Next Level 297: “Grit is Good” and How to Keep Getting up When Your Business Gets you Down

0:00I know there are many issues that need to be resolved and that are very competing, very complex, but United States in most of the world is perceived as the place to be, the place of opportunities. Welcome to the next level income show, it's our goal to take your income, your investments, and your life to the next level. I'm your host Chris Larson. If you haven't yet, get a copy of our book for free at our website nextlevelincome.com, that's www.nextlevelincome.com. Just click on the book link and I'll even send you a copy if you put your address in. I'm excited to share this next episode with Jose Berlanga, an entrepreneur from Mexico City with over 35 years of experience. He's going to share some amazing golden nuggets from his personal story of success, but also from failures. And he's made a significant mark in Houston's real estate industry. He's going to talk about his business at TriCon Homes, but really also his diverse background, going to college in the United States, why he loves this country, and some really great

1:01tips for how you can persist when life or business gets you down. This is going to be fun. Stay tuned. Jose, welcome to the show. Great to be here. Yeah, it's great to have you. We got exciting story you have that you're going to share with our audience today. And you're coming to us from one of our our favorite cities to invest in Houston. We're actually about to close on our ninth acquisition down there here over the next month. We're actually on that. Yeah, thank you. We share we share something in common. So I really I want to, you know, I want to talk about, you know, the housing, the real estate cycles with you, Jose, because we were in different sectors of that. You've got a couple great books, but you also have a great story. I'd love for you to share a little bit about, you know, how you how you started in Mexico City, how you ended up in Houston and, you know, a little bit of your story along the way there. Yes, yes. Well, thank you for that. I'm I'm I'm really known as as as a

2:04person that is involved in real estate. That's what I'm mostly known for. And I consider myself more of an entrepreneur because that's the side of it that I enjoy. Yeah, real estate happened to just be a conduit. It happened to be the not only the topic of discussion, but the bulk of my career has been dedicated to real estate investing and construction and development. But my beginning was very different. I when I arrived from from Mexico to go to college, I started a business right away. But we will skip that all of that initial journey because it was in a seat of different industries. It was in the exporting for the oil and gas machinery. I was in the restaurant business. I was in the food manufacturing. I was in the tire business. I was I mean, there was a thing in the travel business. There was a dozen different things or a couple of us and more like more more like it that I was involved different

3:08technologies of electrical industry. I did so many things because entrepreneurship was something that attracted me so much. And and also because I I was one of those hungry, ambitious young people that just want to do something with my life, I wasn't sure what. And in my destiny has taken one business to the other without truly planning it without knowing it was headed. And and that took me one day to real estate. And here we are. But just just to wrap that up, I've never really stopped, although I've been in in residential construction in real estate investing and in the different aspects of real estate. I never stopped dabbling in the things. This is something that few people know about me that I was I always had something to do with something else. Start-ups, technology, investing in something, creating some idea that in some work and

4:15most of them didn't as as we know entrepreneurship is indeed. It's a gamble. You just got to keep trying until something works. Yeah, I like yeah, I'd like to kind of pause on that for a minute because I think that's, you know, there's this, you know, allure and romanticism about entrepreneurship and, you know, it's exciting. You know, you look at Elon Musk, you look at yourself and your progress and people look and they're like, Oh, Chris, you know, you've done all this stuff. But, you know, like you, when I was 12, I was on wrapping paper door to door and you do all these little things. And yeah, the majority, the majority stuff, you know, that I did failed, you know. Yeah, you know, fortunately, a lot of it wasn't. It didn't take you down. But I think that it's me a bit. Some took me completely down. I aware of everything and had to start from scratch and it's devastating. It's a very, very difficult thing to, to go. Yeah. Do you mind elaborating a little bit on that, Jose? Was that, was that from, I know, we were, we were investing in Houston over 10 years ago and, you know,

