BiggerPockets Real Estate Podcast - 298: Thriving in Multifamily Investing (Even in a Hot Market) with Michael Becker

Episode Date: September 27, 2018

Interested in building giant wealth through multifamily real estate investing? Well, on today’s show, we interview someone who already has. Michael Becker is an experienced multifamily investor who’s mastered the genre and simplified the process for being successful! Michael shares what every new investor needs to know about avoiding the biggest mistakes in multifamily, how to invest no matter the market or how hot it is, four problems to watch out for that led to the last recession, and a lot more! You DO NOT want to miss the deep dive where Michael shares how he and his partners made $10M in profit using a combination of BRRRR, syndication techniques, private money, and prudent decision-making. If you’ve ever thought about moving into multifamily investing at some point, don’t miss this show! In This Episode We Cover: How Michael got into real estate The value of partnerships and networking Tips for buying 16 multifamily units What a cap rate is His thoughts on a crash and timing the market How he raises money for a deal Relationship-building and how it helps in any business Advice for using webinars to pitch Tips for raising capital Why you want to keep presentations simple Unique advantages of Fannie Mae and Freddie Mac loans Single family rentals vs. multifamily And SO much more! Links from the Show BiggerPockets Forums Brandon’s Twitter Profile Brandon’s Instagram BiggerPockets Podcast 170: The Journey From Flipping Houses to Owning 1,470 Units with Andrew Cushman BiggerPockets Podcast 279: How to Find Overlooked Opportunities in a Hot Market with Andrew Cushman Books Mentioned in this Show The Millionaire Real Estate Agent by Gary Keller The ABCs of Real Estate Investing by Ken McElroy The Advanced Guide to Real Estate Investing by Ken McElroy Am I Being Too Subtle by Sam Zell Fire Round Questions Should we have an inspector walk through every unit? How do I do my first multi family syndication with no money down? Would you purchase all three together and secure one commercial loan for the properties or do I have to get three separate loans? Tweetable Topics: “It’s much better to be the borrower than the lender when it comes to investing.” (Tweet This!) “All you really have to do is to close a deal or two.” (Tweet This!) “The world is full of capital.” (Tweet This!) “You don’t need to have everything. You just need to have access to it.” (Tweet This!) Connect with Michael Michael’s Company Website Michael’s Podcast Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 298. Well, multifamily, you control your destiny because it says NOI to about a back cap rate. So if I can increase, you know, if I'm in an environment like today, all this stuff is a five cap. So every dollar I drive to NOI is 20 to value. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right. place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. What's going on,

everyone? This is Brandon Turner. Today's host of the Bigger Pockets podcast here with the man David Green. How you doing? I'm good. What's going on with you, Brandon? Hula Dance Turner. Hula Dan's Turner. You know, not much. I got some, you know, stuff going on. I got some cool real estate stuff going on right now. I'm working on possible another mobile home park. We'll see. I'm really digging those right now. And, you know, just living the dream. How about you? I'm doing great. The real estate business is going as good as it's ever gone. I'm hanging out of my best month ever this month. The agent business? Yes, being a real estate agent. So I've, you know, I've learned the investment side, obviously. Now I'm learning how to sell real estate.

And luckily for me, there are so many bad real estate agents out there that if you're just halfway way good. You can dominate everybody. And as I'm on my way to becoming excellent, I'm going to take over the world. There you go. That's awesome. That's awesome. All right. Well, today's show, speaking of excellent, is excellent. So today we're talking with a guy named Michael Becker. And Michael is a fantastic real estate investor who has done like seriously so many properties. Like over like, I think he said it has over 6,000 units that he's bought. They've raised over $150 million in private lending or private syndication model. He later on talks about during the famous four, three things that will go wrong when you're buying multifamily. I thought that was really insightful. Let's make sure you guys

listen for that. And he talks about a recent deal. Like, you guys, I mean, this is incredible. Like they made like $10 million in profit using a combination of burr, syndicating and selling a property, like $10 million on this deal in profit. Wait to hear this story. I mean, this guy is super aspirational because he's done just massive big stuff. But his advice is like, right on for just like the everyday investor, whether or not you're looking for your first deal, your hundredth. So anyway,

before we get to Michael Becker, though, let's get to today's quick tip. Today's quick tip is, if you don't like your job, do not be discouraged because there are options out there for those who are willing to be flexible, adaptable,

and learn new things. So a lot of people know I'm transitioning from being a police officer into being a real estate agent. And what I love about it is that, though you're still working, it's still work, I can do it from anywhere.

I can be in Hawaii, talking with Brandon while my team is working on deals and I'm making decisions and communicating that via text message or voice message, right, without having to be clocked into my nine to five. So a lot of people are here on bigger pockets because they're looking for financial freedom. And it depends how you define that when you know that you've achieved it. But it's definitely better than being in a cubicle your whole life, right? You don't have to wait until you hit financial freedom to leave the cubicle. There are many jobs out there where it's just to kind of serve as a halfway point where you can be

making a good living, learning new skills, developing your abilities as an entrepreneur as you work towards financial freedom where you don't have to just stay stuck in a job you hate until you get there. So being a real estate agent is a great opportunity. If that's what you're looking for and you're already passionate about real estate, I'm actually going to be writing a book on how you can make six figures in your very first year as a real estate agent. So keep track of that. And then if this is what you're interested in, I highly recommend you get the book, The Millionaire Real Estate Agent by Gary Keller, read through it and see if you like it. If you think it sounds really cool, consider getting your license and working on the side. And if it doesn't sound really cool,

then you can check that off the list and move on to whatever the next idea might be. Yeah, that's really, really good. I mean, like, you got your license and I've seen you just like really flourish at that because you have a good personality for it. So yeah, if you're listening to the show and you're like, I'm looking for something different, but I want to be involved in real estate, maybe consider that being an agent. And yeah, I'm looking forward to your book. It might be still another, what, year-ish away, who knows, but whenever it comes out, I'm looking forward to it. There are two kinds of real estate investors. Those who have reviewed their and those who think that they have.

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drag. Bam Capital structures its multifamily investments around those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach. This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at BiggerPockets.com slash bam. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling. Well, you can. Airbnb has something called the co-host network. While you're away, you can hire a vetted local co-host with hosting experience to help take care of things,

communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. And now it's time to get to today's show. I will say one thing before we jump into it. If you guys have not yet left us a rating a review for today's show, I mean for this show, the Bigger Pockets podcast. Please do so. It really helps us in the rankings on iTunes so more people will discover the show. And then do me a favorite.

Let me know that you did. Shoot me a message over on Twitter at Brandon at BP or on Instagram at Beardy Brandon. And let me know that you did. You can also let at David Green 24 know. And we just want to give you a virtual high five if you do. So thank you guys so much for supporting the show. And with that, let's get to the interview with Michael Becker. All right.

Michael, welcome to the Bigger Pockets podcast. How you doing? Hey, thanks for having me. Doing well. Welcome to the show. We're going to talk a lot about multifamily today, but I hear from reading some stuff that you actually started in singles. So maybe before we get into the big stuff, how did you get into real estate in general? Like why real estate? What sparked your interest and what came before that and walk us through that? Yeah. So before I really got into real estate, my entree was being a vendor in the business. I was a long time commercial real estate lender. So I worked for some community banks. And the year in 2008, my bank got purchased by Wells Fargo. I spent the last, you know, six or so years of my professional career at a very large national bank. And my professional life, all I did all day was I was a commercial real estate lender. So I lent on all the major asset classes and income producing real estate. So I have background loaning in office,

industrial, retail, the last about five years of my banking career. All I did was value add multifamily lending. So that's really kind of how I got into it. So I just loaning money to other people and kind of through that process, I just realized I was on the wrong side of all these deals, to be quite honest with you. It was just much better to be the borrower. than the lender. So I decided to go out and do something about it. And really, when I first started, it was in 2010, I believe I bought my first piece of real estate, invest in real estate. It was a great time, you know, a lot of good deals out there. And I was just a little nervous going into a larger partnership because I work all day. I was kind of the Grim Reaper for about two years from

2009, 2010. I did a lot of problem loan workout. And a lot of the issues I found are really kind of surrounded around people that had partnerships that kind of went wrong. So I wanted to do something with my own money with my own account. And I couldn't go out and buy a large apartment building, but I could put $15,000, $20,000 down to buy a little rent house. So that's kind of what I did. So I ended up doing about 16 of them. I buy out of foreclosure, renovate, get tenant there, refinanced, get my money back, roll to the next one. So I kind of did one after another after another. And through that process, I just realized it wasn't very scalable. I mean, I got to 16 rent houses. and, you know, I live in Dallas, Texas, and, you know, all my properties were here, and in Dallas

it gets hot in the summer, if you could believe that. So it's probably my, my third or fourth HVAC call or something that summer. I kind of got frustrated. I took a, took a step back and then it's kind of reflected what I was doing at work all day. And, you know, I was a very successful commercial real estate lender and just kind of looked at my clients. And I was like, you know, all these guys are out there, they're smart, you know, but I'm as smart or smarter than all these guys. I know more about this than a lot of the people I'm learning money to you, that they were out they're taking action, I wasn't. So I decided to go out and do something about it. So in about a little bit over five, the last five years, we bought, we're about to close on our 30th, a large apartment complex.

So it'll take us over 6,200 units. Wow. To raise about 150 million in capital, done about six, seven hundred million in transaction volume of buying and selling in the last, you know, five, five and a half years. Wow. All right. All right. We got a lot to unpack in there. So I've been taking notes furiously as you've been talking. So first thing I notice is like, first of I love that quote, you said much better to be the borrower than the lender. I like that. Like you're looking at all these people and you're like, I'm lending the money, but man, they're they're making a killing off these real estate deals. But also you mentioned that you noticed a lot of partnerships were kind of at the core of things going wrong on the lenders that, or the borrowers that you were that were

borrowing from you. Can you talk about that? Like, what do you mean by that? What went wrong on these partnerships and what have you seen actually work then? Yeah, if you go back 15 years ago when a lot of these deals that kind of went south in 2008, 2009. Really, they were, they were being put together in 03, 0, 0, 4, 05. That's when a lot of these deals were put together. So you just had a lot of silliness out in the marketplace back then. He had really unsound lending practices and these people that just couldn't have any experience. A lot of the times I would see, I know Davis in California, so a lot of people from his backyard, you'd have someone that had a little single family house who just happened to appreciate. So they pull out a half a million dollars and

buy an apartment complex in Texas, you know, so go from one unit to 70 units. or something, something's crazy like that. Or there'd be a little partnership. So they just weren't very well thought out. So I'm in a business partnership. So my business partner is based out of Austin. And we have two clear roles that we play. And we have different, like, complementary skill sets to each other.

