BiggerPockets Real Estate Podcast - 818: From 16-Year-Old Skater to Investing in “Cash Machine” Kmart Conversions w/Mikey Taylor

Episode Date: September 14, 2023

Cash flow “machines” is how Mikey Taylor describes his most recent investments. To the non-investors, the numbers seem too good to be true. But Mikey has repeated this system, again and again, to make millions of dollars off of “boring” investments that most investors overlook. What “cash machines” is Mikey referring to, and how do you go from making $800/month to millions of dollars like he did? Mikey has no degree, full-time job, or wealthy parents to hand him an inheritance. At sixteen, Mikey made it his mission to find sponsors for his skateboarding career. What started as a hobby grew into a profession, but Mikey knew it wouldn’t last. After searching for some other income to support him when his career finally ended, Mikey conveniently stumbled upon real estate—and the rest is history. Since ending his skateboarding career, Mikey has built a brewery, invested in multiple BIG multifamily deals, and started buying the “cash machine” properties so many investors WISH they could get their hands on. If you want to know the strategy behind these bold moves and how you can go from barely scraping by to financial mastery, like Mikey, this is THE episode to watch. In This Episode We Cover: The “cash machine” real estate investments only few investors will buy What REAL passive income looks like and how to start building your income streams today Starting a brewery from scratch and selling it for an almost unbelievable profit The “blue ocean” real estate deals many are too scared to touch Converting Kmarts into self-storage and how much money Mikey makes off of each How to avoid lifestyle inflation when you start making big bucks (so you can invest the rest!) And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area Davids's BiggerPockets Profile David's Instagram Rob's BiggerPockets Profile Rob's Instagram Rob's TikTok Rob's Twitter Rob's YouTube BiggerPockets Podcast 763 with Barbara Corcoran BiggerPockets Podcast 810 with Greg Harden BiggerPockets Podcast 700 with Rob Dyrdek Connect with Mikey: Mikey's Instagram Mikey's Website Mikey's YouTube Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-818 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Recorded at Spotify Studios LA. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 818. First question we ask is, do we want to own this thing for the next 10 years? And is there demand to own this thing for the next 10 years? But a lot of times we go, oh my gosh, I'm going to buy it now. And what are interest rates and cap rates going to do in four years? And it doesn't matter. As long as there's nothing to force a sale in your time horizon, if you have the demand, it's staying off, but your cash flowing.

Who cares? What's going on, everyone? This is David Green, your host of the Bigger Pockets podcast. here today with my co-host and frequent flyer on the podcast, the handsome Rob Abas Solo. We've got a banger for you, as Rob would say. It slays, it's fire. What's all the other stuff that you're always trying to sound cool and say?

It slaps. Slaps, yes, that's it. Today's show Slaps with Mikey Taylor, a former professional pro skateboarder and friend of Rob Deirdock, who we've also interviewed on the podcast. And Mikey shares a lot. He talks about how he became a pro skateboarder, how he got into real estate investing,

he met with a financial advisor to talk about what he should be doing with his money, how he initially invested in self-storage, then started buying self-storage, then started buying apartment complex, then got a fund, then built a debt fund, built a brewery, and sold it. I mean, Rob, this thing was chock full of good stuff. What should people be listening for to help them in their own journey? What I really liked about this one is that I thought there were a lot of practical elements to what he had to say. Like, you know, he wanted to quit his job or he didn't even want to go to college and wanted

to do the skateboarding thing. And his parents said, no, you need to understand finances and you need to build the budget. And they made him go to a financial advisor that told him that he needed to start investing in real estate passively. And he kind of developed that bug of just – he got his first distribution, talked about how that was just very addictive for him to just continually do that, how that unlocked in his brain that when everything else goes away in the skateboarding world, he can always depend on real estate. And he just used that to kind of build more and more momentum to now his crazy story, how much money he's raised, how much money. to how much money he's deployed in the multifamily space, the self-storage space. Honestly, just crazy story all around.

And I think the craziest story was at the very end the one he tells us about Rob Deerick. So if you want to hear that, stick around until the very end. This guy has lived about six lifetimes. It's true. It's true. In one life, and we've got it all condensed and compacted into an episode

for your viewing pleasure. Make sure you listen all the way to the end to get Mikey's four key takeaways that he's learned from life that are pretty much guaranteed to help you be more successful. Now, you may be noticing that our background looks a little different. That's because Rob and I are here in downtown Los Angeles at the Spotify Studios, recording for your viewing pleasure.

Before we get to Mikey, today's quick tip is start with the end in mind. If you raise money, you need to know how to pay back your investor. This can be for a business or a larger real estate deal, but always start with the end in mind. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value, and the best markets across the country, without making real estate your second job? That's exactly what rent to retirement does. They're a full service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75%

of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade, helping thousands invest smarter. If you, want to do the same, visit biggerpockets.com slash retirement to learn more. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust while they do it. And that comes down to three numbers, occupancy, delinquency, and net promoter score. If those numbers slip, your income slips and your trust slips too. And most PMs don't hold themselves to performance standards.

They focus on activity, not outcomes. Mind is different. They obsess over the metrics that actually grow your cash flow. Go to mind.co slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment like an investment. Do you ever notice how every passive investment

somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value, and the best markets across the country without making real estate your second job? That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing, plus interest

rates as low as 3.75%. They've partnered with bigger pockets for over a decade, help. helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Rob, anything you want to say for we get to Mikey? No, Davey. Let's hit it.

Mikey Taylor, welcome to the Bigger Pockets podcast. For those that are unfamiliar with Mikey, he was a pro skater straight out of high school with a 14-year career who retired at 34 years old from skateboarding, created and sold a microbrewery while still skating, started and runs commune capital, which has debt and equity funds. He owns commercial real estate in self-storage facilities in eight states and is a multifamily

investor in California. And as a fun fact, who is recently elected to the city council in 1000 Oaks, California. You almost said 1,000 Oaks. Yes, I did. I almost did. But I'm not from Southern California, but I caught myself with the last minute.

That was good. You did say the PCA. You absolutely caught what I started to do. So, okay, let me ask you a question while we're on this topic. Yep. Rob said it's not called the PCH, but everything else you guys stayed on here is the something. It's the 405, the 205, the 5.

In Northern California, we just say I-5. Yeah. Highway 99, but you guys have the. But when it comes to PCH, it's not the PCH. Is there rules to this lawless area? That's one of the rules. It's like a locals-only type of vibe. Like, if you know, you know.

And if you don't, then we know you're announced. So you make it complicated so guys like me stand out and you know that I'm not in the club. Exactly right. I think you would really love 1,000-0 California. a really nice place. Oh, I didn't even know why he said that. You picked up on it. Okay. You just thought I don't know how to talk.

I'm reading right off the script here, and Eric could have just put the word thousand, but instead he put one zero, zero, zero, zero. That's good. Which most people read. And then it's like that's the thousand and then oaks is like on another line below. So my eyes are to get that far. As soon as I saw the oaks, I was like, wait a minute. That doesn't sound right at all.