5:18oil and gas, you know, oil prices specifically took a big dip. And it was, you know, it was a lot more damaging than it would probably be today, you know, in the Houston market. Was it from that? Was it from, you know, the real estate crash? Was something all of the above? I had a very exciting life in the business. We're not only personal level, but in, but in business, somehow it's, it's been a road road coast where I start a business. I build it to a certain level. And, and something goes wrong along the way, whether an exporting business, it was currencies. They're the evaluations. People fell behind on their payments and, and eventually put me out of business. And, uh, and it's happened to me in, in a number of industries. It, it's very hard to get back on your feet. It's, it's, it's a process that takes time. And at the moment, it feels like you've never, ever be able to get out of that one and, and, and start all over. But somehow you go one day at a time. And you, you said something very interesting. And

6:22for no worship, I think it's misunderstood. I, I don't think, a, a lot of people realize, but, by the way, I've, I've written a third book, which is exactly about this topic. Oh, terrific. About what it takes to start and build a business and what the reality of ownership is. Because we celebrate a handful of stories. The glory, the success, the millionaires and millionaires that we hear of. But we rarely hear about the thousands and the bulk majority of people who enter this field and fail, which is the reality of it. Yeah. The statistics are overing the, the number of people who get in. Uh, many, for the right reasons, they, they have a dream. They have a concept. They have an idea. They have a solution to, to society's problems. And, and others get into it because of the money and the freedom. Because they associate owning a

7:24business with their, get to, uh, the lifestyle of the rich and famous. Yeah. And it's not quite like that. No. No. No. Yeah. Yeah. Yeah. It's, uh, yeah. It's, you know, I used to raise bicycles. It's the same thing. You know, you, if you win a handful, you know, three, four, five races a year, you're, you're, you can be a superstar. You know, but you fail 90 plus percent of the time. It's just like loss after loss after loss. Yeah. Yeah. Yeah. We only, yeah, we only see the, that little tip of the iceberg that's sticking out. We don't see all the, all the failures that are underneath in that, in that, uh, entrepreneurial graveyard, so to speak. It's incredible. We only hear the stories of the people who made it. Those, those are the ones who we celebrate. Those are the ones who pay attention to. Yeah. And I, I give, uh, tribute in this book, this third book, which will come out in a few weeks, um, uh, to all the people that, that tried, that gave it their best, that took a chance, that took a gamble, that took the risks, because that's what the world

8:27is for. Every, every failed business shifts us something. Yeah. And this is an amazing book. I, I did a lot of reading and, and researching about all the different, uh, types of entrepreneurs, uh, now it's become very popular to, to create your own job. Yeah. But it, it is very different than people perceive this life to be. And one, something that I hear a lot and it annoys me a little bit is how the people who made it, people at the top, the successful ones, so now some would make it easy. Yeah. Oh, if you just do this and that and the other and, um, it's tremendously difficult. I've been entrepreneur for decades. And it doesn't get any easier. They, they say that your first million is the easiest one. And from that point, it's just, uh, you know, everything is simple, not quite. To me, every million has been very, very, um, I wouldn't say difficult. The torturous is, is a word. Wow. Yeah. Um, and, and sometimes I, I make a million, I lose a million,

9:33I make several million, I lose several million. It doesn't stop unless you are in some rare instances where you have a business that, that you're lucky and it scales and it grows exponentially. Yeah. But they are very rare. Yeah. No. No, I agree. I'm excited to reach, I'm excited to reach a new book too. Um, can you share the title? Yes. Uh, the title is grit is good. Grits is, oh, I love that. I love that. One of my favorite books, uh, it's called grit by Michelle Duckworth. Um, and, you know, I talk, I talk a lot about, I, I coach cycling and I, I talk about with my kids and, um, yeah, they talk about, you know, you know, the grit. So I, I would love to hear your perspective, Jose, because I, I've been through some of those challenges and you're just like, you're, you almost, you almost feel helpless. Like, what's the point of continuing and saying, oh, man, just be, it just be easier just to not try again, not to get up and, you know, just, just do something easier that's more predictable. You know, what, what has really pulled you