Well, a lot of people were just kind of friends. And they weren't really intentionally putting their partnerships together. So they didn't have the proper documentation within their company agreement or their operating agreement where they laid out kind of the, you know, those are those are in play for when there's problems. If everything's going well, that doesn't really matter what's in there. It was when you have problems and they just weren't very well thought out. So that was some of the reasons on top of all the other structural reasons taking on too much debt or not being well capitalized, things like that.

You know, one thing that you mentioned that I really, really like about this was that you were, you had no intention of owning properties at first. You were just working as a commercial lender. And in your desire to be really good at that business, you got exposed to other businessmen and you thought, oh, they're doing something better than me. And you were in a position to recognize that's my next step. I want to go there. And one of the things that our listeners struggle with is they haven't got started yet and they don't know the path to get to where they want to go. And you get into this analysis paralysis where you're thinking, well, I'm not where I want

to be. How do I get there? And you're kind of showing like, I didn't know I was going to get there either. I was just doing good at where I was and doors open. Can you talk a little bit about how your investing career has progressed to get to this point? Like what were the individual steps that had to be taken as you look back and you realize, man, this was like a turning point for me because I did this.

it opened doors in this way. Yeah. So what I had was I had a little bit of money. So I was a, you know, pretty well paid employee. I did well. I got commissions and I was pretty frugal. So I saved my money and put it aside. I was a good boy in that respect and didn't have any debt. And then I so had that. And then I had my professional experience. So what I had was that an ability to underwrite deal after deal after deal as a banker and putting loans on apartment complexes as well as I got to observe all my clients. So, you know, some did better, some did worst. So through that process, I kind of got to get some best practices

that a lot of people did. And then as well as more than anything, what I really had was I got to get networks. Being in a pretty major market like Dallas-Fort Worth, I mean, there's even in a major market, it's like this all over the country. There's only a handful of brokers. It's probably six, seven shops that control 80,

80, 85% of all the deal volume. They all knew who I was because I was an important vendor in the business. Like, they would not get their commission until the deal closed. And deal wouldn't close unless my loan went through. So I was a pretty key cog to that. So that's what I had. I mean, I just, I just wasn't utilizing it to the fullest advantage. So my biggest challenge was taking people's impression of me as a vendor from the business and to being a principal. I mean, really, all you have to do is close a

deal or two. And it's like that. I mean, you kind of switch on. They take you pretty seriously in the marketplace because, you know, everything's in theory until you actually go out and do it. So that's really what I had. So that's easy for me to say because I had a lot of stuff that other people don't have. But, you know, if you're just a salesperson or engineer and you're trying to get into this business, you know, everyone starts with where they start. And one of the things I like to say, it's a completely unthar business is who you know, what you know, what chips you have. And it's also a team sport as well. So you've got to kind of put, you know, if you don't have something, you've got to find a partner or a vendor or someone that kind of bring something to

table that you're kind of lacking. So one of the things I kind of recommend people do, there's plenty of educational platforms out there. Bigger product is obviously is one of the major ones out there. But there's also like local mentoring clubs, you know, Dallas-Fort Worth. You have a few of them that are pretty reputable. So go go to the meetups, go to these mentoring clubs, go get networked with people that are doing kind of what you're doing. If you have a little bit of money, but you don't have an experience, maybe you can find a partner that's done a deal or two kind of team up together. You know, if you don't have experience, find a good, competent professional management company that come in and manage your deal for you. If you need to get a loan, get a good competent

mortgage broker. And then when you're going out to the real estate brokers that are selling these deals, you can kind of reference like, hey, so-and-so is my management company. He's the same guy that manages three dozen of these other similar assets in the market I'm looking to buy. So that's kind of like a check. It's like a transfer credibility to him. Or if I, you know, I talked to this very successful mortgage broker that finances all these deals. He's reviewed my statement. He kind of gives me a letter recommendation. That kind of solves that problem. So the broker's really out there not only trying to get the highest price for their for their client, but they're really trying to assess your credibility as a buyer. So the more variables you take out by

having these different reference points you can, you can kind of present to them. You're going to increase your likelihood of actually getting a deal awarded to, you know, exponentially. I love that. And like, we can translate that really easily to like doing a single, you want to buy your first,

you know, single family house or duplex or you want to buy a 200 unit apartment building is borrowing the credibility of somebody else. I think that's fantastic. And I love that you brought that up. I mean, like, let's say you're,

you're trying to work, I don't know, for example, you're trying to work with a wholesaler, right? So you meet some wholesaler at a local real estate group and you want him to bring you good deal. You can be like, hey, I want to buy a real estate deal.

And that whole sale is going to go to somebody. If they're good, they're going to go to their existing client base. But if you're like, hey, yeah, I'm working with this lender. I'm working with this thing. I got this property manager lined up. They're automatically going to be like, oh, yeah, I know them. I worked with them before. And even if like, I mean, like, it's almost like you're not, I don't know.

It's, I want to call it fake, but like it's not like that you've ever even worked with those people before. But just the fact that you use their name and that you've had conversations with them, someone's going to take you much more seriously. So I love that. I guess, do you have any recommendations for like finding those people? I mean, like you mentioned a competent lender, a competent property manager. Obviously, that makes a big difference. So how should somebody go about finding and how do you go about finding the best competent people? Yeah. So, so property management company, really when you're, when you're going out there starting out, it's asked for referrals. So if you have a good mortgage broker, ask your mortgage broker for property management referrals.

Ask the brokers like, you know, hey, you know, who, one of the things brokers are going to give you, regardless is if it's a listed deal, there'll be an offering memorandum. So the package on the deal and in there is going to be rent comps as well. So in this environment, they're going to kind of point out the cops that are doing a little bit better than the property they're selling. So go look at that property. Say, oh, who's managing that property? You know, that's a similar property. The broker says is performing better than the property I'm looking to buy. So let me talk to that management company.

So that'd be a good place to start. So, you know, within there, you'll find a couple of management companies that manage the properties in and around that are like kind, similar vintage, similar sub-markets. And that's kind of really where I start. And then, you know, the broker can certainly give you a reference. into a commercial mortgage broker. They certainly do that. And then there's all these data services out there that certainly do it. Or if you go to the networking events in the area, you just talk to other people doing deals and say, hey, who gave you this loan? It's really just kind of kind of get the boots on the ground going out, getting networked and asking for referrals for these, you know,

your two major vendors are really your banker and your management company. And then your lawyers probably third. Those are really kind of the three legs of the bar stool that you really need to kind of get in place before you're ready to be taken seriously in the marketplace. Yeah, that makes sense. So I want to go back a little bit. You know, we kind of got an overview of your whole story. How many total units do you say, 6,500? Is that right?

6,200 farming units. Yeah, that's just insane. I love that. So, but let's go back to the first multifamily. So you bought 16, I think you said, 16 houses and then decided that this just wasn't scalable, which, you know, I agree. I think it's a great way to get started. But after that you're like, okay, I want to scale this up.

What was the first multifamily you bought? So about 120 unit apartment, a submarket of Dallas, Colarland, Texas is built. in kind of mid-70s. So I call it like a sea asset and a sea location, really. Okay. And so you jumped into that one. What was, I guess, looking back now, so your first multifamily, what did you do wrong on that one?

Or do you feel like everything went really well? Or what would you say, well, I learned a lot since then? Yeah. So I think, I think, you know, some of the capital improvements, you know, the deal needed a little bit, a little bit more money than we probably set aside on the front end. So we came in a little bit undercapitalized. So we certainly could have set aside a little bit more money or maybe done a little bit more thorough physical inspection.

And that first couple of deals we did, we kind of made some mistakes along those lines where we didn't do as thorough of physical inspection. You know, you walk all the baking units, you walk the bulk of the occupied units, but you think, hey, these units are occupied. You know, they can't be that bad if someone's living in there. And that's, you know, not always the case. I mean, some of these people are hoarders and God knows what, you know, some of the stories we can tell you about stuff we've seen in some of these units.

So not having enough capital set aside. But fortunately, you know, we had enough to get it going. and the entire time I've been doing this. I've been a phenomenal environment. I've kind of called it like the golden age of apartment investing. It can't be better than it's been the last five or six years. Cap rates have certainly compressed and come down, which we've talked about that a little bit more,

and that really kind of helps support the values. And the rental rates continue to grow because there's so much, so much demand out there for rental units and the supply just isn't keeping up. So that that's really been, you know, it was an absolute home run. The first several deals we've done, that one, of that. I want to jump in and ask you a controversial question that we don't talk about very often.

You're exactly right about cap rates compressing and interest rates being really low and that makes it easier to raise money than it would be normally, right? Because you don't have to offer much of a return and people are just desperate. Like, take my money, give me a return. Do you feel this could be creating a bubble in the multifamily space? You know, that's a difficult question to answer. But, you know, kind of my thoughts are that's something we focus quite a bit on, that there's certainly some risk. The cap rates for everyone that doesn't have to leave an investor behind. Really what a cap rate is, you buy a commercial real estate property. You know, basically you have your operating income, which is like your rent and your other income like late fees,

application fees, things like that. You tracked out of that all your operating expenses. So like payroll to your staff, property taxes, insurance, make a credit unit. So the difference between those two is net operating income or NOI. And so a cap rate is kind of how you can compare one property to another. So if it's, for example, if we have a hundred thousand dollars of N-OI or net operating income and we sell it on a 10 cap. You basically take that N-OI divided by the cap rate and it would be a million dollars. And if that same cap rate was five, that'd be a two million dollars for that same N-OI. So what's really been happening is the cap rate. You know, I'll use my market as a good example. You know, you go back, say, David, five years ago in Dallas-Fort Worth,

you can buy a brand new class A deal for a five cap. A B deal is about a six and a half cap. A B deal is about a six and a half cap. A B deal is about a six and a half cap. A B deal is about a six and a half cap. A B deal is about a five and the C deal is about five and a half. So what used to be three, 350 basis points or three and a half percent spread from the top to the bottom of the market is now a percentage point or 100 bibs are lower. And if it's a value add, some of these C deals are really even more compressed because there's upside in the deals.