Mikey Taylor, welcome to the podcast. Thanks for having me. How are you doing? Is there ever a moment where you become Michael Taylor? Or is Mikey here to stay? You know what? I felt like running for city council was that defining moment

and all the strategists and campaign managers were like, hey, Mikey sounds like a young kid. Like I think it's time. And like my whole thing was like, look, this is what I am. Like my brand, if you want to say it, as that has been established

and anything different would just be not myself. Sure. And so once I ran and now especially being a city council member, I feel like Mikey's probably here for, I think it's for life. But they did make you

ditch the propeller hat though. I had to get rid of the hat. That was a manor of the hat, but Mikey Taylor's here to stay. There is a Michael Sailor. It sounds a lot like Michael Taylor. That's probably not bad company to be considered. He's a smart guy. Yeah, I will take that confusion. Yeah. So what did life look like at the beginning of your extreme sports career from a money and savings perspective? Oh, okay. So when I was skating, like pro skaters don't make a lot of money. I can start with that. It's not like baseball or football. I was trying to live off nothing, essentially, but I wasn't making that much. So it was really not a lot.

As my career started progressing, I started making more. And for the first 10 years, I pretty much tried to maintain like spending 20% of my income. And I tried to control my lifestyle inflation as much as possible. And I did pretty good up until having my first child. And when I had my first child, I was in a 92 civic hatchback, no power steering, no, no, no, no, uh, your child was born in the back seat of the car. Well, no, it was my, it was my wife, actually. Like when we had our first car, when we had our first child, my wife looked to me and went, you can't do this anymore.

Like, I get that you're like, act like you're broke and you're driving this piece of crap around. It's time for you. You get a real person car. And so I sold that, but I got a Toyota Prius. That's a great car. I was like, yeah. People sleep on the Prius. I liked it.

I ran it for like six years. It was, uh, I think I spent like 24 grand on it. I love who you said. I ran it as if you're still the fast of the furious. I ran it a quarter mile. Yeah. I ran it a quarter mile to down. Yeah.

So basically, like, when I was skating, I was just try to keep expenses as low as possible so that I could make investments in asset classes that you typically need a lot of money for. And I just wasn't making a lot of money. So I almost had like a reverse Dave Ramsey kind of model. Strong defense. Yeah, that's right. That was it. So where did that come from?

Is that just like the insane frugality? Is that something that was ingrained in you as a kid or is that just something that happened later on in life? That's a good question. And there were two parts of it. One, I think fear was a big driver for me. Like, not knowing what life after skateboarding was going to look like was scary. Especially considering I didn't go to college, I was being paid because I could ride a skateboard. I had no idea how that was going to, you know, translate into life afterward.

And then I would say the next component is I'm a very, like, routine and I'm actually pretty good at like discipline and consistency. So that fear mixed with that part of me just, okay? this is the model that we're going to follow. I'm going to stick to it. Is that a pretty common way of doing things in the skateboard community, or did you see your friends kind of blown their cash? No, like skating was interesting

because when I became pro, the skate industry kind of blew up. We went from like no one knowing who we were and thinking we were, you know, kind of lame. And then all of a sudden Tony Hawk hit the scene and skateboarding became pretty large. And so we started making more money. And when other skaters started making more,

it was like, oh my gosh, I can drive a Cadillac that S. was the big one. Everybody started getting Cadillacs and, uh, no, it was like, living in life. This was like 2006 or so. This was 2006. It was cranking. It was just like, you know, money flying everywhere. But we weren't making crazy money. It was just, we were spending it all, you know? And so did your parents like, you, you, you, you were skateboarding, was it in high school? And then did you, like, was it the time for college and you kept skateboarding? Or what was that whole life like? Yeah. So my story was, I started skating when I was like 11 or 12,

got to 16 and my parents wanted me to get a job. And I didn't want to work because I felt like that was going to take away from skateboarding. So I basically went out and tried to get companies to sponsor me. I had a handful that started to sponsor me. They gave me free product. By the time I turned 18, I was in the magazines. I had a couple opportunities to start traveling the world. But that was kind of when I was supposed to go to college.

And so I told my parents I wasn't going to go. They absolutely lost it. We're not okay with it. And I basically looked at my mom and I was like, what if I just do this for a few years? Like this is an opportunity that most people don't get. I'll travel the world. I'll see some things. I can always go back to school.

And my mom, and my dad too, but my mom more so was like, okay, if you're going to do it, though, you have to have help. Like somebody has to help you with your money. Money was the big one. And so she connected me with a financial advisor. I was making like $800 a month. He was like, I don't even know what to do with you. And then that was kind of the beginning of this whole process. Wow.

So was it, is that when you were making the 800 bucks a month? Is that when you were spending 20% of it? So when I, no, the first year it was, it was, I spent it all. I 800 bucks. Fair. But I got to a point where in the first couple years I started making like, I don't know, $3,000 a month. Okay.

And then I was like, okay, I've got a cell phone bill. I was still living with my parents. Everything else was paid for. I was doing pretty good, not spending money. And then I don't think my lifestyle really increased much until kids came into play. That's when it kind of, it's just jumped up. I'm curious, your parents were very interested in money. You weren't making a lot of it, but it's still on the top of their head.

Was money a struggle for you guys growing up? Was there not enough of it to go around? Yeah, see, that's what's interesting. No? Like, my dad, my dad didn't make a ton of money, but he didn't struggle. He was a photographer, had a really healthy view of marriage. Like, there was, I never watched my parents, like, fight over, you know, a ticket or a bill that was unexpected. They viewed money as a tool.

So that was, I think, the good part. I think where the fear element came in and why it was tied to money was my parents and myself really believe that if I didn't go to college, like I was basically saying goodbye to making any type of money. It was like there was all doors that were going to be open were now not. And so I think that was kind of the fear driving the money side. Like if you're not going to be able to do anything afterward, you better take advantage of this opportunity.

So where did the interest in real estate come from? So real estate came from the financial advisor my parents connect me with because his brother was running a storage portfolio. and he was telling me about all the stuff they were doing, and it got to a point where I had enough to invest, and they raised money from investors. So my financial advisor was like, hey, do you want to put some money in storage? You're making $800 a month?

No, at this point I was making more. This time I started making more. And he basically asked me that. I didn't know what to say. I didn't even know what questions asked. I was like, I don't know. Like, tell me about it. So he gave me the like, you know, well, look, people need a place to store things,

and he talked about human behavior. And one thing he did mention, which I always hung on to, was storage performs during recessions, or it's very recession resilient. I don't know why, at however old I was, 24 or 5 years old, that resonated. But I remember going, huh, so I can count on this thing when times get bad. And so I just invested, I don't even know how much, 25 grand, I can't remember. And basically it was on trust with him, and then I started getting a quarterly dividend. And then it happened over and over and over. and by like the third one I was like this is it

this is my way out this is how I you know so that was a that was a big moment do you remember what your first dividend was the amount yeah no clue no no but it was significant no it wasn't significant when you're making $800 a month it probably felt significant okay so so when I invest I was making more than 800 I was probably making I'm maybe close to 100 grand a year at this point

nice nice my first investment was 25 grand so no the dividend was not significant right it was paid off cash flow yeah but I think it was the idea of, oh my gosh, the check, it wasn't even a wire back then. The check came. The check came again. The check came again. And even though I was making money with stocks and bonds, there was something about the storage

side. I don't know why. It just kind of clicked. And the fear, and kind of to bring it all home for skateboarders and how this applies to everyone else, I got paid from sponsors. So my sponsors were my employers. And every contract I had was typically a three-year deal. So when I would sign a deal, the only thing through my mind was,

I have security for three years, right? I don't know what's happening after that. When I got those checks, the dividends, I don't know why it just was that, that aha moment where I went, oh my gosh, if I get more of those, I don't have to be so concerned

with not getting my next contract. It was just, I don't know. Security in an insecure, unstable environment. Correct. Yeah, correct. Yeah. So that fear at the end of the tunnel when my career ended, started becoming not as dark.

