Ep818: Athena Brownson – What Happens When Trust Replaces Due Diligence

Andrew Stotz 00:02
Matt, Hello, fellow risk takers, and welcome to my worst investment ever. Stories of loss. To keep you winning in our community, we know that to win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives, and I want to thank my listeners from Denver, Colorado for joining us today. So fellow risk takers, this is your worst podcast host, Andrew Stotz, and I'm here with featured guest, Athena Brownson, Athena, are you ready to join the mission?

Athena Brownson 00:38
It could not be more ready. I was born. Ready? Let's do this.

Andrew Stotz 00:42
Andrew, yeah, I'm excited to hear your story, and you've got some interesting journeys that you've been in in life. So I'm going to just introduce you to the audience. So Athena is a Denver realtor, investor, developer and former professional skier whose resilience through chronic illness fuels her refined, strategic and client focused approach to real estate. Athena, take a minute and tell us about the unique value that you are bringing to this wonderful world.

Athena Brownson 01:11
You know, I think I've lived many lives at this point, as you just stated in this beautiful intro, and the element that is encompassed by all of the things I've experienced is that I am centered around human relationship. I run my business from a very relational standpoint, and I bring the passion drive accountability and authenticity that I learned as a professional athlete and as someone fighting with chronic illness. To my business, you know, we're living in a day and age where AI is kind of taking over, but one thing that AI cannot take over, hopefully, is the human connection, and that is something I excel at in a transaction that is life changing for people, and it is able to bring people long term financial freedom. So I take a lot of pride in being able to do that.

Andrew Stotz 02:06
That's exciting, and when I think about it, you know, the human connection is critical, for sure. But sometimes we go to, let's say, whether it's a realtor or whoever it is, we go to them because they're hard science. They got data, you know, they help us, you know, in that way. But what is it that they why do people go to you? What is it that they get from you, the feeling or the outcomes that they get that they're not going to get somewhere else? Absolutely.

Athena Brownson 02:33
So whether you're looking for, say, a $200,000 condo or a $10 million home, my team and I provide, you know, red carpet, white glove service to everyone you're going to be listened to. You're going to have a trusted advisor, not just someone that's interested in getting a transaction done, but you're going to have a trusted advisor that's helping you to assess what the best possible investment for your future is, and that could mean looking at a property that you think might be a great fit, and me pointing out, Hey, these are some fatal flaws that are going to really affect the value of how the property is going to increase over time. And I think we really need to re discuss, you know, if this is a good option for you, so you're going to get authenticity, while at the same time getting the best possible client experience, which which really comes down to giving great communication and listening to your client, it really comes down to listening and it's funny how hard that is for many people.

Andrew Stotz 03:35
Yeah, well, that's the good thing about being a podcast host, is you gotta shut up. Amen.

Athena Brownson 03:42
Which is so hard sometimes, absolutely, I struggle myself,

Andrew Stotz 03:49
just out of curiosity what's happening. You know, there's so many different factors going on in real estate these days. Like, you know, you had covid and the damage that that did to commercial real estate. You had interest rates shooting back up, you know, a couple of years ago and remaining high. Now you've got potential, you know, migrants, or reverse migration, or whatever. I don't know all the different factors that are going on, but what's happening in the Denver market these days,