10:38through those really challenging times, you know, and helped you get back up when you've been knocked down? That, that's a very loaded question. Uh, that, that I think everybody approaches failed experiences a little bit different. Yeah. Uh, to me, it was a combination of fear. I, I think that's a number one. Some people are fearful of starting a business. I, I had a fear of, of, uh, looking for a job and, and being my hands, my, my future and someone else's hands. Yeah. Uh, that, that was one. And, and as a years go by, I realized that maybe I had other assets that I didn't realize when I was younger. I thought it was all fear based that I needed to succeed. I needed to survive. I needed to make money. I, I was always, um, a little bit scared of, of not being able to sustain myself and my family. Uh, and that made me always be proactive. Yeah. So I think at the end of the day, a lot of entrepreneurs that succeed, uh, have something

11:38in common, which is, uh, an obsessive compulsive behavior. I, I would agree with you on that. Yeah. Yeah. A personality and, and, and we could talk about this subject for hours and hours. But I, I found that I didn't have many talents. I'm, I'm not a smarter creative or, uh, or, or, or, or I'm not the type of person that can come up with concepts, but, but I'm very tedious. I'm very persistent. And, and again, my, my compulsiveness of working around the clock. I work in my sleep. I create. I think I chew on problems. Yeah. And I would work others. Yeah. Even if it's not physically, it's in my mind. Yeah. So that, uh, that has helped me get, get out of difficult situations because I'm always thinking ahead of time. I'm always planned. Not for tomorrow. This is a mistake that a lot of people make their, their, their fixing

12:39today's problems. I tend to be fixing next year's or, or, or problems that will, uh, hypothetically show up in a few years. And that gives me a little bit of a niche. Yeah. So, so I'm, uh, by default, you, you get there sooner or later if, if you just continue moving, moving and going and thinking and producing and, and before you know it, you look back and, done more than you realize. Yeah. No, I love you. You said a couple of really, really, um, powerful things there. You know, one, uh, and I think Elon Musk shares this. You know, he's always kind of looking ahead multiple problems ahead. And, you know, he's saying, wait, it's not, why are we solving, why are we trying to solve this problem for energy? Why don't we put these data centers in space instead of having, having, you know, he's like thinking, you know, or, in order of magnitude almost beyond what others are thinking. Um, obviously he's, uh, a much smarter version. I, uh, uh, I know means so I compare myself to that because I,

13:44I fix very elemental problems. And, but that's the idea. I mean, if it's very, very modest, very entry level and industries that are already very competitive, I don't consider my smart enough to, to come up with anything new. But, but I do consider myself capable of just trying to do better at what other people are overdoing. Yeah. No, I love that. What, what do you think? Um, you know, I was at the other point I, you kind of touched on. And Michelle Duckworth talks about this in her book, which is, you know, the, the younger professionals, children, adolescents that succeed as musicians, as professionals, as athletes, they have this long-term view of themselves. You know, they have like an identity, like I'm a professional musician, for instance. And that's what helps pull them through those short-term challenges. Um, I love, Jack Hughes, who scored the winning goal in the US vs. Canada hockey game here in the Olympics this past weekend. Um, you know, he, he had an interview, you know, when he was, uh, he got beat and

14:49he was just, he was, you know, you see that long-term view of, hey, I'm, I'm going to win. I just need to push through this moment and kind of accept it and do that. Um, I'm always, I'm always curious, you know, what, what do you think shaped that personality in those traits in you as a younger man? When you convince your brain that you have no alternatives, but to get to where you want to go. And when you match, uh, not, not just with honesty, uh, but, but in a realistic aspect of things, when you match your efforts with the direction that you want to take, you get there by default. Most people, you know, you get tired of hearing people who complain and who want to be successful and who want to achieve things, but they don't match their actions, their habits, their day-to-day activities with where they want to get. And, and this is something that if you don't recognize

15:52the sacrifices that it takes, the things that you have to walk away from in order to get there. You know, your chances are reduced dramatically. And those people are, are not thinking about anything else. They're not thinking about fun, about traveling, about friends, about nothing else other than what they want to do. And, and there has to be more than passion because passion fades, there has to be repetition discipline. I mean, success is a loaded thing that compounds a lot of words. Discipline repetition, consistency, endurance, you sacrifice, obsession, compulsion, desire, all of those ambitions put together when you just don't want to think about anything else. So, you have to like what you do. You have good at it. And you have repeated over and over thousands of times. And eventually, because you want to get there and you don't see yourself