Okay, so what happens next in this life business adventure that you're on. Okay, so I skate for, I'm skating professionally for about 10 years. I'm following the same path. Basically live like I'm broke, invest as much as I can. In 2011, myself and two of my friends had this idea that we could start a craft brewery. We didn't have any business experience. We just had an idea and felt like we could do it. And so in 2011, we started going to other breweries basically asking if they could make our beer for us and we would just manage the marketing side of it. And after like the third or fourth one, we realized there's zero money in doing that.

Like we would ultimately have to build our own production brewery. And so I went to my financial advisor. I was like, his name is Randy. Randy, we have this idea. We don't know what to do. Like, what's our next steps? And he was the one that walked us through having to build a business plan. He helped us build that.

When we built the business plan, we realized we didn't have enough money to start the company. So he started educating us on, you know, how we would go out and raise money from investors. He helped us with, you know, the legal connections for the PPM and all the documents, but he helped us with the pitch. Like, this is how you have to go about in communicating what you're going to ultimately do, build trust with the investor so that they'll give you money. And mind you, this is two pro skaters and a surf filmmaker going into an industry where we had no experience. Like, think about asking you for a, you know, hey, would you invest in Minecraft brewery? We don't know how to brew beer and we've never done this before. You're like, pass.

You know, it was hard. So we had a great team that was helping set us up for success. And then we went out and raised money. We raised the amount that we needed to open doors. We opened doors in about May of 2012. And the thing just exploded. We became – Oh, that's cool.

Yeah, it was unreal. How much did you raise? We raised $2.5 million the first round that we had one, two, two, three rounds after that. I think we were all in maybe $8 million by the end of it. Whoa. Okay. So how does that differ? When you're raising money for, like, let's say a business, like a brewery versus real estate, you know, real estate, you do the syndications. You're like, hey, you're the GP, LP, LP. As the GP, I take 30%, GP takes 70. And then you're not typically re-raising and diluting shares, whereas it seems like with businesses and tech and everything, there are multiple rounds where that's sort of how that works. So is it similar?

There's a part of it that's similar. There's a part that's different. And I'll go into the differences. But what I will say, after we sold the brewery, I was expecting real estate to be a much easier thing to raise money for. It was actually not, it was a little bit harder actually than the business. I'll go into why. When you're starting a business, you're using models from like other companies that have sold.

So it's more of a we're going to build it and everyone's going to make a ton of money. You don't necessarily need a, you know, pro forma of the business that you're starting to get you to the metric of return, where on real estate, here's your return, here's all the numbers that you get there. And so you can't sell this, like I'm going to quadruple or even beyond your investment. But as it pertains to raises, I would say where it's similar as for maybe a syndicator who needs to recapitalize their deal or, you know, maybe they went over budget. that they need more capital coming in, you're calling your investors and going, we have a capital call. It probably is similar to that.

It's calling your investors going, there's a capital call, there's a capital call. And then if they don't perform, you then can take it out to, basically outside investors and start raising. So then there's dilution. Aren't capital calls a bit, I don't want to say unsavory,

but not a great thing to do? It's not a great thing to do, but in real estate, and here's the difference, if you're doing a capital call in real estate, typically something went wrong. Right, right? Right. If you're doing a capital call in a business that you know you're going to have multiple rounds of capital to get to an exit.

It might be like an offensive opportunity that you need capital for, a defensive mistake. That's what it is. In real estate, it's a defensive mistake. In a startup, it's part of the process to get you to exit. It's just the way it is. Yeah, it's why you go seed and then you go series A, B, etc. So you were planning to exit when you started this company. Can you walk us a little bit through what that process was like? Yeah. So this was a piece. piece of advice that when we're basically building the business plan and being taught how to raise money, this is something they said. They'll never forget.

When you ask somebody for money, when you're raising capital, the first thing that probably is going to come out of the mouth, maybe it's a second is, how do I get paid back? When do I make money? And so you have to very clearly show them where your exit is, or if you're building a cash flow, you know, a business is going to cash flow, how often those dividends come out. Just basically, when does money actually be realized? And so with us, we knew that we were going to pay investors back by an exit. And so in our pitch, it was, you know, this is the time frame.

Let's call it 10 years. There's going to be multiple rounds up to that point. We're going to exit now to be how you get paid back. Which is similar than even real estate raising too. You're basically calculating your IRAs, your internal rate of return based on the exit, most of the time, right, on a five-year exit, seven-year exit, 10-year exits. I guess this is pretty similar in that because most of the time investors just want to know what that end point looks like. Right. And you're totally right. I would say the challenges for anybody who runs like an open-ended fund, right? Then it gets more difficult to show somebody this is when an exit happens and this is when dollars go into your pocket.

So we're doing right now, the open-ended fund. And it's tough because just like you said, most investors, they just want to know what the timeline is. Not that they want it now. They just want to know that there is a timeline. So open-ended funds are very tough for that reason. That is the hard part about them. Open-ended funds, the blessing. You don't have a capital call need. That's true. Yeah, yeah. So you're developing. this brewery is starting to grow, crush it, I imagine. And how did you make it so that it stood out in a way that's like attractive enough to be bought? That's a good idea. So we, when we were doing our research on the craft beer industry, what we learned early on is that no companies really marketed a brand. It didn't exist. Everything was product driven. So the normal experience with somebody would go to the store, they go to the beer, wherever you want to call it, Allie, they'd

look for brands and something would resonate and then they'd buy it, right? We went in going, wait a minute, we come from a world of marketing. Like in the skateboarding world, the wood manufacturer, there's two of them. So every kid is riding the same board, but every kid thinks one board's better than the other because of the experience that the brand was able to communicate to the kid, right? So our idea was we're going to build a brand and experience a lifestyle and market the person prior to them going to the store, right? So what we did, is we raised money from skaters and surfers and snowboarders, and then our marketing was around them. So 2012, when there were no influencers, we made our investors, our ambassadors, and then all of our

marketing was many documentaries on them communicating the California lifestyle through their lens. So what does California look like through Paul Rodriguez lens? What does it look like through Taylor Knox lens? And so what happened was we had a whole community of people from California that went, this is my beer, because they see California. like I do. And there was no one else doing that. So that was the thing that ultimately separated us. And then to add on top of it, we're doing it all through Instagram at that time. So no one had social media. Imagine a world where no one has social media. No one understands a brand. And we come in and go, we're building a brand. We know how to do it. And we're promoting it on social. It just went nuts.