Athena Brownson 04:17
I would start by saying it as a roller coaster, and the direction changes almost daily. But what we saw, you know, actually, covid times were probably one of the most booming markets that Denver's seen in quite a while. Now, Denver overall has one of the fastest appreciating markets in the country, until about a year and a half ago. So when interest rates decided to go, you know, about to 7% you know, a little over 7% our market came to almost a complete halt, except for the ultra luxury market. So properties over $5 million were still selling because, mainly, they were being bought and, you know, traded with cash. So we didn't see a huge difference. Differentiation there, but the rest of the market came to a complete halt. Properties that were typically sitting on the market for about two days started sitting on the market for over 100 days. The amount of sellers that wanted to sell their home that, you know, the people that were selling, were selling because they had to. So the inventory was a little bit sparse, and buyers were gun shy. Um, I just in the last two and a half weeks, as the new year has begun, I've seen a very strong increase in buyer activity, which which is hopeful, considering all of the things going on in the world and in our country at the moment it, you know, it's a very uncertain time, I feel, and that uncertainty translates into real estate very directly. But we do have promises of, you know, continuing to gradually decrease interest rates over the next. You know, every 90 days we also hear some radical statements about interest rates going down significantly all at once, and we'll see what happens there, maybe the 50 year mortgage. But I don't want to speculate. So you know what I have? I have hope that it's going to be a strong year in the world of real estate, but the last two have been the most difficult in my 11 and a half years by far.

Andrew Stotz 06:23
And one of the other things that I hear about a lot is the idea of, you know, a lack of inventory in the US residential market particularly. And I know that that was a big factor, you know, three to five years ago. And you know, normally rising prices attracts more construction, and you get, you know, more build out. And I'm just curious, like, what's the say that I haven't even heard about it for a long time? And I'm just curious, has there been an addition to inventories, or has that never really kept pace or got to where it needs

Athena Brownson 07:00
to be? That's an excellent question. So, yes, the inventory that we have seen on the market in the last year and a half while, there has been a slight increase in inventory. The quality of inventory has been really low, to say, to be honest with you. And with that being said, you know, I work very closely with a commercial realtor or commercial lender who gives me a lot of insight into what they're lending on in terms of commercial, new home, new housing projects. Over the last two, two and a half years, it came to a complete halt. There was absolutely no developers that wanted to start new projects and build new inventory, and we felt it, and we're feeling it currently, but I sat down with him about two weeks ago, and I was so excited, elated, because he said that they have closed more loans for big new construction projects in The last three months than they did in the last two years combined. So I foresee that com, you know, these builders are going up in six eight months, you're seeing their finish time. So I think six months from now, we're going to be seeing an influx of new construction that is going to help support our market. And a lot of times, new construction comes with really great loan packages that, you know, they've partnered with a lender, they're able to then offer a lower interest rate because that lender is buying down huge blocks of mortgage backed securities, and then the consumer is able to get, say, a Four or 5% interest rate as opposed to a 6% interest rate. So it actually can really help the consumer as well. So I'm excited to see new construction thrive again, because it has been very dry for the past couple of years.

Andrew Stotz 08:54
And my one last question is that when I am, because I lived in Thailand, when I grew up, I didn't really think that much about buying property and but I did, you know, at one point, think, oh, maybe I'll buy a condo. And so I saw one coming up near my place that was near Park, and I liked it, so I thought, I'll buy that. And I bought one of those, and I they were building it, and once it was constructed, I kind of realized pretty quickly that I'm probably not going to live there, because it's a little bit smaller and all than where I was living at the time. So, and then I rented it, and then eventually I sold it. And I sold it for probably, you know, a little bit more than what I bought it for. And then I just realized that Kano in Bangkok, it's not really a great investment. Because despite the fact that it's a great, you know, it's a, it's a booming, you know, city over the years, and there's a lot of people in it. You just have so much great new supply coming on all the time. And it's like, depresses the final resale. And I think that's where condos in a more developed market, like in the US, or, let's say, a US city, there's just not this huge level of new. New, fancy, amazing supply coming on that just pushes down. And so my question to you is, you know, what is the likelihood that if somebody buys a condo in Denver, and let's say they hold it for, I don't know, 10 years, 15 years, and then they sell it, what's the likelihood that they would sell it at a price higher than what they bought it for?