So people are paying even lower cap rates to have the upside. So that's really where I'm kind of concerned a little bit that, you know, at the same time the cap rates have compressed, the interest rates have ticked up a little bit. They really haven't run away, but they ticked up a little bit. So the arbitrage is, your cap rate and your interest rate where the first couple of deals we bought on an eight and a

half cap hard money at five percent so we had you know three and a half percent spread and we're levered five to one so we had 80 percent loan now all these deals are levered 70 percent because a because a debt service isn't there you're borrowing money at four and a half and you're buying a deal at a five cap so it's making these deals a little tighter the cash flow certainly a little tighter so i'm a little bit more fearful of the bottom of the market than i am the top of the market because it should be a bigger variance between the top of the market cap rate and the lower market of the cap rate. Right now, there's very little difference between. So I don't think the market is properly adjusting or pricing in the risk that comes with these older buildings of all the potential

obsolescence, all the lower, generally speaking, a lower tenant profile from a credit standpoint, and they just don't have the money set aside. So that's certainly a little bit of an issue. Then on the top of the market, you certainly have a lot of supply and it's all concentrated in the urban core and top flight suburbs of all the major cities across the country. So there's certainly some risk in there with the new supply. So really kind of the middle of the market is really kind of where we try to focus on. I call it the B to A minus. So in Texas where we buy, that's kind of about 1983 to 2008, that 25 year time horizon.

That's the best part of the market. And we're targeting deals that are 10% or more below market rates. So, you know, the upside of the deal is also my downside hedge, you know, and then taking out longer term fixed rate debt will kind of mitigate some of the risk in these deals as well. I went on a tangent. I don't know if that answered your question, but that's kind of my rambling thoughts there. That's really good. In fact,

I'm going to rewind that and listen to that later because that was very smart and intelligent answer. So I love that. So short answer is yes, we, you believe it is getting dangerously high. Do you believe, I mean,

obviously none of us have a crystal ball. Is a crash coming? Is a slowdown coming? Is there a slight back retreat coming? If you had to guess, what would you put your money on? Yeah. So I would be,

skeptical if I was in a in a in a coastal market that has you know really rapid appreciation and they're the rented rent of values out of whack I think those like you know LA your your your San Francisco if they repeal Costa Hawkins and they get rent control in California across all that that would be on an issue for me I think here about New York slowing up quite a bit I think the tax reform act that just got passed about a year or so ago I think that's really kind of separating the markets from the coastal markets are losing and the flyover market It's like Dallas, where I live, they tend to be doing a little bit better because we don't have a state income tax.

So I think if you're an area that's got, you know, I'll answer the question this way. So the last time that we had a recession, there's really four things I've kind of noticed that caused people to have some problems. One, they bought in the hood. You know, it's buying a high crime area, low social economic area. Those areas tend to have the biggest problems when we have a recession. Two, that came to these deals undercapitalized. They didn't do a good physical inspection. They didn't set enough money up front to cure all the deferred maintenance on the deal and implement.

their business plan. So one of the examples I like to use in Texas, it gets hot. So we had an AC go out and in summer, you don't have the money to spend $1,000 to fix it up. So you take a vacant unit, that's off a vacant unit, put it on an occupied unit. Now you have an un-leaseable unit. And it kind of snowballs and snowballs, right?

The third reason really was people had improper management. So they had, you know, a UPS, a good example, who made a loan to a guy that was a literally UPS driver in California that tried to owner-manage a deal in Dallas. So if that didn't end well, I can tell you that at the end of the day. And then finally, you have a low maturity at a bad time. So, you know, when the capital markets turn off, it's like a light switch is off, right? So that kind of comes on a little slowly.

So if you happen to have a low maturity in 2009 and you're cash flowing, you keep your bills paid, but you have to, you know, your values temporarily down. You've got to refinanced or sell it at a bad time. That's caused some problem. So I think if you kind of take out those four things, I think no matter what happens in the cycle, you'll do well. I think the areas that are landlord and business friendly areas of population and migration with job growth.

Those areas will do a little bit better. Just kind of stay away from where the new supply is. So kind of maybe go in the suburban markets versus the urban core in the areas. And places like Phoenix, Atlanta, Dallas, Salt Lake City. Some of those types of markets I think are, you know, very going to do well no matter what happens. I'd be a little more nervous. I was in San Francisco or L.A. or New York. Yeah.

Yeah, that makes a lot of sense, actually. But you're still buying. I mean, you're still buying right now. You're under contract on something or, right? So you're still doing this, even though the market is hot. I think that speaks to, like a lot of investors tell me, well, I think I'm just going to wait until the market, you know, drops and then I'll jump in. What do you say to those people? Yeah.

So if you've never done it, then when the market drops, are you really going to have the stones to go put your money on the table when everything's tougher? You know, right now you can get capital. You can raise it. You can get the debt. And those two things will become exceptionally more hard when there's a recession because you're, you know, it's just a world. the world is full of capital and it's got to find a home somewhere somehow. So something that goes in real estate, stock market, bonds, whatever. So if your investors getting crushed to the stock market,

they're not going to be likely to write you a check to go into an asset class and just declined a bunch. They're going to be, they're going to be spearful. They're going to try to catch a falling knife. So if you don't have a presence in the place, I don't think you're really going to be able to build as good of a presence, at least in some sort of scale quickly in a recession. So I'd be the first way to answer that. The other thing is, you know, we're just just set your deal.

up. Like I mentioned, there's four main risk factors that I kind of see. If you kind of take steps to mitigate that, that you should be able to survive what, you know, any, any way, any form, you know, in our markets, really the people that were well capitalized had good located deals that managed properly, they survived it well and their values are materially higher today than they were at the peak of the bubble before. They were just able to have enough maturity and management in place and capital in place to kind of survive all that. So I think that that'd be kind of how I'd answer it. So just take out, you know, if you have a business plan for three years, take out a five-year loan or a seven-year loan or a 10-year loan, have a little bit of

runway on the back end. So you're not forced to make a decision at a capital decision at a bad time when the marketplace is on there. It's kind of hunker down and operate and a way to come out the back end of the deal. And also take a little bit less leverage today. That'd be the other thing I would say. You know, the lenders are pretty prudent today. So whatever the next event is that lenders aren't giving out, you know, crazy loans anymore. So these loans are closer to 70% where two, three years ago, you'd get 80% pretty much on everything. Yeah, I think the lenders see the writing on the wall that something, you know, eventually will, it will, I mean, rules did is cyclical.

Everybody knows that, at least in a way. So fantastic. All right. So I want to, you mentioned how right now is a little bit, may, I don't know if easier is the right word, but like whatever you said for raising money, like today you can do that because people are feeling good and the economy is doing great. So I want to actually spend a little bit of time there because you mentioned earlier, you've raised. I think you said $150 million in capital. Yeah, a little bit over. Wow, that's,

like, that's crazy, right? Like, I've raised like, like, like, one percent of that, not even, right? So, like, how did you, the very first time you raised money, was it on that first deal? Yeah, it's really hard, right? So starting out is really hard. So I was fortunate on the first, first several deals we did. My now business partner was working for a broker out of Beverly Hills at the time and he had access to a couple high net worth guys. So I took a very small promote or a very small cut of the deal. The first several deals we did and I just had one equity check on the first several deals. It's kind of set me up to get some credibility at the brokers and a track record. And then I went over into the syndicated route where now we raise a hundred, $100,000 minimum

and kind of go out and raise, you know, last year we just raised $27, a half million dollars. And I had 170 people and one one webinar, one 90 minute webinar, we got all the money in the bank in less than 30 days. That's awesome. I didn't start there. That takes, you know, a lot of effort to get there, but that's kind of how I do it. All right. So I want to touch on this.

You mentioned the first deals, you didn't take as much of a cut because you realize that you needed the experience, you needed the knowledge, you needed that part of things more than you needed the capital. And this is something I see newbies make the mistake all the time. They get into a real estate deal and they want to do it. And they're like, no, I want to do 100%. I'm not going to split this with anybody. I don't want to lose any money.

Everyone gets a little bit agree at the beginning. beginning. They don't realize that that first deal will likely never make you rich anyway. Like the whole point of the first few deals, right, is to get the competence to be able to do the later deals. And so that's, I love that you mentioned that. Even like you're talking on big deals. Now, you mentioned high net worth individuals. What percent, I don't know, percent wise, but like, are most of your investors typically like just Uber wealthy people? Are they more like, you know, the guys got the Roth IRA with a couple hundred grants sitting in it? What do you typically target for raising money. Yeah. So when we first started out, we did a few more like,

what I call joint ventures. So it'd be like one rich guy and then us. And so they'd write, you know, 90, 95% of the check. And they'd write a very small percentage of the check. So we did, we probably did eight, 10 deals like that. And then we kind of really transitioned over to do more of the syndicated structure. So it's just your normal, your normal rich guy. So you're, you're really rich guy. So someone that has the ability to write a hundred or two on a thousand dollar check. So I think for 20, 2017, I did like 500 K1. and I think 2018, I'm going to do almost 8, 900 K1. So, you know, we have a pretty deep.