So we, for context, we became, if not the one of the fastest growing breweries in California. we had demand in the entire nation and then in the world we couldn't get our product out to California we could not even come close to fulfilling demand it was the opposite experience that most startups have and I think in my perspective

it was because of that element where our beer was good our beer was winning awards but we were doing something that no one else was doing which was creating the separation from the many and what kind of helped us stand out do you think you could do it again okay so that's a really good question

when we sold it I had three partners I had two partners three including me one of my partners stayed in the beverage industry so he went and created to Seltzer brands

called Ashland's huge brand my other partner does a company called primitive huge clothing brand and then I went into commercial real estate we all are still using the same model

we're just now he's still in the same let's call it beverage but we're all applying it to other spaces yes you can but a lot's changed. Like, it's not 2012 anymore

when it comes to social media, right? Everybody has it now. So you don't get as much standout just by being on. You actually have to be better than those around you. But, yeah, I think I could do it again. Yeah, I mean, I'm attempting to now

just in a different asset class or a different industry. Yeah, yeah, so let's talk about that. You end up crushing it in the brewery world. You sell it. At what point are these, like, happening at the same time, or you're getting into real estate and you're doing the brewery thing or does one like does the real

estate come after? Good question. So no. Well, okay. Okay. Investing was happening passively in real estate. I was not active at all up until this point. Started the brewery, sold the brewery, and then I had about a year of trying to figure out what was next. I didn't know. I was actually, I went through like a tough period of transition. Sold the brewery. I was no longer a pro-scapeboarder. I had two little kids. My wife and, and, you know, my marriage was not going well. And I was being hit with like identity and purpose kind of challenges as well. And so I had basically a year of figuring life out.

And my wife and I especially had a year of like rebuilding marriage, our marriage. Then at the end of 16, early 17 is when I came up with the idea for commune and then started working on building this company out. And what is commune? We're private equity real estate firm. Okay, cool. Yeah. So no, about a year.

About a year of trial. would say. So you start commune about a year or a year of trial. Do you go right into what you know? I know you were investing passively into the storage game. Did you decide to just go all in there? Good question. No, we started with multifamily. Okay. Yeah. I look, storage, anyone who's an investor in storage is going to resonate with what I'm about to say. It's a phenomenal asset class. They're cash machines. You don't have to deal with tenants living there. There's a part of the operations that is in my perspective a lot easier. But at the end of the day, it's a bunch of garages. It's not the most sexy asset class. And so when we started commune, I wanted to use what we were talking about with

St. Archer, which is the brewery, what I thought my skill was to try to create a value add or separation on the assets that we were basically going to go by. And I felt like multifamily and ultimately building out homes was the ultimate experience. Like talk about like adding value through kind of marketing or brand. I felt like that was the one. Mixed with it had, you know, what we talked about earlier, performed well during recessions. So it kind of hit the safety or the risk adversity that I wanted. And then I was able to, what I thought, hit a value ad. What that meant like for our business model, we were going into markets that the creatives were going into first. So what we see if we're looking at California, right? Skaters, photographers,

artists, they go into the sketchier areas, and then they make it cool. And as it's becoming cool, then you start seeing the home flippers come in, you start seeing all the cool retail. Then years later, the big institutions get here, right? So our whole model in the beginning was follow the creatives, go in and actually create an apartment that the youth wants, right? If the creatives are going there, what do the creatives want? They want an apartment that they can film content at. It's really basic stuff, but for our generation, it made sense. They want something that looks good, They want people like them in the community and make it so that it's current with technology, right? No keys.

Make it all, you know, keyless entry. And we did really well in the beginning with that. That's really funny because you remember when we had Barbara Corcoran on the show, that was her exact strategy for when she was building her, you know, her empire in New York. And she would go to restaurants and she would talk to the waiters and she'd be like, hey, where are the, you know, the hip artist staying? And they would tell her and then that's where she would go and buy real estate. Yeah, that was, and look, I came from skating.

Like, my whole community's plugged in here. So, you know, what that looked like, our first apartment we did was in Long Beach. And in Long Beach, 4th Street is kind of what started to become built out. So we started looking for assets above 4th. It was like 5th, 6th, and 7th is where we were looking. So we got in there, we got in there early. A couple of my partners said, absolutely not. Why are we doing this?

And then we ended up building it out. And three years later was the hit place to be. And we ended up selling it. We did well on it. Really? Yeah. What do you mean by, when you said value add multifamily, just for everyone at home that doesn't really know what that means, break us through that process a little bit. Okay. So value at ultimately means that you're going to do something to increase the value of the property.

But you can do that with a lot of different levels in a sense. Somebody can come in and do a light value ad, which is typically paint and, you know, maybe do landscape, etc. Or you can do a deep value ad, which is basically bringing something down to the studs and really trying to, If you're looking at a rent from rent standpoint, increasing rent significantly. And then I would say the ultimate value add would be like a redevelopment, scraping something and building. And so that's actually what we do. I mean 100% of our business right now is complete development. We scrape and build now.

Like you tear down and build? Tear down and build. Because I've always been told especially these days, it is rare for that to ever make sense to actually, where it's cheaper. Oftentimes you're like you don't want to tear it down. You'd rather just fix it up and make it nicer. Sometimes. Sometimes that's the case, but there's cycles, right? There's points where your yield on cost is going to be close to or less than your cap rate, right? If that's the case, then you don't build because you can buy something at a higher yield than you can build, right? But in times like this, that's not the case. Depending on the market you're in, right? Like we invest, you brought it up from the beginning, we invest in California. A lot of people do not invest here. Right. It's difficult to build. California scares a lot of investors out. But because of that, our markets and a lot of cities are

undersupplied. So we typically go into markets that are undersupplied, build more units. Right now, we're in a point where city councils are saying yes, almost everything. And then we get our value add by adding a product that has demand in an area that needs it. You mentioned when your yield on cost is greater than the cap rate, you said it doesn't work? When your yield on cost is less than the cap rate. So basically, if your yield on cost, let's say, is five, five percent, and the cap rate's five percent, why would you build it? You could just buy a five cap, a five percent return. Correct. You want a spread. So basically on your yield on cost, what most people look for is about a 250 BIP or two and a half percent margin or spread from build to curtain cap rate.

So if cap rates are at, let's say, five, let's say five percent right now, you'd want your yield on cost to be, let's say, seven and a half percent. When you're saying yield on cost, you're referring to the cost to build. Correct. How much money you have to spend and the return you're going to get on that money. Correct. We're going to go build a $2 million property. And if it's going to bring us back a 5% return, then that's a 5 cap. It's a build on cost of 5. So what you're saying is that if that number is greater than what you can buy at, it makes sense to go build. Yeah. Yeah. So this is a metric that a lot of like the institutional investors look for, right? Another way to say it is basically that you're building to a cap rate from a yield standpoint. So if cap rates are,

let's call it 5%, right? If you buy an existing product, let's say, you know you're going to get an unleavened 5% return, but you can go build it to, let's say, a 8% yield on cost. That premium may be worth a bill. That would be called 300 basis points or 3%. Correct. 100 basis points. So 250 basis points is the number you said they want to be, which is about a two and a half percent increase. Correct. And then when you start getting into at least some of the bigger investors, if it's not a big enough spread, they're not coming in. Because the time you're taking and the effort and you got to hire people to make sure it's going to happen and the market could change, right? Versus you just go in, you buy something else and it's way less work time and

