the money to feed what we’re doing with our software development arm.

The third layer is what I call community service because I’m a big proponent of giving back. A couple of ways I like to give back is Boy Scouts of America. I grew up in scouting. It’s one of the ways that my brother and I bonded with our dad. My parents were very involved with scouting when we were growing up. I’m still active in scouting. I’m going camping with my scouts in the summer of 2022 for a week in Michigan because I like hanging out. My scoutmaster is Scoutmaster Meredith. He doesn’t come out and go camping on the ground like the rest of us do anymore. He was a cop. He had a pistol in one hand and a paddle in the other. I was on my last visit to Chicago and he’s threatening to hit me with a paddle like we’re back in the 1970s.

Community service for me is largely scouting. There is no corporal punishment in scouting anymore, maybe in the ‘70s or so I’ve heard. Commercial real estate software development and community service. Scouting is a big part of that. I also teach scouts in my troop the management of time and money through a personal management merit badge. I’ve been the counselor for a personal management merit badge since 1987 or 1988. I’ve got a bunch of scouts with guns in there.

The other thing that worked for me for community service is a podcast I do call BizDayGlobal. It is all about global business. I believe that when we are doing business with each other, we are less likely to drop bombs on each other. I don’t like the term financial freedom. I like to think if we are smart about managing our finances, we can do things like what I’m doing with these three layers with Bridgetown Partner. I might sit on a beach for one hour but after a while, I want to go get my laptop, get on a Zoom call and start talking to people about deals or something.

Understand, love, and appreciate science. Click To Tweet

I love this answer because it reminds me of an episode called swirling. I feel that your answer to me reflects your ability to take the things that you’re interested in, passionate about, meaningful to you and then also combine them with your experience, 21 years of already being in the software. It’s not like you walk away from it and say, “I’m not doing this again,” but it’s transformed and reinvented. You take a different look at how you can swirl together the real estate and the technology and then give back and contribute all in one company. That’s beautiful. This leads me to the level-up questions that I ask all my guests. The first one is, what are you grateful for in your life?

There’s so much I’m grateful for but the big thing I’m grateful for is my family. My mother lives in Chicago. Gowing up, my parents were such a major inspiration and mentor to me and my brother. If I write something, give a speech, do something or start a company, I got to point back to my parents. My dad passed away some years ago but my mom is alive, well and still telling me what to do or trying to. In a big way, I’m grateful for my cousins who live here in Arizona. We get to hang out together. I’m grateful for my brother, who has extremely risen.

Mostly most of the things I’m grateful for is having to do with people. I’m grateful for all of the people that I’ve met here in Arizona that I talked to you, from whom I’m learning about this commercial real estate and multifamily real estate business. I could go on and on. I’ll stop there but there is a very long list of people, things, situations and stuff that I’m grateful for.

What would you say you attribute your success and continuous growth to?

Number one, my parents. Someone asked Warren Buffett that and he said, “I chose the right parents.” My brother, Edward and I were involved in so much stuff when we were growing up from scouting to swimming. My brother and I were competitive swimmers from when we were six until high school. We learned entrepreneurship. We learned so much like woodworking. They exposed us to so much. We traveled all over. In one spring break, they took us to Upstate New York to visit a bunch of IBM factories at Endicott and Binghamton, New York. White Plains, Armani flew us around there because my father had contacts and relatives there who were able to get us in and do that.

My father is the reason that I’m able to give speeches and do all the speaking because he trained my brother and me on that well. We had to memorize poetry when we were kids. One of the points they made us memorize is on my website at RayHightower.com. You’ll see a poem there called If by Rudyard Kipling. I’m thankful that they made us do that. We didn’t like it when we were kids. We’re like, “You leave us alone.” If we didn’t recite the poetry, they wouldn’t feed us.

Next are my teachers. We were blessed with great teachers going all through school, especially Math and Science teachers. I had awesome Math and Science teachers across the board. I’m grateful for the critical thinking skills that my parents taught us. My father was a Christian minister who taught us to understand, love and appreciate Science. He was a Christian minister who questioned things. I would point back to my parents and then my teachers going back to early grammar school.

I navigated your website to the If. It’s one of the things on the menu right at the top and it says If. It is powerful that your parents had you recite this. It takes a lot to be an entrepreneur and build businesses. It takes a lot of courage to keep showing up and doing things. When I see this poem, I’m like, “Wow.” The last question is, what do you know that you wish you knew at the beginning of your journey?

LUR 125 Ray | Investing In Arizona

Investing In Arizona: If you can bear to hear the truth, you’ve spoken twisted by knaves to make a trap for fools.

 

I wish I had moved to Arizona much sooner. That’s number one. I wish I had started exploring syndications much sooner. At the same time, it’s not like I was sitting on my couch, drinking beer and watching TV. I was running a technology company, technology conferences and doing a bunch of stuff. That was a lot of fun. That made money for me, taught me stuff, built my character and exposed me to adversity. I didn’t talk to you about the bad stuff I had to go through because I got my butt kicked once or twice. I wish I had gotten involved in syndications and multifamily syndication sooner. I’m happy that I’m here and I’m grateful for that. I can’t complain.

When you say that and you point this If poem out that’s on your website, I’m pretty sure this has come back to you many times when you’re in those moments where everything is not going as planned.

One is, “If you can bear to hear the truth, you’ve spoken twisted by knaves to make a trap for fools.” I remember asking my dad, “What is a knave?” We were real little kids when we were taught this and had to memorize it. My dad shared what knave is. It is somebody who doesn’t wish good things for you. A lot of this stuff didn’t make sense at the time but we went through it.

If my readers want to learn more about you, what’s the best place they can go?

The best place is RayHightower.com. There are links to everything else that I’m doing. From there, you can get to BridgetownPartners.com, BizDayGlobal.com and some other things that we will be launching. You’ll find all my stuff and I look forward to hearing from you.

Thank you so much. It was a pleasure having you on the show. There are so many good nuggets. What a journey and it’s still going on. There’s more to unfold as the journey continues.

Thank you for having me, Lisa. I’m so glad to be here.

 

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About Raymond T. Hightower

LUR 125 Ray | Investing In ArizonaRaymond T. Hightower is a tech company founder and commercial real estate investor operating in the State of Arizona, USA. Growing a technology company for twenty-one years and ultimately selling it gave Hightower a boots-on-the-ground education in business execution and vanquishing obstacles.

Driven by a desire to improve the world through business, Hightower launched BizDayGlobal, a video podcast where business leaders serve others by sharing knowledge. Hightower is active with the Boy Scouts of America where he teaches future leaders about budgeting and time management. In 2017, Hightower launched Bridgetown Partners. Bridgetown is a buyer of commercial real estate in Arizona and Texas, with a special focus on 50-120 unit multifamily properties.

 

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