I'm probably 600 unique investors at this point somewhere along those lines. So, you know, we kind of just, we branded. You got to get out there. You got to get some presents doing podcasts. We host a little podcasts, you know, out there as well. I go to events. I, you know, I partner with other people strategically that have big list. They'll come in with me and we'll kind of split up the promote is what we call it,

or carried interest in the deal, we'll kind of split it up. Will they take a portion? I take a portion, but then I can expand my list and my reach to their reach. And so, you know, you don't have to do everything on your own. You know, you just need to kind of be realistic about what you have and then try to find a solution to solve the problem that you have. So we've done a couple of varieties of different ways. And then nothing is better than returning capital to your investors.

So you turn capital, they'll tend to give it back to you and then tell all their friends about it. So then you can kind of grow your list that way organically. Yeah, I wanted to ask you. How much of this is now just rich people telling other rich people, hey, I found a good way to make more money. You should come over and invest with this guy. There's a good chunk of that for sure.

And then really one of the last year we did, I partnered with a with a firm out of San Diego that has, you know, tens and tens of thousands of clients. And so we just got to hit their list to then raise capital from. And I don't have that list. And they did. And they don't have the deal. And they don't have the relationship with the,

brokers and the ex piece to run it, which I do. And so it was a really good marriage that we were able to kind of partner up. And, you know, they had what I needed and I had what they needed. And we were able to strike a deal and do a deal. So, you know, you don't need to have everything. You just need to have access to it. So that once again comes back to your point you made it earlier about networking and meeting people and growing through the relationships that you're building. Because rather than you saying, man, how do I look something up on Google? Like, where are rich people? And how do I find them? You're just going to the resources you already have, right? And you're working them, you didn't need to understand every step along the way before you got started.

You're like, well, who do I know that can help me move in this direction? And then it worked well, then word spread, and then it got easier. So tell us a little bit about that, I guess. That's kind of where I'm going is what have you learned about relationship building as far as how it helps you in a business sense? Yeah. So the first thing I like to say is no one's ever going to come to my office or my home and give me money or a deal, right? So you got to go out and get it. So you You need money, you need to go to places where rich guys are. And preferably, I think, you know, you guys host several events. You host meetups.

I mean, those would be a good example of a place to go. So you go to a meetup and these people are interested in real estate and there'll be some people that have no money and there'll be some handful of people in that room just trying to network and meet sponsors a deal so they can kind of co-invest with or be a private lender or whatever they're looking to do. So go to events. That's a good way that real estate events, networking events, educational events, those are good ways to go out and start networking people with people.

If you become a thought leader in an area and you go out and when I tend to go to events, I'll tend to be a presenter or speaker in an event. And then I don't, you know, I'm naturally a little bit shy. So I don't, you know, it's not a natural thing for me to go on network. But if I find if I'm on the stage, then when I get off stage, I guess to stand in a corner corner of people come up to me. I don't have to be the person initiating the conversation. So I've got myself out of my comfort zone to go present or do a podcast like that.

and the people will seek me out. So you can be like a magnet, attract the money instead of pushing at it. Then on the deals, you know, just going to the events where the brokers go. So the brokers don't go to those meetup events. Brokers go in apartments to the National Multihousing Council event every,

every January. That's where every major broker in town is going to be. So I need to go to that event. They get networked. They'll go to that, like for a good example, Marcus and Milichap is a major broker shop all over the country. And they have an annual multifamily event in Dallas,

Fort Worth coming up next month. I do it all on the major cities. So you know who's going to be there is all the brokers of Marcus or Milichap are going to be there that sell apartments. I spend $300. I'll buy a ticket. I go to the event and then I get to talk to everybody and they're captive at their event. So I can get in front of them and see them.

So, you know, those are the things that I do. Just need to be intentional and specific about your actions and go to places where you're likely to set yourself up for success. If I'm trying to pitch all my loser friends from high school that they should give me money to invest in you. That's not a. That's not a good use of my time. It's so smart though.

Yeah. Your method is actually called brandoning where you just go to a room and you stand against the wall and it helps if you're six foot five because everybody can't help but notice you right. Six and a half and a half. Don't forget that half, David Green. Even easier, right? And then you just wait for someone to come talk to you because they see you standing over there. You don't have to go hunt them down. So you go to where the people are and then you wait for them to come to you.

It's very similar to fishing, right? Like fishing, you don't sit at home and wait for fish to come swim up to you and cross the land and jump into your alive well. You go to where fish are and then you throw out a hook with bait that they want and you wait for them to bite it. Right. And I think it works for almost any business, matter who you are. If you're a plumber trying to go your plumber business, that will work is you go to where you're likely to find people that own homes. And then you find something appealing about yourself so that they're going to like you. And then you become their plumber and they call you and they need something.

So that was fantastic advice for everybody who's out there frustrated not knowing what to do. Step one, find where the people are that you want to connect with. Step two, make yourself some form of bait or more attractive so that they're going to want to talk to you when you're there. And if you can't be six foot five and a half and just find something else about yourself, change so that you'll get noticed. You know, the other thing is it's all relative too, right? So if I'm in a room and I've done one real estate deal, I bought one rent house, I did one flip. And I'm in a room when everyone else has done zero.

I'm 100% more experienced than they are. So it's all relative. I mean, that's really it. You don't need to be intimidated and you just got to put yourself out there. That's really it. Yeah, that's true. Very good. So, all right.

So for somebody who's listening to this and saying, you know, I really want to raise money for a deal, you know, whether it's a large multifamily or maybe something smaller, but they don't have those relationships necessarily yet with wealthy people. Like what is the, what is like the first step they should do? Is it to go to a conference? Would you recommend that? It's go to a meetup. is it a I don't know what is it yeah so you need to have a base level education you need to be able

speak the jargon you need to speak somewhat intelligently about it so if you don't have that stop what you do and you know get a base level education then once you have that then like I said be intentional you know go go to events where you know meetups and where other uh people who are interested in investing in real estate would be start building your list out you know start getting getting coffee meetings calls build out like uh you know it's easy for me now because we were raised capital mechanically. When I first started doing it, we just have a bunch of telephone calls. So I shoot you a package and email. I'd be on the phone. And the first couple of deals, we had to raise a million eight for a deal, one of the first deals I did. And I had to get,

you know, $100,000 minimum. So I had to get like 13, 14 people, I think, was what it took. But I had to do like 30 calls to get 14 people to give me their money to invest in the deal. That's horribly inefficient. So now what we'll do is we'll do a webinar on a Tuesday night and the evening and then we'll record it. So that's good to, you know, people get intent live, can in 10 live. The other people have a recording. It's a sufficient way to raise money. But what it also does is now I have the deal package for the deal we put together, the PPM and the business plan, as well as a webinar of recording me presenting the deal. So when I meet you new, David, I can say, hey, David, here's a example of a deal I did.

And then I'd say, hey, you know, let's have a 10-minute call. You watch this. Any questions you have, you call me back later. But the forms and the presentation will be very similar on every deal I do. So that kind of shortcuts it. And when I have a live deal, it's like, they're already comfortable with me. They already come from my presentation. Do they want the deal or they don't want the deal? That's really essentially it.

So the more, you know, you need to do that on a smaller scale, give them some information, send them an article, something relevant about multifamily or self-storage or whatever you're doing particularly. And they start just dripping on these people, get a list and just start to get in front of them and try to be, you know, somewhat of a thought leader and whatever subject matter that you're trying to syndicate capital for. So you brought up a very interesting point we don't hear about very often. And Brandon, I want to get your opinion on this too, because this is kind of like, right up your alley. You mentioned using a webinar for the purpose of pitching your thing, which is easier to do one webinar to 50 people than it is to make 50 phone calls and say the

same thing over and over. And I'm just getting to this in my own business as a real estate agent where I'm getting the same phone calls about the same stuff and having the same conversation and starting to be like, man, I'm spending a lot of time talking to people about getting their license or how to step up their game as a real estate agent, whereas I could just make a recording of it and send it to them or do webinars. Can you tell me a little. bit both of you about what you found makes a good webinar what people need to know if you want to start doing this to be successful like what skills they should build up what software to use stuff like that we'll start with you uh you know we just use go to webinar when we pitch deals and that's that's

really it then like I said we you know if you could get some content out there you get the webinar start a podcast start a blog something along those lines those are just kind of not in your face ways to present contact out there like you guys I mean you're at what this is episode 298 I think is what you guys told me. So they have 297 other examples. They can listen to you guys talk. And over that time, either people, you're going to promote or expose yourself as a fraud or promote yourself as, you know, competent. So I can listen to 297 hours of you guys talking. Neither I feel comfortable with you or I don't. You know, it's hard to fake it over that many hours. So that's kind of what I would do. So go to webinar, podcast, blog, start putting content out on a regular basis and

be consistent and kind of drip on them more than being in their face. That's kind of the method I've chose to do. Yeah, I love that. Yeah, I mean, I obviously do the, we do a webinar every week on bigger pockets. And we're like teaching different real estate topics, like, you know, how to buy, you know, multi, like this week I'm doing one on multifamily. Well, I guess it depends on what week this comes out this episode. But anyway, I'm doing one multifamily.

I've done single family, right? I kind of look at like there's like five, five or six things I love about webinars. And this applies across the board. I mean, if you're an insurance agent, I think webinars can be powerful. If you're a mortgage broker, if you're a lender, if you're raising money, if you're, you know, a real estate agent, whatever. I just love webinars because of these like five or six things. Like first of all,

they're scalable, like you just said, right? You can get multiple people. You don't have to give the same conversation over and over. There's like the celebrity factor. And this is like hard to quantify, right?

But like when you're on a webinar teaching, you instantly are seen as sort of a celebrity, even if you're not at all. Even if like, but you're the one teaching it. You're like, I don't know. You go to a wedding, right?

Like the bride and groomer like the celebrities at that event. Everyone wants to go talk to them. Right? When you're teaching a webinar, you're the celebrity in that space. Also, it establishes credibility. Anytime you're teaching people, especially teaching in front of people, establish that credibility. It also builds relationships at scale.