Athena Brownson 10:18
Yeah, that's an excellent question, and it's something that comes up quite often, but I have to discuss with clients, because condos, especially in large metropolitan cities like you said, are the slowest appreciating real estate investment that you can make. And it used to be that there was more flexibility with HOAs, that people could short term rent the properties, but almost every HOA makes it pretty much impossible to short term a condo right now. So if you're going to be renting it out, you know you with condo rate interest rates being higher than the typical residential conventional loan, they're usually about a half a percent to a percent higher. You're you might be breaking even in Denver, and when you look at that part of the investment combined with the fact that it is the slowest appreciating asset in real estate, and most condos that I see have been sitting on the market for over 200 days, because there's a huge number of them. Like you said, unless it's the newest, greatest thing, which is not really happening very quickly. Here we're seeing a lot more apartment buildings going up due to construction defects laws. You're not looking at a great amount of appreciation. However, I do believe, if you're buying and holding for, you know, 1015, years, you will absolutely see the ability to make some profit after paying out commissions and paying, you know, title insurance fees and everything like that. So yes, but is it going to be equivalent to if you put that money into even a town home or a single family home? Absolutely not.

Andrew Stotz 12:05
Well, that's a great discussion, and updates me at least in the audience. Yeah, what's going on in real estate? So now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be, tell us a bit about the circumstances leading up to and then tell us your story.

Athena Brownson 12:21
Oh, did I think that it was going to be the worst investment ever? You know, I think everyone gets a little bit trigger shy to tell these stories, but when, when I look back, I am a firm believer that we learn the greatest lessons in life through falling on our face and by listening to podcasts like yours, where we're learning about where other people fell on their face, and boy, did I fall on my face. So and you know what? I'll lead up to that with, I had a really amazing experience team around me that was helping me make decisions that also fell on their face. So it wasn't just a newbie. So my father was a residential real estate developer. For the last 45 years. He built out most of the ski town Breckenridge called in Colorado. He did a lot of high end luxury. Probably developed over 100 luxury properties in his time. And it was finally time to get him down to Denver and start developing with me. Well, on our first project, you know, we partnered up. I had saved up a good amount of money for a very long time that it, you know, it took me to do so. And when we were going to hire the builder for the property that we wanted to build. You know, I already owned the lot. It was a property that I bought and was renting out, so we already had the land. And when I started talking to the builder, it was someone that I knew for over three years. It was a dear friend, dear friend's business partner in another business, and my father, his team and I sat down with these builders multiple times. And you know, my dad is extremely experienced, and knowing exactly what questions to ask, I'm sitting there like taking notes on everything he's saying, just trying to learn as much as I can about his process and how to vet the right person. Well, all of those interviews, all of those questions that we asked, I had only spoken to, you know, a couple of people that had worked with this builder, and I'd walked one of their projects. I was really impressed with it, but when we went to sign a contract with them, which we're so excited about, I really trusted these people. We put down about $130,000 which was to get the project off. The ground, you know, scrape the current property, do asbestos abatement, start the foundation excavation process. So it was a good chunk of money that I had been saving up for a very, very long time. Now I start going to the property and notice that not much has happened, except for a big blue fence went around it, and over time, you know, I keep driving by it, and I'm asking the builder, okay, when are things going to start? Well, we got into the asbestos abatement phase, so I got really excited that I saw some forward movement. We're starting to make a little bit of progress with the city, although now, in hindsight, I realized that it was going very, very slow, and that probably should have been a red flag, but I still had complete faith. I knew I believe these guys were going to do such a good job for us, and so did my father, you know, again, with 45 years of experience, well, as time went on, after the asbestos abatement occurred, we stopped getting any responses from the builder, and that silence became okay. There's no one ever on the job site. We can't find anyone on the job site. Oh, this phone number has now been shut off. Oh, his subcontractors haven't been paid that were hired on our job. You know, the people that did the asbestos abatement and started the excavation had not been paid and were coming to us saying, you know what's going on? We can't get a hold of this guy? Well, he unfortunately, ran with the 100, and there's probably 110 left, after what he did, and he ran. And I found out later on that I was one of about eight people that that that happened to with this particular builder, and unfortunately, being in the real estate industry, you know, I like to think that I know what's going on. I have my pulse on the business. I know a lot of builders. I know their reputations. But this is something that happens far too often in this industry, and you can come in with a huge amount of experience, and it can still happen. So I honestly can't believe to this day that this is something that is still an ongoing investigation, actually,