risk. Correct. So the bigger, the spread is needed to justify the additional risk time expense. Human beings that have to manage the process, something they could go wrong. Correct. Anytime you're taking more risk, you need a premium for that risk. I'm glad you said that because, I mean, we don't want to go too far down this road, but a lot of people at risk scare them. But if you can quantify risk, if you can turn it into some form of a number, you can bake it into your overall numbers. And now it's not so scary anymore. Rather than looking at risk as something to be avoided, it has to be something that can be quantified. Correct. Right. And now there's times where, okay, we're adding risk, but the rewards so much outweighs it that it actually is smart to move forward

with that. And I think that stops a lot of people from investing at all. 1,000% is you're almost actually experiencing in some regard the reverse right now, where you can go after deals with less risk right now that a lot of people were taking a year and half ago. But the return is a little bit less than people that are still levering up and expecting a refi in two years. And they're going, oh, I'll take the bigger return because it's the bigger return, duh. But they're not, you know, including the increase rate. Yeah. Correct. Which is really what insurance companies have done to make themselves so valuable is they've just quantified risk for you. Correct. They're like, yeah, all these things can go wrong. But if they do, we'll cover you for this cost. Correct. Now you just bake that cost into whatever you're paying for the property and you know if it makes sense. Correct. Yeah. And even like, you know, from a pitch standpoint, this happened to me recently. So I'm just thinking of it. We were talking to a potential investor. They had their manager on the line as well. And the, you know, managers talking to the the person and goes, hey, just so you know this is a high risk investment, right? You just need to know this is a high risk

investment. And I looked at him and I was like, hey, I just want to put this out there. If you're saying this is a high risk investment without any context, you're going to look at this return and go, wait, why would I do it? That's all, right? A high risk investment was the brewery. That was a high risk investment. The brewery 12xed everyone's investment in three and a half years. If you're expecting that risk and that return with this, that's not it. This is a risk adjusted return. But in real estate, there's different risk in that category. So I think it's really important to know a riskier investment in, let's say, real estate does not mean it's the same as a riskier investment in tech or in the asset.

It's relative to that asset class, right? Yeah, that's a great point. When you say this is a risky investment in tech, that's saying a lot because tech is sort of inherently risky in a lot of cases. You could say this is a risk-ladled real estate investment. That might not mean a whole lot because real estate's safe compared to most. Correct. Asset classes.

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Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsor. sponsor job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring, Indeed is all you need. Well, hold on a second. You said you're investing in California and then you described this is why we're investing in California, right? Because there's not enough supply. Right. Which is one of the things I just think no one looks at when they're picking a market. They ask, what's my cap rate? What's my IRA? They're

asking questions on the return they're going to get. They're not asking why. What's the supply and what's driving you here? What's driving that? And a lot of people do look at demand to their credit, like, okay, people are moving here. It's a good thing to look at. Okay, jobs are moving here. That is a good thing to look at. I just don't hear anyone in the real estate space say, this market has constricted supply. It's hard to build here. It's already built out, like what you had said, like, that's how you knew in Long Beach where to go. You said it was built out up to 4th Street, so we started looking at these areas, which is where the path of progress had to go. Correct. It's not completely speculative when you know what's driving it to see that it's

reasonable to expect this. And something about your brain picked that up. You know what? I think from my brain, I knew back then where the trends were headed. I have a partner who's, he's the smartest person I know. He's brilliant. A lot of what I've learned over the last seven has really come from him from at least some of the stuff we're talking about now. I remember one of the first things he told me when we're going to look at doing basically any type of purchase. First question we ask is, do we want to own this thing for the next 10 years? And is there demand to own this thing for the next 10 years? And if there is and you're going to hit the rents that you need to hit, it doesn't really matter what happens in the interim. But a lot of times, like to your point when we're looking at new projects, we go, oh my gosh, I'm going to buy it now and what are interest rates and cap rates going to do in four years? And It doesn't matter because as long as there's nothing to force a sale in your time horizon, if you have the demand, it's staying occupied, you're cash flowing. Who cares? And so that was a good beginning metric for us.

Is there going to be demand for the next decade? Yeah. I mean, it's having a pretty long-term perspective on your investment. But even like if you don't, right, sometimes we'll promote or look at like a five-year hold, right? And so when we're showing investors, we're showing an IRA based on five years. but what we're saying is look this is the plan but there may be a situation where we can't sell it in five like if it's not an opportune time to sell we're not going to sell and then we extend it to 10 and show them what the return is on a 10 year hold and if the 10 year hold is still a good return

but if we are able to sell it at five or maybe a big pop that's how we go about it but we need to make sure that if we can't sell it's still a good asset to hold so did the multifamily end up being the crux of your like the foundation of your of commune or that would So multi-family was the first asset class that we went into. It was the first fund that we built out. But we were using social media for some of the stuff we were talking about, the brand experience. And we took a pretty big push into financial literacy. We wanted all of the content to be educational and actually a little bit more broad than just real estate.

Like I wanted to make sure that the person that followed me, even if they were an 18-year-old skater, was still getting the basics, how to build a budget, how to build credit, how to have a plan on what to invest in, all the way up to, you know, some of the stuff we're talking about. yield on cost or debt yield, something more specific to our industry. And what happened is very quickly, we started getting opportunity. So we started getting deal flow from social media. We started getting investors from social media. And the brand started growing at a very sizable rate. Then what happened is my partner who, there's a part of this story I didn't tell you. My financial advisor, his brother who was running the storage portfolio, when I came up with the

idea for commune, I brought the business plan to that. them because I didn't know what fund management was. Like I didn't even know how to build a fund. That was different than what we did last. So I brought my business plan to them. They looked at it and instead of them educating me on what to do like they did with the brewery, they looked at me and said, would you ever think about doing a partnership? And so we created a management company, which was commune capital, and then our first fund was the multifamily fund. They had a storage management company managing the storage portfolio that I was investing in passively. And they had built it over the last 20 years all from kind of the more traditional way of doing it.

Our assets are performing. We've given a great return. Investors have told their friends, et cetera. Well, in about 2019, they're looking at commune and it's taking all of the attention, right? It's growing and grabbing people at a way crazier rate than storage. But storage should be doing that because of the historical performance, etc. So they actually presented the idea to me at the end of 2019 about merging our companies together. And so in 2020, we did. The two management companies became one.

And then the storage portfolio came into commune. They had a lending portfolio as well. And then since then we've done, I don't know, five different offerings after that. Wow. Okay. And so then... So a little bit more context. Started a multifamily.

Then we added storage, which I had been investing in forever into. it then the debt fund. Now we have our second multifamily portfolio, our second debt fund. We're about to reopen storage and we've done a handful of syndications along the way. What is a debt fund? Does that basically mean that you're raising money from people and just paying them like a interest rate? Basically it means we become the bank. So when people are looking for bridge debt, we basically lend on the commercial asset and then we take our interest and that interest is then paid to the investor. And you're lending on assets that you have some understanding of in in case you have to take it back. Really good question. Multifamily and storage.