I talk about scalable in terms of like growing your thing. But like people, how many people come up to like podcast hosts or webinar hosts and say, I feel like I know you. Like people listen to the show right now. How many of you guys think that you, like you feel like you know me or Michael or David now because you've heard us talking before, right? Like it builds relationships and that's huge for being able to raise money. And then you're also just giving good information like, well.

And then lastly, you're collecting contact information, right? When you use like go to webinar, you're getting their email address. And now you can email them again later in the future and on future deals. And so, yeah, I'm a huge believer in webinars. They're one of the most powerful like marketing tactics in the entire world. So yeah, people look into webinars. They're good stuff. One thing I heard people say real quick, random, before you put this on is that I don't

remember what the breakdown was, but it was something like you learn 40% of what you read 50% of what you hear, 60% of what you see and 90% of what you teach. And when you have to teach somebody, it exposes the gaps in your own knowledge very, very quickly, right? And it's also a very powerful motivator to learn more because you don't want to look stupid from the sleep people when you don't know something. And so putting yourself out there and being like, I'm going to be the thought leader, like you said, Michael, I'm going to be the meetup organizer. I'm going to be the webinar presenter, forces you to step up your own game and your own knowledge and learn more. And that will make you a higher producing person in general.

So I think, I mean, it's a little bit risky because you're putting yourself out there, but that's how you grow so much faster. Okay, what were you going to say, Brandon? Well, I was going to say the other cool thing about webinars is that, like, you put your slide deck together first. Like, you probably put together a pitch deck, right? Michael, like, right? And so, like, you're not just like, people often think that you're like,

when you're speaking, just like standing up, just making things off off top of your head. You're not. You're like, you have a slide and it's in front of you. And you're just basically explaining what you already put together. So you know it because you put it together. right so do you have any tips for people who are trying to raise money michael on maybe a webinar or maybe in just one-on-one with somebody like anything that you found that works better or worse in those kind of conversations yeah so some of the some of the early mistakes that i did is you can't i could tend to get a little wordy or i'll go down the rabbit hole of the deal and get into the minutiaa

where honestly these people that that invests with us a lot of people first and foremost so they don't trust you and like you as a person they're not going to give you their money no matter what you what deal is it is. Right. So that's first and foremost. So having a certain level of trust to then get them to like you enough to get on the webinar. I listen to you. It's kind of first and foremost. And then once you get into the deal, they want to know, okay, so how much is it going to take to get in this deal? When am I getting my money back and how much along the way? So how much and when am I getting my money back? So you need to start with that. And then you can then get into how am I going to do all this. You know, I'm buying this deal with the rent comp support, you know, 10% or 20% higher,

or rents down the street. But if you don't hook them on the front of this deal, with this is how much I need, this is when it's going to close, this is, you know, how much money you're getting it back, the timing of that money. You can go for an hour and then the people like, well, I don't even understand the basics of the deal. So that's some of the mistakes I made on the front end that now, within the first five minutes, you know all that in my deal and then I get into the granular detail. Some people, that's all they need to know.

If they trust me, they're like, all right, I'm going to sign off and I'm going to send my check in. I mean, that's really it. Yeah, I'm a huge believer that, like, when raising money or talking to, like, when you're talking about, like, people like raising money, not necessarily are lenders. Lenders go deep into stuff. But when you're raising money from people, I would guess, I don't know, maybe you have a different number, but I would guess 90% of people don't even look at the numbers that closely. They just trust you because they've had a friend that trusted you or

whatever. Because I've said this before. At the end of the day, they're not calling up tenant in 905A saying, hey, how much is your rent? I want to double check that and make sure that Michael here has the rent number right here. At the end of the day, it all comes down, do they trust you or not? because you could just be making up all your numbers on the on the you know like on stuff as well you could be doctoring PDFs of the tax returns like you could do anything you wanted in today's world so do they trust you or not and yeah like you said keep it simple up front especially I love that advice like this is what the deal is what you're gonna where we're hoping to get you yeah yeah the other thing I would say too is there's uh when you're raising capital one of one of the questions a new syndicator always asked me is like well how do you structure your deals so there's a many ways to do it you make a simple you make a simple or complicated, I would err on the side of simple. So just have like a basic, maybe there's a small upfront fee, like an acquisition fee or something along the line. So keep that relatively small.

Have it even easy split. You know, typically the deals we do is like an 80, 20 split. Well, the sponsor gets 20 to 80. The investors get 80. And then there's like an asset management fee, kind of something on an ongoing basis, so revenue. So we can kind of keep our lights on pay for overhead staff, things like that. So keep it simple.

The other people will pay like a prep with the waterfall split that's graduated up on IRR and then I have to explain what the hell all that stuff means anyone anyways. They don't know what it means and it gets complicated. So simple is better, you know, especially if you're raising, you know, capital from just individual high-knit with people, $50,000, $100,000 out of time. You get down the weeds.

I mean, that's stuff that, you know, guys with MBAs that I, you know, I certainly don't have. That's what they want to see. That's not what you're just your typical salesman doctor, engineer, what I want to see. Well, I remember, so, you know, a lot of the syndicators I know that are like the real I mean like the guys

they have the waterfall IRA that you know all that fancy stuff and so I thought I need to do that so I was raising money for a mobile home park deal I was doing and I'm sitting there trying I mean for days I was putting together these really fancy spreadsheets that were like you know really like waterfall stuff and because that's

what I'd seen done and then I call it my buddy Andrew Cushman who's uh who's been on the show a few times right and Andrews under alone yeah okay yeah Andrew's fantastic he's like Brandon what are you doing just keep it simple He's like, just do like, I think we ended up, it was like a 70, 30, like flat. And it was like suit. And I was like, I can do that.

And he's like, yeah, he's like no. He's like when you start confusing people like, you know, I'm not raising money from, you know, a private equity firm here. Like they're not going to look up in my numbers that deeply. So if I confuse them, they're going to say no. When I keep it simple, people like, oh, yeah, that sounds good. And that changed my life, that conversation. So.

Yeah. Confused mind doesn't buy, right. There you go. Yeah. Go forward. Exactly. You're exactly right. about that. When people ask me all the time, like, how do I recognize if this syndicator is good

or not? I get that question. People call me all the time. And I don't mind that at all. The thing I tell them, the number one thing that matters to me is more than like reading the PMM and the prospectus is what's our track record? How many times have they done this and how well have they done it before? Right. Like it's very hard if you've done it. If you've hit it out of the park 19 times in a row, then you're 20th, all of a sudden, you're going to make some huge mistake that you couldn't have not coming. But if you're your first deal or your second deal, there's a very good chance that you don't even know what you don't know yet. And you could have the best intentions and you just get sideswiped by something you didn't see coming. So that just goes back to show that getting those

deals under your belt, if you have to give away a big part of it, just to get it done is valuable because it's moving you along that path where your track record is the number one most important thing when it comes to raising money. More than some incredibly complicated waterfall that some MBA from Harvard wrote up for you that you spent $80,000 to get made. And like, you don't even understand it yourself. So how are you going to explain it to your investors? That's right. Yeah, definitely.

All right, so we are about ready to shift over to the next segment of our show where we want to learn about one of your deals in particular. So this is the deep dive. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claim.

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Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. All right, let's get to the deal deep dive. This is a part of the show where we dive deep into one particular deal of yours, and we want to know a whole lot of stuff. So what is the deal? What do you want to tell us about?

And then we'll dive in deep on it. Yeah. So I'll talk about the sixth property of a purchase. We sold it about a couple of months back. So that's a recent, recent transaction. We just went full cycle on. So the deal with the time we purchased it was called regional place apartments, which is probably one of the worst names of an apartment complex I've ever heard in my entire life.

That is hilarious. Yeah. Yeah. It was a reasonable place apartment. No, no. Regional place. Regional place. That would have been worse.

Yeah. If it even a regional place, it does exist in a region. Yes, it's a place in a region. It's stuck when we bought it. Vaguely named apartment building. Yeah. So it was a 218 unit apartment complex in suburban Dallas. So we had a submarket called Great Vine.

It was built in the mid-70s. We purchased it for $10.9 million. It was about $50,000 a unit. We owned it for four years, about two years into it. We were able to put a, we had a Fannie Mae loan on it. Fannie Mae loan's allowed what's called Supple, one-end financing. So basically the second lien cash out note. We will return all our money. We put $2.7 million down. About halfway through, we returned all the money plus a little bit,

about two years into it. And then when we sold it, we sold it for $23.5 million a couple of months ago. Whoa. I put over $10 million in 10, 31 accommodator. So we had all our money out. We stole the $10 million. We bought a brand new deal with one from 1976 to 2015 vintage that we just closed on two weeks after after we sold it. So that's the deal we did. Wow. Okay. I'm going to unpack. I want to unpack that here. So I just make sure I got every number here right. So you, so first of all, so it was a 218 unit in Dallas, 1970s thing. How did you find it? Did you say how you found it? Was I just broker? No, I did. So, so yeah. So all these deals, you know, predominantly, we've done one or two maybe where there's no broker involved. This was an off market deal. So, so a broker brought it to me. So he was bidding on it. He was competing with some other brokers to try to win the listing. He didn't think he was going to win it. So the broker's playbook and one of the tips I'll give somebody, if you're talking to brokers giving brokers opinions of value or B-O-Vs, if they're not going to win it, it doesn't hurt for them to try to slam an off-market offerance.

We just threw an LOI-N, the owner accepted it, and we kind of went forward. So we bought the deal off-market. All right. You said 10.9 million is what you bought it for, which was like 50K a unit. Yeah. That's awesome. And then negotiation-wise, did you have any interesting negotiation things in that? Anything that went wrong or right?

Yeah, so the deal at, you know, Texas, we tend to get pretty large hailstorm since this property had a, had a large hail storm about a year or so before we agreed to buy it. And so they had a, they had like a $2 million hailstorm. It was crazy. So all the roofs and all the AC units were on the roof. So I got all new roofs, all new AC units. So they had, uh, they had only done about 80% of the work. So I had to finish that off. And then we got in this deal. This deal was, was a dump if, if I ever saw one, it was just in a really good area. So like the guy, for example, was putting in used carpet. when he was turning over unit. So that's about the grossest thing I've ever heard of in the multifamily space. So there's a bunch of deferred maintenance. And so we got into the deal. The back of those days, you could potentially retrade a deal.