Andrew Stotz 17:34
and what is the when you make the payment, you're making the payment to his company or to him,

Athena Brownson 17:41
correct to his company and his company, you know he's, he's this proprietary member or not member owner of the company, right? So, but yeah, yes, sole proprietor. So we were making payments to his construction company, and it disappeared, interesting.

Andrew Stotz 18:05
So how would you summarize the lessons that you learned?

Athena Brownson 18:08
Oh, you know, endless lessons. I think the number one thing, and I've heard this and a lot of the guests that you speak with, is the importance of the due diligence process. And for me, in hindsight, I look at the due diligence process as I should have gotten a list of maybe 10 people that he was currently working with, and another list of people that he had finished projects for, and I should have called through all of them and gotten exact the story of exactly how it went, because at the same time that this was happening to me, and even a little bit prior, there were people that were also being ripped off. And if I had taken the time to make phone calls to a greater number of people, and not just people within my network, I would have found out that there was something not right about the way that they were doing business, and I really believe that's the due diligence process that you know. I would have walked their projects. I would have grilled them on exactly how, how their line items were looking and how, what costs were they were occurring, what work had actually been done?

Andrew Stotz 19:27
Now there's imagine that they there was a connection between a friend or something like that. So, yeah, so you're allowed your that clouded. Did, were you would you normally have done the due diligence? Or were you green and thinking,

Athena Brownson 19:42
Yeah, I was so green, and that very much clouded my but I also think one of my you know, I'm a very trusting person. I grew up in a small community. I do business with really wonderful people, and I think I was a little bit naive, to be honest with you, I didn't think people. Both would, would do that, and that was my bad.

Andrew Stotz 20:05
There's a few things I want to share from that story. And the first one, you said, trusting, right, right? Then it just told reminded me, I have a friend of mine that was really, I really admire him and admired his accomplishments, particularly when I was younger, and I came to Thailand, and I saw he had a factory and a good business. He was a really smart guy. He had good amount of money and all that. And he sold his business. And, you know, over time, moved to Australia, and he lost all of his money. And now he's, you know, 78 in Australia or so. And you know, he his life is very hard right now, and we talk, and I was just, you know, asking him the other day, we were having a call, and I said, you know, let's go through and see why did it happen? Yeah, and we went through it. And, yeah, he trusted people with his money. And you know, I'm sure there's plenty of people they trusted with his money that that lived up to that trust, but you know, there was three to five that just took it

Athena Brownson 21:13
heartbreaking. It's

Andrew Stotz 21:15
heartbreaking, and you can't earn it back at that time. And so that's the first thing I wanted to share that I've heard you use the word Trust. The second one is that when I was young, I bought a motorcycle. I was, I don't know, 16 or 18 or something like that. And I What, what? What happened? I sold that motorcycle to another guy that I went to high school with, I wasn't close with him, but and he gave me a check, and I said, we're going to meet at the bank, and you I'm gonna give that check to the bank, they're gonna cash it, and I'm gonna take the cash. It was $700 at the time, was a lot of money for me, and I'm gonna then sign over, you know, the title. And so we did that done, and I felt pretty proud that, you know, I was like, I want cash in my hand, yeah, and, like, the next day the bank called me, said, You need to bring back that cash. And I was like, wait, what you can do that? And they say, Oh, they're like, we have three days that, you know, he has stopped the payment of the check, and you need to bring the money back. So I went back to the bank. Gave him $700 I went to his house and said, Give me my motorcycle bank. And he said, No,

Athena Brownson 22:33
did you beat him up?