16:55doing anything else, you start doing better at, at, at whatever that is. That's fantastic. Yeah, my coach likes to say, you know, what is your level 10 problem? And are you putting a level 10 effort into it? And then he says action beats anxiety. And I found that to be true. You know, whenever you're, you know, you're struggling, you know, we get into our heads and we're thinking about like worst case scenarios. And if you just get up and you start making, you know, putting a foot forward towards that goal, it makes a huge difference. And then you build on that momentum. And, you know, keep pushing forward through that. And that's ultimately, and I love that what you said, which is, you know, the habits, the discipline that you create, it's like, well, I don't want to go to the gym, but I'm, I have this habit where I work out every day. And, you know, I might not be a great workout, might not be your best workout. But, you know, you, you get in that habit. And those habits, ultimately, you know, overcome, you know, those challenges that you, you've, you've, you encounter. And it takes time. Everything takes time. So, so if you, if you're hoping to get results very quickly, it, it's unlikely that you're going to achieve anything. So.

18:02Yeah. And, and I do, just to, just to wrap that piece up, you know, one of the things you mentioned was it's not easy. It's challenging. I think we do a disservice to, you know, our younger generations are saying, oh, it's easy. You just do this. You, you do this. If we're honest and say, hey, it is going to be a challenge. It's a challenge to be married. I'm about to have my 20th wedding anniversary. It's not easy. You know, it takes work. You know, it's not like you just meet the right person and everything's easy. And it's like, you see on TV or the, the romcom movie, you know, that you watch, it's like, no, it takes work. And if you're honest about that, you, you talk about the work that it's going to take, then, you know, you're better, you're better equipped to handle that and go through those challenges, for sure. Yeah. Yeah. And, and, and you also said something very interesting that stress never goes away. Worrying, the insides, we, we tend to think that worrying is horrible. Now it's, it's, it's been categorized as something not to do. You know, we, we need to just leave a peaceful, mindful life. Yes, there are moments for that. And we need

19:06to figure out how to detach ourselves for a few moments, clear our thoughts, have a healthy brain, but ultimately I talk a lot about how anxiety and stress are necessary. They get to involved, they get you serious about doing, they give things meaning the more time you invest into anything, the more it has something value and the more it's going to stress you. But the solution to my stress, the solution to my insides is action. Love it. I have, every day, I have one of those busy brains that is always consuming me with, with the things that I have to achieve. But my medicine is get to work and start making a list, a sequence of events of things that need to occur, for me to solve those puzzles. And when you start taking action one at a time, one at a time,

20:07and start moving in the right direction, the insides are reduced. So I think insides and pressure and stress trigger action. And if you use them, they are a magnificent tool in a weapon that you just need to take them. They're, they're indicating you what you need to do next. I love that. And I tell that to my boys, they both play lacrosse and they get nervous before big games. And I say, that's good. That means you care. It's the same thing. That anxiety, that nervousness, that worry that comes up. But if you let it sit on its own without the action, that's where it can become very dangerous and consuming and drag you down. So I love what you said. If you're worried about something, put down what your plan is and then start working on it. What is worrying you? Why is it worrying you? How would you fix it and create a plan and start doing it? And before you know it, you're getting somewhere. But just procrastination. I have a formula stress plus action equals success. Stress plus procrastination equals failure. Those are very,

21:15very simple options. I love it. I feel like we should just end the podcast there because that is said salad gold right there, Jose. But you have so much experience in the real estate market. And we've got a lot of listeners that like myself are very passionate about it. So I'd love to hear, I'd love to start off and really get your take on where we are in the real estate market. I know you've got a lot of experience in the residential side. I'd love to hear your thoughts on that. And then hear a little bit more about what you have going on today with your business. Sounds good. Well, let's talk about residential developments, which is the bulk of my activities, single family residential developments. Although I participate in other commercial multifamily in other sectors of real estate, where I'm more familiar with is single family residential. And we're going through a transition. I see a difference. I've been doing this for 30 years.