You intentionally get a price adjustment. We attempted to do it and we got summarily dismissed by the seller. So we ended up buying the deal with the price anyways, even though we kind of misled us on a blind item or two. There's some additional deferred maintenance. We didn't quite account for when we were originally budgeting it. But it was such a deal. We knew what was a deal was below market rents and had the easiest, obvious management

upside. So we went forward with it anyways. So that's an interesting thing about all real estate. We don't really talk about this strategy very much. But, you know, you can, I guess if you, if you have a deal under contract, no matter what it is, big, big or small, and you find stuff that you don't like during the inspection period or during your due diligence, you can ask for a reduction, right? But like, if they, the worse they can say is no, right? And then you just go buy it anyway if you want to. So there's really no major downside, right? So the downside risk. And if you're just doing if you're just trying to deal up then try to retrade it that what you're going to risk is reputation yeah yeah especially at a market so you know if there's something like legitimate and then

they or they misled you on something or there was you had no way of knowing that the roofs had hail on it because you know you don't get on a ladder on a three story building or something so those are legitimate reasons but if you say go the parking lot's messed up well you got eye you should know the parking lot's messed up so just that the biggest risk is reputation so we don't tend to try to do that but this deal we had we had some legitimate reasons and he just denied us anyways and we decided to buy it. Yeah. Well, and I think that's cool. Like, I mean that, again, yeah, I would not, like, I don't play that game either where we'd try to like, you know, you know, get under contract and then try to bully them later. But like a lot of times stuff does come up in due diligence. So you shouldn't be necessarily afraid to ask for those things. For example, I actually, I should have done it here. I bought this property here in Hawaii, right? Like, and I got an inspection, but I didn't, I decided not to get to a pool inspection. And then I got here and I found out the entire. all the pool stuff was bad. I mean, had I got the inspection, then I would have come back to them,

but hey, you know, we inspected all the pool, you know, whatever. So I don't know. I'm probably like 10 grand into fixing the pool now. And I could have negotiated that earlier had I done the inspection. But anyway, all right. So you negotiated. How did you, actually, before I go there, what were rents like when you bought it and then when you sold it again?

I'm curious, like, what did you guys be able to push? What did you push rents to? Yeah, I'm trying to remember exactly. But I think all on average, we were somewhere around six, $150 in rents, give or take across the board. And then when we sold it, I think we were north of $1,000 in rents. So that's, you know, we like literally doubled our net operating income when we owned it, like literally doubled. So it was, this deal had, you know, an apartments, especially these older apartments. So utilities are a big deal. So this particular deal we had

upside in the rental race. They were, I think at the time, we figured there were about 20 or 25% below the market comps. In addition to that, their property, all these older properties, are, you know, master meter typically for water and sewer and gas of that borders. And in apartments, you implement what's called rubs or UBS ratio utility billing system. So basically that's a fancy jargon for where you take the water bill and then you allocate it and then you bill a percentage of it back to each of the residence on the property. So we had both upside and increasing the rents as well as upside and increasing the billbacks plus adding, you know, admin fees and some other stuff.

They just customarily weren't charging for that that we thought. all the competitor properties are doing that we could charge for. So those are the two ways. And on top of that, they had some high expenses like their gas bill was out of control because they had a really old boiler. So we budgeted to replace a boiler, did a water conservation program. So we lowered the water bill on the way and a couple of other expense savings that we could

able to implement. That's awesome. Let's talk about rubs for a second on that. Like the idea of shifting over the responsibility of the water to the tenant is one of my favorite things in the world when I buy a property. Like if I can do that, it like it takes a lot of the variables. out of the equation, right? Because the water bill, like, could be 800, one month and 200 the next month because,

you know, somebody left their shower running for a month because tenants will do that sometimes. Like, I mean, I've literally gone into units before and their faucet was like their their bathtub faucet, whatever was broken and it was running at full strength completely. And I'd ask them like, how long has I been doing this? And they're like, I, since we moved in or something like that. And I'm like, well, clearly it hadn't been since they moved in. But like at some point, the faucet broke.

And it just runs and they didn't want anybody in their units. They didn't say anything. I don't know how many gallons they wasted. But anyway, when you shift that over the tenant, now they're going to be like, well, I don't want to pay for that water bill. So I'm going to get that fixed right away. But how do you know whether or not you can implement that?

Like, can you always do it? Yeah, so do the other competitor properties that I'm confident mine to do they do it? If it's acceptable in the marketplace, then you should be able to implement it if like-kind properties and similar areas do it. You could do it. So it's not raucous. That's a good thing about multifamily. It might sound intimidating, but it's a really dumb, simple business.

You know, he's kind of follow the leader, very simple principles. You know, it's not always easy to do it, but it's really, really simple at the end of the day. You said something else I really like, too, you said we replaced the boilers because they were inefficient and the gas bill was high. I think it's important to notice that you can get an ROI of your money in more ways than just acquiring a new property, right? Like you spent some money up front to fix something that someone who's cheaper might have thought, I'm not fixing that thing. It still runs, right? But I bet if you looked at it, within a certain period of time,

you would have recovered all that money, and then you were making pure profit after that point. And a lot of times when you dump money into your properties, you get a return in the form of lower water bill, lower gas bill, better rent, and you make the property worth more so that you're benefiting on the back end when you go to sell it. So the thing that is most critical,

and it was like a light bulb went off when I kind of like, I always understood this, but when I always knew this, but when I understood it, There's like a light bulb that went off. So the difference between, you know, single family and multifamily is, you know, single family, your property's worth what, you know, the neighboring properties are worth, the CMA, compared to market analysis.

So I can, you got to buy it cheap enough, have enough money to renovate it. So it's then worth what the neighbor property is worth. Well, multifamily, you control your destiny because it says NOI to about a cap rate. So if I can increase, you know, if I'm in an environment like today, all this stuff's a five cap. So every dollar I drive to NOI is 20 to value. So let me repeat that. Every dollar to NOI is 22 value. So if it costs me, you know, $5 to get 20 in value, it's a freaking no-brainer, right?

So the moment you realize and understand that, it's like, why would I ever do a single family house again? Yeah, honestly. Yeah, I love that. Let's talk about funding. Like, how did you fund this thing? You said, and you run investors and a Fannie Mae something. Let's walk through that.

Yeah, so we had, I think, three or four investors. So we had a couple of the high net worth guys put a little larger checks in the deal. And then we put some money in the deal. I think we put about 10 or 12% of the capital in. And we had three or four guys for the rest of it, a little larger checks on this deal. We needed about $2.7 million. So we paid, I think, $10.9, 6,8 to be exact for the deal. We had about a million dollar renovation budget because there's a bunch of worth that need to be done there.

So all in all, about $12 million or so into the deal. Got about $2.7 million loan. So the Delta was nine and some change, I think. in a loan. So we got a 10-year, 10-year fixed-rate loan through Fannie Mae. So Fannie Mae and Freddie Mac are not the only two largest lenders on the single-family space. They're also two largest lenders on the multifamily space. So the other thing is really kind of life-changing when I, when I kind of realize that is, you know, these Fannie Mae loans, you know, or you get, you get both floating or variable rates and fixed rates. They're typically say a 10-year term with

a 30-year amortization. So you have a longer amortization. Nowadays, you can get multivocal. multiple years of interest only on the front end, three, four, five years of interest only today. Back of the time, we got one, but the market is a little bit better today from that standpoint. And then they're all non-recourse. So, you know, so what that means is we have to sign what's commonly referred to as a bad boy carbout. So what that means is, you sign a thing that you're not going to commit a bad boy out, which is basically fraud or misrepresentation. So the example I like to use in Texas, we get hail.

So if I have like an insurance, a hail storm, I get an insurance check. I don't tell a lender about it. That's a bad boy act so I can bring in a guarantee. But if I, you know, it's run the property and I'm just incompetent, I just can't, you know, I can't make the deal work and the deal fails or Dallas turns into Detroit and everyone moves out of the city, you know, and I can't rent my units. You can just give the keys back and there's no personal recourse to you as a borrower. So that's, that's powerful in that respect that it reduces the risk.

What's even more powerful and is that it doesn't kind of cloud your balance sheet with contingent liabilities. So what I mean by that is, you know, I only have a certain amount of net worth and my partners do as well. And if I have all these, you know, I don't know what I have three, 400 million in debt or something like that right now out there. So that, you know, if I had 300 million and contingent liabilities, a banker's going to look at my net worth wise, you know, it's grown quite a bit. It's nothing compared to that kind of debt. So they might not be as apt to give me more loans, but all these loans are on recourse so I can do more and more and more deals. So basically I'm just limited to the amount of money I can raise. days, my deals I can find. That's really my only limitation out there now. In the moment you kind of get to that realization, that's the other real power that you have in multifamily space over the single family space. That makes sense. All right. Next question. What did you do with it? You know, you said something about refinancing it or pulling out capital and. Yeah. So we went through our basic business plan was we went through, we cured all the deferred maintenance, you know, And then we set aside some money for some upgrades.

So we had upgraded the pool area. We added a playground. We added, upgraded the office, signings package, things like that. Then we went into the units, flowing appliances, light fixtures, plumbing fixtures, painted it, resurfaced the countertops, kind of your basic apartment turnover upgrade. And through those efforts through, you know, curing the deferred maintenance, through, you know, improving the management style and then adding some amenities and better product, we're able to get those higher rents from the tenants. by extension, we increased the value.