Andrew Stotz 22:35
That thought crossed my mind. But you know, I'm a peaceful it's better loving God Exactly. But I took him to court, and I didn't know what else to do. I thought, okay, you know, America, you know you're gonna take someone to court. They do that. So I took him to court, which was, you know, I defended myself, you know, because I didn't know anything. I'm not gonna spend money on this. So, and I remember the night before, his father asked to meet me and said, I'll pay you right now and then we'll get this over. I thought, No, I'm already gone to court. Let's do it. And I this is principal, yeah, exactly. And so, you know, I won, and I and basically I still had to collect the money, you know, just because you win in court, yeah, like the money, you know, so they're not going to collect it for you. Unfortunately, it just was a big lesson of understanding about receiving and giving money and all of that. And you know, you get some protections through bank for sure, but also you get some protection for pure cash to say, hey, I want to buy this computer from you secondhand. And I say, Okay, it's 5000 you know, let's say sorry. It's, let's say $500 and then, okay, you pay me. We made a deal. That's it done. You can't recall that, so it just made me think about those types of things. So, yeah,

Athena Brownson 23:58
and it's so, you know, I think right now, the amount of scammers and the amount of, you know, something very similar to to what happened to your friend actually happened to my mother recently, not on that big of a scale by any means, but, you know, it was so convincing, and in a million years, it's not something any of US would have picked up on. So I think the importance of questioning everything now is really critical. And unfortunately, you know, we can't just trust everyone. We need to assume the worst and then hopefully they can prove out, prove us, to us that the best is actually the outcome, but not the other way around.

Andrew Stotz 24:41
Yeah. In fact, I was thinking about, as you were talking, it's like, maybe the lesson is, you know, you just gotta hold your money like it's, it's your life energy, which is exactly what the book your money or your life, yeah, which is a great personal finance book. And that book basically says money. You look at money like it's, you know, a piece of paper. No, it is your life energy that has been constructed into a piece of paper. And you would never give away your life energy just walking down the street, you know. But here, because it's been converted to paper, you think about it differently. So that's, that's a

Speaker 2 25:20
beautiful analogy, really. In fact,

Speaker 1 25:26
see if I have it. Great book. It's called, have to read that.

Andrew Stotz 25:34
Yeah, your money or your life. And I'll put it in the show notes. Also, I'll send you a link, but it's from Vicky Robin and Joe Dominguez, which was written a while ago, and it's been updated, but really shifts. You know, your thinking on money, so

Speaker 1 25:50
I love, love to read that. Thank you.

Andrew Stotz 25:53
As you can see, I've read more than 3000 books in my life, and I just constantly looking at books and reading so

Athena Brownson 25:59
now you might be one of my favorite people.

Andrew Stotz 26:03
Just read. Just read. Just read based on what you learned from the story and what you continue to learn. What one action let's go back in time. What one action would you recommend our listeners take to avoid suffering the same fate?

Athena Brownson 26:17
You know, and I grew up also in the world of lumber yards, my dad sold lumber, and they always said, measure twice, cut once. And that, to me, is a statement, you know, a statement for everything we do. It's double triple check. Do everything that you possibly can to gain knowledge and then find a mentor if you can. You know, I think that I'm a firm believer in mentorship and coaching, probably from my background in skiing, but I believe that we, you know, we have blind spots that we're not necessarily able to see on our own, and our a simple conversation with someone that we know, like and trust, you know, is invaluable, because they can point out to us the blind spots that maybe our excitement is, you know what? In big investments, we have a lot of excitement. There's a lot of emotion going and even if you want to make a decision without emotion, it can be very difficult to do so. So having a trusted advisor that you can go to, no matter if you're, you know the CEO of a Fortune 500 company, or you're a realtor in Denver, I think it's pivotal to have people in your life that can help you see your blind spots and that are not afraid to speak up and tell you what those are.