22:18And I've never seen so many pieces of the puzzle moving from lifestyles, from the way people want to live. For example, footprints are reducing, you know, when I started building a small home with 2,300 square feet. That was considered. Now we're talking about 1,200 square foot. And I'm talking about Houston, where we have a lot of space, a lot of land. I'm not talking on the minions. People want a more efficient home. People want to travel. They want more money to live their lives. But also the big elephant in the room, which everybody's talking about, is affordability. That's a big one. Absolutely. We've experienced cycles where interest rates were much higher. And homes were moving faster. They were selling the activity in our industry, was moving at a faster pace, because we've never had this issue of affordability. I think that's

23:18a big one. Yeah. We're living a cycle where it's almost less expensive to buy a home. I'm sorry, to rent a home. Yeah. Yeah. By about a third. Yeah. Yeah. So renting is a popular thing right now that's affecting our industry in a lot of ways. And pushing a lot of investors to build communities for rental, which is one thing that we are doing too. Yeah. If we're not able to sell a community, we'll just rent it out. Yeah. And I think, you know, I'm curious. I know like you mentioned, there's so many moving pieces. You have, you know, you have a lot of homeowners that are locked into like we are, you know, a 3% mortgage. And if they move, the price of the home is going to be double or triple plus the rate is going to be double. So you know, I did the math yesterday. If we bought our home today with current interest rates, our payment would be over three times higher than what it is today. Yeah. And it's like, okay. And then you have the baby boomers that are starting to downsize. The first baby boomer turns 80 this year in

24:202026. And you know, those baby boomers are downsizing in a lot of ways. They don't need as much space. You have younger families that are, you know, like you said, moving into smaller homes. There's a lot of different factors, you know, that are really, it play out there. So I guess, what are, what are you seeing in terms of, you know, buyers in the market? Are they one of those specific demographics, you know, that you said are looking for downsizing? Or is that across the board that you're seeing that? I would say it's across the board. But what I'm seeing is that, and I talk to people that are in this industry in other cities, other states. I think we're experiencing something similar right now, which is every market is slightly different. You know, there are periods of time where real estate is either doing better or doing work. You know, the cycle is improving or the cycle is beginning to slow down. Right now, it's all over the place. This is the first time in my career where there's not a dear vision,

25:21a clarity as to where we're headed. Is it getting better? Is it getting worse? Some good news, some bad news. Sometimes it's a little more consistent in what they're about to crash and all the signs of a deteriorating market are visible. They're palpable. They're there. Or no, we hit bottom and we're on our way up. Right now, it's a little bit of everything. Some some submarkets are doing very well. The higher end is doing well. Rich people are still rich and they're getting richer and they don't care about interest rates and they don't care about affordability. The entry level are struggling because a couple of hundred dollar difference in the payment is making a big difference on their lifestyle. So we're seeing entry level homes which, who would have thought now an entry level home is 400,000. That's crazy, but those are the markets that we are noticing

26:22that are the toughest. Multimillion dollar homes are moving quite well and not too much concern over there. So yes, it's a matter right now, a matter of subdivision, sub market, price points, product, putting the right product in the right neighborhood and understanding you. It's knowing what you're doing is a big one. Well, you've picked an amazing city. Houston is one of the top three markets in the country. Like you said, there's still land there. There's still the ability. You don't have as many constraints. We found some really innovative solutions that Houston has come up with for affordability in the multi-family market that we've worked with on over the past several years. It becomes a more appealing place to live, especially when you look at places like New York and New York City where I would say the policies are having the opposite effects. You really get it. You're attracting people there. Jose, what drew you to Houston? I guess I'm just

27:22curious. Why didn't you move back to Mexico? Why stay in America? Why stay in Houston specifically for your business? You know, United States was always fascinating to me since I was a child, this country, which I'm very, very proud of. I know there are many issues that need to be resolved and that are very competing, very complex. But United States in most of the world is perceived as the place to be, the place of opportunities. Not everyone in this country is willing to put the work and the effort. And since I was a child, I used to travel here. For a number of reasons, I had a lot of surgeries here. I went through an accident where I had to visit hospitals and at that point I was lucky enough where I could come here and get some treatments. And I was fascinated by the infrastructure of this country, everything that happened in middle of last