So along the way, you know, about two years into it, we went to a lender and said, hey, we took the value from $11 million and it's now worth $16 or $17 or whatever it was at that time. And they gave us almost a $3 million loan in the interim, which is a supplemental loan. So that's another unique advantages to the Fannie Mae and Freddie Mac loans. They're assumable as well. So if I will own a mortgage and you know, I own a property, have a mortgage. I can sell it to you, Brandon, and you can come take over my mortgage. assume my mortgage and buy the property is kind of put the difference down. So it's

assumable as well as it allows supplemental financing. So allow you to re-leverage a loan to 70 or 75% if I come in and increase the net offering income by extension of the value. So it's a really flexible product. So there's a lot of good things. So we put a supplemental loan on it. We owned it for a little bit longer. And then a couple years ago or a couple months ago earlier this year, a gentleman, a broker who sold us a deal and a guy we sold three or four deals to that came to us and started giving us unsolicited offers to buy the property from us because we've already transacted on a few other deals. And then us, we kind of brought a few other people in, ran like a little mini kind of

marketing process, got a number that worked. It was too much money to say no to. So we took it and moved on to bigger and better pastures out there. All right. What lessons did you learn from this specific transaction? You know, making sure that you have your capital set aside up front. I think this deal, we got a little skisks. area on the front end of the deal where we, the tenant profile that was in place that would,

that would accept a unit that had used carpet, for example, and all those deferred maintenance, you know, it was a little deeper, deeper dive. So I kind of describe these value add multifamily deals. It's kind of like a check mark. You kind of go down and then you go up. So, you know, I think our dip was a little deeper, David, than what I really thought it would be, you know, we were kind of, I think we could hold about 90% occupancy and we were down to low 80s. So that kind of stress cash flow until we were able to kind of turn over all these units. But it takes about a year, year and a half to kind of go unit by unit month by month, turn these units over. And then once we kind of got through it, I was a little bit better. So the deeper, the crappier of the property, the deeper dip's going to be. So subsequent

deals, we've kind of underwritten a little deeper dip when we see a little bit more distress within the property. You know, that's the first time we've actually heard anyone, or at least I've heard anyone describe the process as like that checkmark. But that's exactly what you see. I even see it in a much smaller degree in the single family space where I tell people in my first year of owning a property, I don't expect it to cash flow at all because there's always things that I did not get fixed during the initial rehab that pop up during that first year that kill your cash flow. And it doesn't mean you did something wrong. It means your expectations were wrong.

Like I just tell myself the first year, it's not going to make me any money. I'm going to be dumping money into this leak or that thing that broke or this dry rod I didn't catch. And then when you get it all fixed, rent starts to go up and it turns around. I think with single family, it's almost though like you can. change direction very quick because you're out there with like a jet ski right like I don't like the direction it's going boom I can turn it around fast where with multifamily you're out there Michael trying to turn around an aircraft carrier like it's going to take a year and a half to get you

to get that whole thing spun around but it's immensely powerful once it is you know like that the wealth you created in this one deal to me is just amazing yeah it's life changing is really what it was and you know one of the things I like to say about apartments it's kind of like adult daycare in a lot of ways, which you don't have that with single family. You have all these residents and close proximity to each other. And then, you know, if you have a drug dealer in unit 202, is going to affect all the units in and around that deal. So those are some of the things that you have on the multifamily side.

You have the city as well. You don't have as much of that on the single family side. They don't really come mess with you on the single family side too much. On the apartment side, they'll do like an annual inspection and give you, you know, correction notices and all these things you have to, you know, kind of manage the city on top of all the tenants and all those things. You own real estate, but really you also own an operating business. It's kind of just wrapped in real estate.

There you go. I love it. All right. Well, that is the end of the deal deep dive. Now we're going to shift gears here and head over to the world famous fire. It's time for the fire round. All right, let's get to the fire round. These questions come direct out of the bigger pockets forums.

And we're going to fire them right at you, Michael. So first one, we're in the process of person. purchasing our first multifamily. It's four buildings, a 24 unit, a six unit, five unit, eight unit. I'm wondering what detail of inspection is common for this. I mean, costs add up really quickly. Like, do I have to check the gas line, like the sewer line? Should I have an inspector walk through every unit? What would you suggest? So there's two components when you're doing a multifamily site inspection. There's a physical inspection and there's a financial audit as well. So on the physical side, yeah, I would get all, we tend to have our management company and or there's a vendor locally that kind of is an engineer that. I'll do these reports for you.

But yeah, I would walk literally every unit if you can because you, like I said, even the occupied units, you'd be shocked with some of the conditions that some people are willing to accept it. And if you don't properly budget for it. But yeah, get a vendor out, check the roof, parking lot, AC, kind of do a basic AC survey, get a plumber out, maybe put a camera down the sewer lines. Check out all the major components because if you miss something, you can talk $20,000 on a smaller deal that can swing quite a bit on a bigger deal with surrounding air, but only smaller deals

it can certainly add up. Certainly do that as well as you need to make sure you do a good lease file audit. So you're making your offer based off the financial information that the seller provides you. So he gives you, he or she gives you a rent roll. So you need to go check lease by lease. The tenant name, start date, end date, lease amount, security deposits, make sure they mask the files that are on hand, as well as we always try to get copies of bank statements and utility bills so we can at least match the numbers they give me on

the water sewer bill, match what the water sewer bills actually are. and their deposits somewhat are in line with the revenue they produce. I don't care as much about what their insurance is or what that payroll number is because I'm going to operate it the way I'm going to operate to my budget. So that doesn't impact me as much, but the water bills are kind of consistent from ownership to ownership. What do you say to people who worry like this? Like, I don't want to spend money inspecting a property.

Do I really have to? How do you correct that mindset? You should stop buying real estate because you're going to lose all your money. I mean, that's such a short-sided. thought to have, you know, you're talking to what I, I don't know how many numbers you just write it off, but you're talking 40-ish units. They're spending a couple million dollars, most likely, unless it's in the hood in Detroit or something like that. But, you know, it's a couple million dollar transaction. So you're not going to spend $5,000 in pursuit

cost. Yeah, that's that that's foolish. You're stepping over dollars to get dimes. All right. That's a great way. Okay. Next question. Oh, this is a good one. How do I do my first multifamily syndication with no money down? Should I even try. This is not a, in my experience to do this right, this is not a no money down business. I mean, at least not in scale. You're not going to get someone to give you a 100 unit deal to do it. Maybe you can have someone to sell you a six, seven, eight unit deal, kind of a mom and pop. That might work there. But you need to get as high paying job as you can, sacrifice some lifestyle, save some money, maybe do starting a single family space wholesale flip, accumulate some capital. And then once you get, you know, 50,000, 100,000, then you just. You start putting that together. That's one of the things that I've kind of really been, the most interesting things is, you know, one, two things, really. One, how do you scale it? How do you, how do you, how do you manage 800K ones I have to do? How do you, you know, I'm a dumb banker. I didn't know how to have employees and do all that kind of stuff. It systematize your business. And then the other

thing is as you go up in this business, when you put a house on a contract, maybe you put $2,000, $3,000,000, earnest money. When you buy a, when you buy a $30 million apartment complex, we've had a million dollars hard on a deal out of the gate, right? So how do you scale your pursuit cost? So you don't jump into that out of the gate. You got to have some confidence level. You've got to know what you're doing before you're willing to put your, your gonies out there like that to make sure you're going to get the deal done.

And so, you know, having to think through as you go from a 10 unit to 50 unit to 100 unit, the price of poker goes up on the pursuit costs, on the earnest money, on the lender fees, on your lawyer fees, all those things that if the deal blows up, that's on you as a sponsor. So making sure you have a plan and you think that through as you scale your business up. So you don't have it, find a partner that does. I like that. It's kind of like saying, how do I play poker without having to pay the blinds?

Like I want to be in the game, but I don't want to have to risk any money or spend anything to do my due diligence. It's just you shouldn't be doing it at all. And like Brandon and I talk all the time because everybody has that question is, how do I invest in real estate with no money? And you can be in deals. I do it all the time with none of my own money ends up in the deal or something. Sometimes I pull out more than what I even put in when I use the Burr method. But I took money to get into the position where I could get the money back out. You have to have some form of money.

And I love, love, love your answer. I mean, that should be like the thing that we take from this episode and put on Instagram of the path to success is get a good job, make good money, get good at what you're doing, save your money. Now that money has some value to you because it's tied to hours and sacrifice you made. So you don't want to go out there and blow it. Invest it. Learn what you're doing. Get good at that. and then bring other people in once you've got kind of like your system figured out.

So that was an amazing answer. Well, thank you. Yeah. All right. Next one, I'm going to be looking to purchase three multifamily properties from a seller liquidating their portfolio. One's a 75 unit. One's a 50 unit.

So it's a total of 175. Let's see. I'll be purchasing through an LLC. I'm going to get bank financing. So should I try to get one loan, one commercial loan on all three? Or should I get three separate loans? Yeah. So I would first want to know how close and proximity the deals are to each other.

So if they're contiguous, you know, if they're contiguous to each other, you can legitimately run them as one apartment building. It might make sense to get one loan. I don't like the idea of getting one loan. If you do get one loan, I'd make sure they have what's called a partial release provision within their loan documents that if you want to go sell one of the 50 unit deals off. You don't want to pay your entire mortgage off. You have the ability to partially pay down that note. I think it makes more sense to get three separate mortgages that way. And if they're closer proximity but not contiguous, you can potentially share some of the staff.

Or you maybe have one of the places have an office and they lease the other two buildings out of a larger building or something along those lines. But I like the idea of having three separate loans or at least having partial lease provisions within the mortgage. All right. I like it. Last question of the day. Well, of the fire round anyway. David Green. All right.