Yeah. Yeah. Before we even lend on a deal, we ask ourselves, is this a deal that we would want to own from an equity position? Right. You might. You might. You might. You will always have assets that become troubled and you have to take over. If you've been in the business long, it's going to happen. Kind of like motorcycle riders say you don't dress for if you crash, you dress for when you crash. Correct. That's right. And have you taken over any yet? Of course. Yeah, of course. It just happens. But you know what I love about this idea is it's sort of a vertical. And you're not learning a completely new business. You understand this asset class. Now you're going to learn maybe five or 10% new information, which is just how to make loans, how to price loans. But if it goes bad, this is a property that we could have bought. We've already, we already like it. It's not a completely new thing. There's a lot of synergy between it, but it's another income stream.

It is. You think of it this way. You do want a loan to perform. It is easier when it does. Everybody gets their interests. Everybody's happy, right? Loan gets finished. Then you've got to get money back out.

That would maybe be the challenge. but if you lent on an asset, this is a good asset, and you have to take it over and you understand it. You just took over an asset for potentially 65 cents on the dollar if your max loan to value is 65%. So you can look at it through that lens. If you need to take something over, you bought something that you wanted to buy at a discount.

Is it like, I mean, obviously it's easier to just for the loan to perform, but are you all at this point with your experience so good at seeing like a distress or a bad property that failed that you're taking, over and being like, oh, all we have to do to fix it is this, this, this, is it always pretty straightforward at that point? Or is it a bit of a haul to get your team? My thought would be, if the person couldn't deliver, something went wrong that you now have to jump in and fix that

problem. Is that? Correct. Yeah, that's correct. So, so basically, and we didn't do this always. Like, now we're at the point where it's multi-vindler storage only. But yeah, there are points. Like, let's say we lend on a construction project, right? And it stalls out 70% complete. We have to come in and finish it. So it does take time and it does take brain damage. Right, right. So you, and that's why I said it's better when they just pay off. You can get to scale easier and things work a little bit more smoothly when they don't.

But when a project doesn't perform, it's not that awful of a scenario. You know, you actually take something over. Correct. Yeah. Correct. And how much have you raised in your debt fund? So our debt fund, we've done about maybe a little over 300 million in loans, me $330 million.

How? And that's probably right now, I don't know, maybe we have like $50 million raised in that. And are you borrowing money from other debt funds and then like there's a yield spread between what you can lend it out and what you paid them?

On our equity side? Yeah. No, no, no. Sorry, I was thinking on the debt side. Oh, no. On the debt, on our debt fund, we're first position only. So the money that you're lending out,

money you guys have saved up through your company? Oh, oh, oh, I see what you say. No, we raise it from investors. Okay. Yeah, so we'll go out, raise a certain amount of money, put that into a loan. We get our interest. Interest is paid to the investor.

We take a split like we were talking about earlier. And then we just constantly go through the cycle. And if the loan doesn't get repaid, you have to take it over. The investor just takes longer before they get their capital back. Depending on where the project is. Yeah, if the project is, let's just say, stabilized for whatever reason, well, it's not that much longer until they start getting paid back. But we do it in a fund.

So just because one becomes troubled doesn't necessarily mean that investor's not getting a dividend. Maybe there's a maybe the dividend comes a little bit less through that timeframe potentially. But if you were maybe syndi, I don't even know if it'd be hard to syndicate, but if you were syndicating loans and one become troubled, then yeah, an investor's not going to see a dividend. Gotcha. Potentially. I remember you had a pretty interesting business model. I don't know if you're still doing this, but I seem to remember you were buying old Kmart's and turning them into storage facilities. Yeah, we're still doing that. Okay, you're still doing that. How does that work? You find it, I mean, because Kmart's seemingly don't go out of business all that often, but, you know.

Okay, so we, yeah, we look for Kmart's, Walmart's, Bedbath and Beyonds, which go ahead of business. Okay, that's good. Toys R Us. Correct. Have you thought about just following Ty Lopez around and snagging up all of the buildings that go vacant from his businesses? Was it Radio Shack or something? He was doing a boot barn and Radio Shack. Exactly. This is why it's the no. There's actually a lot of big box retail that goes vacant. That's something that's completely out there. The challenge is the city. Cities don't like storage. And they absolutely do not want what you. to be a bed bath and beyond that employed a certain amount of people and brought revenue to the city to go into storage. That's not something they want. It's not an amenity for a city. Or is it because of the actual income? It's actually not necessarily ugly because when we do our properties, you'll drive in and you'll go, oh my gosh, this looks like a brand new Kmart. It's a life storage. So from an

aesthetic standpoint, there's not much that changes. What the city loses out on is sales tax and employment. That's what they don't like. You want to move to a new city. They have a big, beautiful Kmart It makes it easier sell houses there. They get more property taxes. The Kmart is generating revenue. And they get jobs for their residents. And all those people are paying taxes on the money that are coming in. And then you get a self-storage facility, which is run very lean.

Like you don't need hardly anybody. I can see how if I ran a city and you're like, well, do you want to have a new Bass Pro shops? Or do you want to have a self-storage? It's like asking a kid, do you want to eat broccoli? That's right. You want to have a snickers. That's right.

So that's what we do on storage. and it's it's when you do it it's really good like we we've done well with our storage portfolio but it's hard to stay focused on one area it ends up being really spread out so our properties are all over the place and then we don't do a lot of deals i was telling you earlier we've done we're going to do one storage property this year one conversion we did one last year so it's not a lot whereas multifamily it's i mean we've five projects we've got three under under development or currently building out we've got four under It's just, it moves a lot quicker on multifamily.

But how does it work with like, let's say, Kmart or a Walmart or whatever? Because I thought that you, it would effectively be the person that owns the real estate leases it to Kmart. Kmart signs like a five-year lease. They don't own the real estate. Then Kmart goes out of business or vacates that. Are you then renting that? Are you then now the next leaseholder of that building? We buy it from the owner.

Okay. So that might be buying it from a bank. It might be buying it from an actual individual. it depends. Because is that owner panicking if Kmart leaves? You would assume so, but not always, believe it or not. Maybe if it's paid off. Yeah, we get some owners that hold those things for a long time.

But I think what he's getting at is, are you getting a, why would they sell it to you as self-storage, rather they just rent it out to Walmart instead of Kmart? Really good question. What they're going to attempt to do is get that, get an anchor in fast. That's what they're attempting to do. You see if Target wants to open. Correct. They're going to put that in.

You're right. But what happens, at least a lot of the properties that we end up getting, they've been vacant for a long time. So they attempted to get somebody in. They can't do it. The property's been there for a couple years now. It's starting to become distressed. There's weeds coming up through the parking lot. Maybe there's windows being broken that aren't getting fixed.

Then it starts becoming panic mode. Did you send all your skateboard friends in the parking lot to just go and like cause a big scene so nobody wanted to rent it? Yeah. Just unleash your minions to get a better deal. Absolutely not. So walk us through that. deal like that, like a Kmart, which you've done, because I'm super fascinated by this. What does one of those deals look like?

How many units go into a typical Kmart? I know it depends on square footage. And I guess that's cheaper to retrofit a Kmart than it is to build a storage unit facility? Yeah, a lot of times it is. Okay. Well, there's more to it, but potentially, I guess it would be the best way to say it. What you look for, you typically need something a little bit larger than 100,000 feet. and then most of our properties we get in, I would say, between 11,200 units in each facility.