28:24century, highways, construction, infrastructure that you don't see in other countries. It was mesmerizing. And I wanted to be here. Houston, to answer that question, Houston was always our second home. My father was in the valve and piping, manufacturing, distributorship. Yeah. And this was the capital of oil and gas energy. That was a big industry. So he used to come to Houston for years throughout my childhood. And every single time I had the opportunity, I would come with him. And I fell in love with the city. Back then, it was a small town. Houston, I'm talking about 40 plus years ago. It's grown tremendously. Oh, it's insane. Yeah. Felt like a small town. So the moment I had a chance, I applied to the University of St. Thomas here in Houston, and very international, great university. And I got accepted so that

29:24I came here and figured out a little how to make a life in this country. But it was what I wanted to do since I was very, very young. I wanted to live here. Yeah. Wonderful. No, it's amazing. And no, I think that's what really makes this country special is, you know, my ancestors came, you know, some from Germany, escaping communism, some from Denmark, you know, making a better life as dairy farmers. But you know, it's ingrained in the fabric of our society. And it's really, it's really cool. And it's special to hear, you know, your personal story there. Americans are a very special breathe. And we need to embrace it. Nothing when when there's collaboration, it's it's a shit that sometimes the government doesn't seem to get along with each other. But if when everybody works together in this country, it does fascinating things. And hopefully that will continue to be the trend. Yeah. Well, I'm very optimistic. I

30:25think we will. I think we will, you know, push through and solve these problems that you kind of alluded to. But you've got, you've got a book coming out. We'd love to have you back on the podcast and share more about that. But before we let you go, Jose, share a little bit about, you know, your other books, you've got the Business of Home Building. You've got Dirt Rich, which I love that title, exploring the world of land investing and development, as well as your new book, grit is good. What is the best way for the audience to learn about these books, learn more about you, your business, and get access to your new book, as well, Jose? The first two books are on Amazon and any other all the available sites for you can buy books. The third one will be out. Grit is good. The greedy entrepreneur I was inspired by, by greed, and you know, that famous phrase that greed is good. Yes, but I go in our new era. Yeah. I think grit is a little more helpful

31:30in the way of doing things. But that book will be out soon. The first one, and by the way, these books, although they sound very niche, they're very real estate, they apply to anything and everything as far as entrepreneurship, as far as improving the way you do things, dealing, facing challenges and adversity, they are business books, they are personal to me. The first one, although it's it sounds like it's about how to build homes, it's not about the, that's why it's the business of home building. It's not the home building business, it's the business side. How to build a business, it just happens, I happen to use the rest of the construction residential industry as an example. But this is a, almost a step-by-step sequence of events and ideas and concepts of how to build

32:31and sustain a business from the perspective of an entrepreneur, not from a technical aspects of a builder, which I'm not. So it's very interesting, I think, anybody who wants to enter the field, even for brokers, for realtors, if you're buying a home, if you're selling a home, if you're anything that has to do with this industry, talks a lot about how this business works and it's entertaining. And Durbridge does something similar, very, very deep, gets into the meaning of land, everything that real estate represents. I honor this aspect of real estate, which is what starts everything, what's, the land is what makes everything else happen. So I just, I, everything that it means to me. So it's a little more abstract philosophical and entertaining, I would think. I

33:34hope. Yeah, well, I got to dig deeper into that because certainly, you know, the way our country structured the ability to own land, the credit around it, it drives everything in the real estate business and it really is incredible how it weaves itself through all the, really all the economic cycles that we faced in this country. So I look forward to digging into that. And Jose, you've had, you have an amazing story. We look forward to having you back on the podcast as well. You've had some amazing lessons that you pointed out for audience here today. Thank you so much. Thank you. I appreciate it, Chris. Great to be here. Hey, Chris here again. I hope you found this episode valuable. Now, I have one more thing to give to you. We have a page for my coaching clients where you can get a free copy of my book, as well as much more from previous guests on the show. Just check out nextlevelincome.com, slash coaching to get a free copy of my book, audio book, and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like, share, and take just 90 seconds to give us a rating on Apple podcasts.