Last question. Should I start with multifamily or should I start with single family? I don't think there's right or wrong answer. So it just kind of depends on the amount of resources you have. I had enough money. I had a background where I didn't, with the benefit of hindsight, I didn't necessarily need the single family space. I could have jumped into the multifamily space. What the single family space really got me to do is it really got me in a position where I learned how to do a deal, go full cycle, give me some level of confidence that I can project manage on a very small. scale and then I was able to kind of implement some systems and build and repeat. You know, and I almost personally like a single family house more than if you're buying like a triplex or fourplex. You know, I think that's a little bit better in my personal opinion than buying a really small

multifamily. So if you can't buy a 20, 30 unit deal, I might, I might suggest you go into the single family. Now one of the things one of my mentors told me a long time ago, and this is extremely true. And the smaller of the property, the more true the statement is, is when you own multi-family deals, you kind of own them in. You know, so every year of ownership feels like you've owned it for seven. The smaller that property is, the more true that statement is, you know, multifamily,

the real power of it is just a scale. Economies a scale. So if you can't have, you know, enough, large enough property that produces enough revenue that you can afford to have full-time on-site maintenance staff and full-time on-site management staff, you got to manage it off-site. It just becomes really challenging. So I think the goal that I would try to put out there for people, you know, you want to You want to get in the business and get to a point you can buy large enough property that to support full-time staff on the actual asset until you get there.

Everything else is real efficient. So, you know, people get in this business, they either love it or they hate it. You know, one or two things are going to happen. You buy a 50-unit deal. Man, I love this. I can't wait to sell it, scale up by something bigger. Or, man, I hate this thing. This sucks.

We sell it and never do it again. So, you know, if you own these things in dog years, you kind of use that little saying, you'll kind of be kind of the smaller that the property is the more. more true that statement is. So you're going to get in and want to scale up or you're going to want to get out one of the two. What do you recommend is a good like break even number for how big of units people should be looking for so that it's worth their time and that's. It's really depending on how much revenue produces and every area is different. So I think in the state of California, if you have 16 units or more, you have to have an on-site resident. So I think that's you need to California. It's certainly not in Texas. But generally speaking in our markets, we're in the

write about one full-time office person, one full-time maintenance person, about every hundred units we have. So, you know, I think about 60, 65 units in our market should justify a full-time manager maintenance. It won't be as efficient as you have, you know, 35 less units and kind of what the optimal size would be. So the closer you can get to that 100 unit, the better. But with that said, I mean, you know, people make money on these small deals. People start with what they have. And that when you get in this business, you start now, it's got to be realistic. They can an account of what you have, what things you can bring to the table, how do you find other people to kind of fill in the gaps that you have? And there's nothing wrong with a single family

house or an 8plex. It's whatever you can make work. But, you know, if you want it to be in this business, you want to be a professional, you want to scale, you know, you need to do these larger deals or you just can't scale your business. Well said. Well said. All right. Well, let's head over to the last segment of the show, which we lovingly call our famous four. Let's get to the famous four. Number one, these are the same four questions we ask every guest every week. And now we're going to throw them at you, Michael. Number one, what's your favorite real estate related book? I like the two Ken Macroyd books, the ABCs, the real estate investing and the advanced real estate vesting guide. So Ken's my buddy. I'm not the biggest reader, but I actually read

those books after I did a few deals. So I was very heartened when I saw Ken's business model was very similar to the way we operate. Cool. Yeah, those are fantastic books. All right. All right. What is your favorite business book? One of the books I one of the guys I kind of look up to is Sam Zell. So Sam Zell came out with a book about a year ago. I'm not being too subtle. So I really like that book. He's a master of scale. So I've really got

a few nuggets out of that on how to kind of grow your business and scale it up. Cool. I had not heard of that one. Wow. Congrats on finding a book that Brandon hasn't already read. That is the worst. Seven billion dollars. So you might want to check that one out. I'll check that one out. All right. What about hobbies? What are your hobbies? So I like to travel. So I'm going to go to Ireland for my term 40 in a few days. Nice.

My birthday will be over to Ireland. So I'm looking forward to that. I did. I was as I did Ireland a couple years ago. Make sure you do the, if you can, do the air and islands. It's the worst sea ride over there. Like the boat is the worst thing ever. But one of the coolest things I've ever seen in my entire life is over on the Aaron Islands. Awesome. I recommend it. My comment was much less practical.

I was going to say if we have you on again, you need to be the whole thing in an Irish accent. while you're over there. I'll work on it. Yeah. All right. Final question from me. What do you believe sets apart successful real estate investors from those who give up, fail, or never get started? I think there's a lot of termination and perseverance you need to have in this business.

You know, like I said, what I like about real estate, well, like about single family, what I like about multifamily. It's a really dumb business. It's really, really simple. You know, it's just not always easy. So you're going to have some challenges. is you're going to have to deal with some adversity. The city, you're going to have a tenant issue. You know, one of the things I kind of, I've learned through this business,

if you own enough, large apartment buildings, you know, three things are going to happen. You know, there's going to be a fire. Your tenants are going to sue you. People will die on your properties, right? So if I don't want to deal with stuff like that, you know, then I should go back to be a banker again, you know, and then I have to deal with my 401k and not having the lifestyle I want to have

and being able to go to Ireland for 10 days on my own whenever the hell I want. own whenever the hell I want to. So there's always a trade-off with everything in life, but having some perseverance, being able to deal with some of the challenges as you come. And you find out once you kind of overcome it, you know, it's kind of like being, I'll compare myself to like a professional basketball player, you know, or football player. When you first get out of college and you go into the pros, everything seems really, really fast to you because you know, you're going from from the college level to the pro level. It's kind of similar in real estate. You know, now I'm constantly surprised by things I see all the time.

But more and more, I've either seen this exact scenario or something similar to it. I don't need it. It's not a, I don't have to reinvent the wheel every time something comes at me. I've already kind of seen it. And I know what the right answer is and I just do it and move off. I think that is such a profound analogy that you use. Thank you for using analogy on the show. I have my house, not to my wife.

I tell you to speak great about me to her. The problem is newbies, like, Everyone is new at something. Most of the time, if you're listening to a podcast, you're in the educational, like, phase of the cycle and you're new, right? Like people that are really good at this aren't usually seeking education. So people that are likely to listen to a podcast like this are in that, man, I just got into the pros. And this is fast.

Like these guys are strong. The game moves so quickly. I miss half a step and boom, I'm beat, right? Like, this is guys that are really good at what they do. And they start to feel like it will always be this way. And I'm never going to catch up. And this just sucks, right? But you're saying, hey, no, you will adapt.

to it, you will adjust. There's only so many things that can go wrong. And it's not rocket science. It's not easy, but it's very simple. And if you stick with it, you'll start to figure it out. And everything in life kind of works that way. And that's why we always say, like, persistence is so important. Because if you just stay playing the game long enough, your brain will adapt, your body will adapt, you'll improve in the areas where you are weak and it will get easier. And then it's fun. Then you can go to Ireland for 10 days. You know, when I first became a real estate agent, Oh my God, it was so frustrating. Everything was new.

I didn't know anything like talking to people, calming people that down that were upset. It was all a different skill set that I didn't have yet. And then I just got back from being in Hawaii with Brandon for like 12 days. And it was as smooth as things could ever be. I came back with three listing appointments set up and we closed on about four houses while I was there. And my team had things running. And it wasn't hard at all. But man, if you'd have told me that two years ago, I wouldn't have believed you because it's just too hard.

And the other thing, too, that I'll all kind of leave you guys. on is one of the things that I really I think is a great advantage about what I do is is a completely unfair business right so it's who you know what you know what chips you could trade what relationships what deals you've done and when you're starting out that really sucks because you're on the wrong side of that more than you're on the right side of that but once you get into this you know a good example is uh you know two years ago one of the top brokers in town his family and my family went on at Disney cruise right my 40th birthday parties in two weeks and you know seven or eight of the top apartment and Dallas Woolworth are going to be in my birthday party, right?

So this is a completely unfair business. You know, we're all funny. We're friends. And when they get that deal, you know, they're not going to call you that's never done. They're going to call me. And if I pass and they'll start going down the line. So you just got to get yourself in a position. You've got to be a person of integrity, do what you say you're going to do, follow through,

close these deals, get a track record. And then you'll get yourself on the right side of that unfairness. Drops the mic. I love it. That's cool. Boom. All right. dude, this was fantastic. So I won't rob your last question, David. You want to ask it?

Yeah, like it wouldn't bother me if you did. But thank you, Brandon, for passing that. I'm a nice guy. Michael, where can people find out more about you? Really, there's two ways you can find information about me. We have a, we have a podcast. I host of one of my, one of my partners, my background is banking. So it's called the old capital real estate investing podcast. It's old capital, real estate investing podcast or old capital podcast. Or old capital podcast. You can find it anywhere you're hearing me today. You can likely find it iTunes Stitchers. Or the other way, simply the way we do business is to my company, SPI Advisory. So just go to our company's website, which is www. SPI, like spy advisory.com.

There's a contact us for them. I'm always happy to have a 10 or 15 minute telephone call of people I meet off of a podcast. All right. Awesome. Very cool. All right. Well, thank you, Michael. This has been fantastic.

I've learned a ton and my mind is racing right now. It's really good for me and hopefully our audience as well. So thank you. We'll see you around. Thank you guys for having me. Appreciate it. All right. That was our show with Michael Becker. Fantastic. That guy is just like on fire with his multifamily. That's amazing. Yeah, he's so good that he just describes it in a way that makes it so simple that you realize like, man, I could be doing this too. And that's what I love.

Like you know someone's good at what they do when they describe it in a way that makes it sound simple as opposed to complicated. Yeah, it's true. And like I love the idea too. he's covered the webinar thing because nobody really talks about that on the show of like using webinars to raise money or you know like why those are so powerful. So yeah, super cool. All right. Well, guys, I hope you enjoy this interview as well. Make sure you guys stick around for next week. We got a really fun interview next week with a TV celebrity. You'll find out more next week on the podcast. But stay tuned for that. And the one after that, actually, Mr. Josh Dorkin may be coming back

and kicking David Green off the show for episode number 300. But you didn't hear that here. I don't know. I don't know what you're talking about. What? What? Let's get out of here. I sit on the throne of the king and he is welcome to come take back the iron throne anytime he likes. All right. Well, guys, thank you so much. David, thank you. Rosie, thank you for being so happy and cheerful. Rose is in the background hanging out with me on my lanai here. So with that, guys, let's get out of here. For BiggerPockets.com, I'm Brandon. Dave, you want to take us out? See you guys later. You're listening to Bigger Pockets Radio.

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