Wow. Yeah, we get a lot in it. Yeah, we'll double stack them. I'll show you a video after this. It's funny, man. Like, you seriously feel like you're driving into a Kmart. And then you walk in as just endless rows of storage. If you're watching on YouTube, we're going to B-roll it right now.

Yeah, I'll send you some clips. It sounds like the scene in the Matrix where you're seeing like all the pods of little human beings that are all, Matrix clip there in case you've ever haven't seen that movie, Rob. Yeah. I've seen it a time of time of time. So you can get a lot, you can get a lot in. Yeah. So, I mean, do you just go hire an engineer to draw out the plans for how it would be converted, hire a contractor to build it out? And do you build it out in chunks or do you just build out the whole thing? Build out the whole thing. And then the cost of capital probably plays a big

role in what you can do with it, right? Because that's a lot of money that you're putting in to be to redeveloping. You're not going to make a ton of money back right away. Correct. Yeah. And they're not, I mean, they're not crazy check sizes, actually, compared to our multi-family, it's a smaller equity check. Yeah, you're not building bathrooms, you're not building kitchens. Can you give us an example of one? Yeah, I would say the average check size for our storage is, I don't know, maybe $5 million. So maybe it's like a total cost of around, let's call it 13.

Our multi-family, I mean, total cost is usually north of 40. Wow. Okay. So you're raising $5 million to basically get into this $13 million development or, you know, redevelopment. What kind of return does one expect from that? Like what's the hope on the cap rate? Yeah.

So it's going to vary on the time in the project, but I would say we typically want to see a project level IRA north of 20. Wow. That's huge. And then what that yields to the investor. I mean, that's changed out the years. Right now we're in a different scenario. Of course. The financing markets are different.

But right now we're targeting about 14, 15% IRA. That's still better than most people are getting up. apartments. But the apartments, I mean, we're doing a, that's a heavy lift. You're talking about a three-year project just to get to build in California. And then, you know, we, we want to see a project level, I mean, healthy 20s. Okay. How do you find out that there's a vacant Kmart?

A couple ways. We have a relationship with brokers. So we don't, we're not the like, there's, there's groups that are super good at getting direct to owner. Right. We typically get our stuff. You're going to the person that if I own the building that leased a Kmart. and I found out that Kmart's going out of business

and they're breaking their lease and I'm panicking. I'm calling a broker to be like, hey, who do you know that wants this space? That's the person you're going to go build the relationship. Yeah, so we'll get a lot of deals through brokers and then we do have a couple development partners. So we will also get deals from developers

that we've done this with and they'll say, hey, we've got the deal. Do you want to come in on this one with us? And then we will. So I would say that's the two sources. And then every once in a while, like we have had projects where the lending portfolio had to take something over

and then we repurposed it into storage. Yeah, that's happened in the past. That's kind of a nice little, like, tool to have in your tool belt. It is nice. We always got the storage play. It is nice. It's just hard. It is so difficult.

Because of the rezoning. The city just fights you on it all the time. It's the rezoning part. Yep. Rezoning entitlement is tough. Mom burned the macaroni and cheese. Broccoli again tonight. You got to get the kid to eat the broccoli when they don't want to.

I can see that. Yeah. So do you know on one of those projects, like what the, total cash flow was for for the storage facility pretty splits because i know you got investors and stuff like that well so we on our storage portfolio the part it's going to be hard to give you to that that's that's been an open-ended fund and we brought investors in it so many different stages yeah so it's one clean number it's going to vary got it got it got it okay all right so i understand you've got four things that you have learned in the past that you can narrow down to share with

our audience can we walk through those yeah uh we can i would say the first would be uh Starting with the end in mind. And this happened to me from my mentor. He asked me about my financial freedom number when I was young, and I had no idea what that meant. And so what he said, and which ended up becoming very important in my life, was you have to know what your goal is so that we can actually find the path to get there. That was huge for me. So trying to figure out what our end goal is and then find the best path to get there is really important to do from the beginning. I would say two consistency and discipline.

That has been the model for me. Anytime I've ever tried to hit a grand slam, it's gone nowhere. If I just focus on singles and doubles, I've done really well. So that's been a big model for me. Three, lifestyle inflation is probably the big one. I think this is something we all fall victim to as we start making more. This is also called lifestyle creep. Life style creep.

Yeah, lifestyle creep. As we start making more, we spend more. It's like we all fall victim to it. But if we can control how much we're spending, we start making more, this actually gets us to our financial freedom goal faster. So it's actually really, really important to hold that discipline. And then four, I would say, how to make yourself stand out or the separation factor. When we talked about how we did it with St. Archer, we found an industry that was saturated,

had a lot of people doing breweries and especially San Diego. And we figured out how to take an idea out of kind of the red ocean scenario and put us into blue. Did you describe what you mean by that? Yeah, so basically, when you're starting something in an industry that's saturated, it means competition is everywhere. It's very difficult. That's a red ocean. That's a red ocean.

Blood in the water. Blood in the water, it's saturated, right? What you need to understand is you don't always have to reinvent the wheel and you don't always need to create something new. You can find an industry that's saturated and actually create a spinoff that then create separation and puts you in a blue ocean scenario. What I like about that actually is you're going to be a lot of. going into an industry that has proven demand, right?

You don't have to build it and hope they come. But then you can create something that makes you different than everyone else. And then it feels like you are one of a kind. Which is the blue ocean. Which is the blue ocean. That's where you ultimately want to be. So with St. Archer, that would be the ambassadors and social media. With our company now, it's actually a similar model.

So, yeah, for your brewing company, you knew people want beer. Red oceans have proven it. People like to drink beer. But you don't want to have to go say, here's why I'm better than Budweiser or something. So instead, you create a marketing plan that nobody else. else is doing. So you've got this whole blue ocean of people. Wow, that's so cool. I've never seen that before rather than how do I make a better commercial than the Clydesdale horses for Budweiser. Correct. So how that applies to everyone. If you're going to start something or get into doing

something, you have to ask yourself, why would somebody go to me versus anyone else? You have to have that one thing that separates you. And it's a really important test and why I think business plans are so important is it forces you to figure out what that is so that you actually have a fighting chance to have something successful. I like it, man. This is some really good stuff. Awesome. We saved the good stuff for it. So one was start with the end in mind. Two, discipline and consistency. Three, lifestyle inflation. Don't let it creep up on you. And four, make sure you stand out. Have a way to stand out from the competition. Absolutely. If you guys would like to learn more about how to have consistency and discipline, check out episode 810 where we just interviewed Greg

Hardin. He's actually Tom Brady's performance coach. And he talked about this very stuff. And I'm like, you know what, this is good because now when Mikey teaches you how to make millions of dollars, you can use Greg's information to help you get there. Oh, that's good. That's good. Meanwhile, I'm going to be swimming over here in the green ocean. You're getting so much better at this. It's like your fourth callback to the color green. Very nice. I'll have to describe what a green ocean is. Awesome. If people want to learn more about you, connect, invest, do all that kind of stuff. Where can they learn more about you? Okay, so my social media is just Mikey Taylor. Our company is called commune capital. That's the same on all the accounts at Common Capital or website, communecapital.com.