Andrew Stotz 27:34
Yeah, and that conversation's got to not be in search of confirmation. It has to be what is wrong here, and then you got to be quiet and listen. All right, so what's a resource that you'd recommend for our listeners?

Athena Brownson 27:50
A resource that I would recommend for your listeners is, again, mentorship and coaching. I, you know, I do a little bit of coaching on my Instagram. I'd give real estate tips and tricks all the time. It's at Athena Brownson realtor. But everything that I know I have learned from someone who knows it even better than I do, and that I have absorbed like a sponge, and we have such an access to information these days. So whether you know it's self taught, and because you're on masterclass or you're listening to amazing podcasts like this, we have so many different ways to learn these days that it doesn't necessarily have to be mentoring and coaching, but I think some sort of educational resource that You're constantly feeding yourself with so you can stay relevant and stay aware and also have community and accountability. I mean, I think that's really an important part too, and that's why I gravitate towards mentorship and coaching, although I never do not have a podcast on in the background of everything I'm doing.

Andrew Stotz 28:58
So yeah. And, you know, get help. Yes, I did a little, a little thing. I around covid time I saw that young people weren't getting jobs at university. So I thought, okay, I can give them internships. And at one point I had 100 interns.

Speaker 1 29:25
Andrew, holy cow,

Andrew Stotz 29:27
and it was, it was after covid and, you know, but, but around that time, and I got some of the most smartest, you know, interesting young kids, and they would come work with me.

Athena Brownson 29:40
That is so neat. And what a gift, what a gift you gave those kids.

Andrew Stotz 29:44
Seriously, yeah, and it just like, I just the idea of coaching and getting help, what I did is I asked the students, because I, you know, have a big group of students, I said, Go on your LinkedIn. Find. Five people that match this description, you know, let's say a human resource manager, whatever, and and ask them, would you be willing to answer these three questions, you know, just in reply, but when you do, half of you guys just, you know, introduce yourself normally, and other half say, I'm a student. Would you help me with this? Oh, and the response was huge for the ones that said I'm a student. And it really helped me to first, to tell my students in other areas, like, ask for help. People want to help. They do. And if you have the advantage of saying, this is a project, this is something I'm working on from my MBA, this is something I'm working on research, you know, give them a good reason, like that. And people want to help.

Athena Brownson 30:53
They do it actually is an act of service. And people do enjoy serving others at the very core. So that's beautiful

Andrew Stotz 31:03
being there to watch the two cohorts getting their answers and their replies live.

Speaker 2 31:07
I was like, this is a great experiment.

Andrew Stotz 31:11
Yeah, exactly. So last question, what is your number one goal for the next 12 months?

Athena Brownson 31:18
Oh, I'm so excited about everything right now. So my number one goal is to continue building a really trusted referral network that's going to allow me to serve more clients in building long term wealth through real estate, whether it's their you know, whether they're big time investors or they're buying their first home and just need help making a really wise decision, so that they're gaining equity and great the appreciation is there, so that we can then roll them into something else. That's another investment. So it's really to continue building really deep, genuine, authentic relationships with people, and continue growing my team as well. You know, I work with just four at the moment, people that are on my team, and they're the most incredible humans that anyone could ever dream to work with. And I'd love to continue to be able to mentor younger agents and help them get their feet under them in the business, because if I didn't have the mentor that I did when I got started, I followed every move he made for the first year of my career. I wouldn't know anything like I do now, so my goal is to be able to do the same. Awesome.

Andrew Stotz 32:33
Well, listeners, there you have it. Another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. And as we conclude Athena, I want to thank you again for joining this mission. And on behalf of ACE Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Athena Brownson 32:59
I would say first, thank you for having me. And don't make rush decisions. Take your time and know that the right thing is going to come, come into place at the right time. Wonderful.

Andrew Stotz 33:11
And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers, let's celebrate this today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host, Andrew stotzing, I'll see you on the upside. You.