And then, yeah, reach out. Anything you need, I try to provide any type of information that I've been given to anybody who wants to hear it. Mikey is the king of TikToks and InstaReel, so go check those out. He's always got nice, spicy hot takes. And meanwhile, David, David, maybe we rebrand you instead of David Green 24, Davy Green. I just don't know. That's what my audience is looking for. You keep trying to turn me into an infant or a goofball with every single.

single one of your ideas. Well, at least put on the propeller hat about you. There we go. I wouldn't change anything. You think David Green 24 is okay? Yeah. I appreciate you saying that. I wouldn't change anything about you.

The first three guests that we had today were like, why is that your social media? It's boring. It's dumb. You need to change it. Then we ask Alex and Layla Hormosa, they're like, no, it's just you. Who cares? I like you said that with the Hispanic accent. Hormosi.

But he's not Hispanic. I know you were just like Alex. I just get home sometimes. You know what I think? I think your name very, uh, it fits. It's your... Boring personality. It fits your personality.

Well, no, that's it. I wasn't going boring. Dang. I was going... No, I was going consistent, trustworthy, wise. I was actually going a different direction. You know what you're going to get. I absolutely know what I'm going to get.

You're somebody that I could count on and I know if I would call you'd be there. I think that name represents that. So having met me in person for the second time now, do you feel like the version of me that you hear in a podcast is the same as a version of me that you get in real life? 100%. Yeah. Yeah. You see what you get.

That should be the motto behind your name. You see what you get. Unlike the other 23 Davids that came before me, the 24th David. Is it you see what you get or you get what you see? You get what you get and you don't throw a fat. Is it you eat what you kill or you kill what you eat? I love that.

I've often wondered about that one too. I've heard of both ways. Don't do the time. Don't do the crime if you can't do the time. That's what my dad always said. That's what he said. That's the only thing he ever said, though. It was weird. My dad ran that too.

That was his favorite English English phrase. So if you want to get David's Foyer content, go over to David Green 24 and you can follow me over at Rob Built on threads on Instagram, on YouTube and everything in between. Go check out our threads, and are you on threads, Mikey? I am.

All right, go look at what's your thread. Mikey Taylor. Mikey Taylor, David Green 24 and Rob Built and let us know in the YouTube comments who has the most interesting threads of the three of us. Not that it's a competition. We just want to hear you guys to know.

But for the sake of this podcast, I guess it is. Rob's going to win this one before. I don't know that you want to compete with a professional skateboarder in anything. Do you do skateboarding lessons? Can people reach out to you if they want to have a skatebacker?

No, I don't. Is there any videos of you skating through a vacant Kmart doing kickflips and what else, what other skateboarding? Well, that was your ad campaign when you were running for councilman, right? No. No, we stayed away for that. No, but there are clips of me doing with other skaters doing tricks in the brewery before we put it out. Politics and skateboarding mesh wonderfully. There's never any animosity between those two groups.

That's right. Last question I want to ask you, we've interviewed Rob Deerdeck on the show. How did you and him ever run into each other in your skateboarding careers? Rob Deerick is probably my biggest mentor throughout my whole career. Actually going to a gala with him right after this. Tell him that we said hi. We'll be right there. Have you guys interviewed him yet?

We did. Yeah, we'd sent him on the show. It was great. Rob is the man. Rob is the absolute man. He's been one of my closest friends since I was 16 years old. He completely mentored me through my career. He's been huge.

Ask him if he remembers doing the podcast. I will. I'm going to see him. Seriously. We should go to the gala. All right. You like pretty things. That's all you ever talk about.

I'm going right. I can scoot in time. I'll go buy mine right now. I'll go to men's warehouse. You go in there with $500, you leave a king. You see what I mean about this is the stuff he's good at.

Rob is the man. Yeah, Rob is actually the man. Rob Dierdick is my mentor through skateboarding, right? Rob does his show. Rob becomes an entrepreneur, incredibly successful. I feel like I've been chasing him my whole career.

And he just keeps setting the bar higher, right? He's a worst guy to chase. I'm never going to catch that guy. I want to start my first business, St. Archer. And I'm, you know, me and Paul and Josh, my partners. And I was like, okay,

we're going to build this out. We're going to pitch us to Rob. Rob is going to be an investor. He loves us. He supports us. So we build out our business plan. We go to the fantasy factory. We pitch Rob on our idea, right?

We're going to do this brewery. This is how we're going to market. He's looking to the business plan. And he looks at us and goes, you're telling me other brands don't market. There's no marketing. There's no brand. We're like, yes.

And he goes, you're wrong. Like, no, dude. That's true. He goes, absolutely wrong. We're like, Rob. He grabs the business plan. Crumples it up. throws it into the trash and goes,

do not do this company. If you raise money from others, you're going to lose everybody's money. Right? Heartbroken. Heartbroken. Right? We leave, I'm so defeated. My freaking mentor just told me we shouldn't do it, right?

Three and a half years later, we sell it, right? He hits us up in me. I'm so proud of you guys, etc. Fast forward to a year ago, right? I talked to Rob. I'm like, Rob, it's time. He's like, what do you mean the time? Like, it's time for us to have that talk about my company now,

about you coming in as an investor. And he goes, let's do it, right? So we have him scheduled for, like, let's say a Thursday. Monday, I'm prepping the whole team. This guy is going to destroy us if we do not nail everything, right? You kept that crumpled paper. It's framed in your office. I was so hot, guys.

I walked everyone through the pitch Monday, Tuesday, Wednesday, and basically made everybody aware. If we fumble it, he will destroy us, right? We get through the pitch on Thursday, right? Give him the whole deal. like prepared. We finish. It's silent, right?

Rob's looking. It was on Zoom. He's looking. He goes, right? Because Rob could be extra. And he goes, that was one of the best pitches I've ever heard, right?

I love this. We're going to talk tomorrow. I hang up with the phone, screaming in the office, we did it! I was like one of those just like the student lived up to the mentor. That was a fun experience.

That was about a year ago. But you're not done. You're not going to tell us what happened tomorrow. No. No. I can't. That's the next potty.

I can't. I can't. I can't. I can't. Yeah. According to your NDA, you're not allowed to say whatever happened from there. I thought you're going to say he crumbled it up and he was like, a goose. Yeah.

So he, he, he, it ended up being a good meeting. Okay. Glad to hear that. If you guys want to hear more about Rob Deardek, his approach to life, how he fits like a whole year into one day, check out Bigger Pockets Podcasts, episode 700. Dude, it's so crazy how you memorize those. That was impressive. That's the only reason they keep me around. It's not for my good looks.

That's nice. What was six. 92. Do you remember? Oh, was 692? Yeah. Yeah, why are we going to take away from Mikey, though? We're talking about Rob Durek is buddy right now. That is masterful.

Do you tip a brista? No, I have the theory that you should only, you should only expend energy in areas where it's appreciated. And if tipping becomes expected, it is no longer appreciated. And now there's no ROI on my energy. Now, Mikey, with that said, the iPad's going to ask you a quick question after you swipe your card. So here you go.

And we'll catch you. the next episode of Rob, the next episode of Bigger Pockets. And we'll get you on the next episode of Bigger Pockets. David, sign us off. Thanks, Mikey. This is David Green for Rob, Shameless Plug, Abasolo. Signing off. Do you ever notice how every passive investment somehow turns into a very active lifestyle,

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