Speaker 1: I got to get me some financial freedom, and I
just wanted to parlay my IPO millions into passive income.
So I learned how to learn how money works. I
traded stocks and options for a while. Trade at Iron
condos for eighteen months was pretty cool. I flipped a
couple of houses for good measure, took a commercial real
estate class. But my big idea, Carrie, was to get into.
Speaker 2: A you're listening to Carrie.
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Speaker 4: Ever, and welcome you are listening to and watching the
Financial Survival Network. This is our first show of February
of twenty twenty five. So much going on, so much uncertainty.
Nobody knows what the FU sure will bring. All we
can do is look at the past and hope to
draw inferences and guidelines and over time. Real estate. You know,
we're very pro real estate. I've had some significant windfalls
in real estate, so never say never.
Speaker 2: It's always too high. That's one thing I've learned.
Speaker 4: The price is always too high, but it's always going higher.
Maybe doge, we'll solve all of our fiscal problems and
we'll start living within our means as a country.
Speaker 2: But you know what, I'll believe it when I see it, And.
Speaker 4: If you believe it, then We've got a bridge for
sale on eBay right now and it's going to go fast.
Speaker 2: You better go on there and get it. Michael Blank
is with us now. Michael real Estate.
Speaker 4: Invents Investor par Excellence into multifamily. Michael, it's great to
have you on the show. So tell us how did
you get involved in real estate?
Speaker 1: Yeah, so I kind of consider myself carry the crash
test demmy of financial freedom, and maybe your audience a
little bit. I've done so many different things, you know.
I was first taught to go to go to school,
get good grades, get a job with benefits. And I
have a master's of computer science. Carry. I'm highly educated,
and so I was part of this the software IPO
in March of two thousand, company called What Methods put
a bunch of money in my pocket until I read
rich Dad port At in two thousand and five and
threw me for a loop because that was what it was. Gosh,
son of it, son of a gun, really through for loop.
So I was like, I have it all wrong. I
got to get me some financial freedom, and I just
wanted to parlay my IPO millions into into passive income.
So I learned how to learn how money works. I
traded stocks and options for a while, traded iron condos
for eighteen months, was pretty cool. I flipped a couple
of houses for good measure, took a commercial real estate class.
But my big idea, Carrie, was to get into a franchise,
because that's what you would have done. So it was
a restaurant franchise and I and I.
Speaker 2: Did like mistake, Yeah, of course.
Speaker 1: But I also invested passively and with a developer, which
I said, which I had subsequently lost, and had a
bunch of stuff with equity. So I've done a lot
of things. I'll experienced a lot of things. And yes,
the franchise did not go well for me. I I
lost my IPO millions, and I had eight restaurants at
the height and uh and uh, I did flip three
dozen houses. Try to flip my way out of I
had a few rentals and uh, those were pretty cool,
you know, not very not very passive, unfortunately, and uh,
twenty twenty eleven got into apartment buildings and that changed everything.
So we that is actual more passive, much more scalable.
So I've done a bunch of stuff. Where do you
want to take it from here?
Speaker 2: All right? So got into real estate? How do you
how do you like? You know, how do you find
a building to buy? How do you raise the money?
And how do you what do you do after God forbid?
It all work and you own the building?
Speaker 1: Well, you're jumping through whole whole minds of hoops. First
of all, line the world would you get in a
multi family in the first place? Like, what's wrong with
flipping and rentals? You just prove it right past it.
But let's say you move back past The problem with
that is it's hard to scale and it's not very passive.
That's the biggest problem with single family house I've found
is I've done a bunch of it, and so apartments
is actually much more scale, will much more passive, and
I would argue also less risky, which is important if
I want to get into a strategy I want to
be able to scale it, but I don't want to
have to arder either, and I can't. I can't have
spent five years building a business and then lose it
to some market event or some legislation that I can't foresee.
And that really puts the damper on things. And so,
after all the things I've done, apartments really is the
one thing that's stuck, and it sucks. Think it has
stuck since then, and it has performed well over the
last you know, you know, decades as well, So I
really like the acid class.
Speaker 2: How'd you do during the pandemic?
Speaker 1: Pandemic was surprisingly positive?
Speaker 2: Right?
Speaker 1: It was privately because we all thought that no one
would no one would pay rents and then you couldn't
get them out because of the directions, and the exact
opposite happened. Right, People actually pay their rents Number one,
I think because people's the one thing they control as
a roof overhead, because their jobs were on the line.
There was death in the streets, so they actually paid
the rent and the ones that didn't guess what the
government paid for them. And so our elections actually went
up wild.
Speaker 2: Wow, yeah, unbelievable. What markets do you like Michael.
Speaker 1: I like any market status growing where I can get
cash flong properties. So for example, we like Atlanta, that's
where a majority of our portfolio is in. But there's
a number of other markets, you know, Houston, Dallas, Austin, Huntsville,
or number of markets. It won't be either coast. It
won't be Boston, won't be New York, it won't be
San Francisco, LA. While they may be growing. Again, it's
tough to get cash flong properties.
Speaker 2: There, understood.
Speaker 4: And what about the laws of the jurisdiction getting rid
of non paying tenants, Like in New York, you know,
you might as well marry your tenant because you're stuck
with them for life, and then if you want to
get rid of them, it's going to cost you a
ton of money.
Speaker 2: So it's just like a marriage.
Speaker 1: Yeah, my first deal was in Washington, DC, again because
I didn't have someone advising me at the time, and
that was a nightmare, nightmare very much so, very difficult
to vect people, very easy for tenants to sue the
landlord for no reason whatsoever, impossible to get out, and
then actually really hard to sell. They actually weird topa
laws and so it is important to find the right
jurisdiction you're in, and that disqualifies Great State of New
York or California or places like that. It just makes
it more difficult to do business.
Speaker 4: So what's your favorite market overall in terms of value
and in terms of landlord friendly jurisdiction.
Speaker 1: There are so many. I mean I just mentioned a
number of them. We happen to be Atlanta, but like again,
you can be in Dallas, you can be in Austin,
you can be in Houston and Huntsville, Birmingham, Chattanooga. These
are all in the South Southeast, are all relatively the
landlord friendly growing and the.
Speaker 4: Cashflow positive real estate. It sounds like you have reluctance
or issues with Florida. Yeah, yeah, because a little bit
of it unknown.
Speaker 1: As you know, with the within, with the hurricanes and
the insurance and insurance, it's becoming increasingly difficult to get insurance,
which is a problem. I mean, if I could say
insurance goes up twenty percent of a year, I can
put that on writing. It's not a problem, but it's
a bit certain. So I'm a little cautious about Florida.
Speaker 3: Yeah.
Speaker 4: Well, they've made some changes, but you know, then you
got the engineering thing and the reserve funds. Well, I
guess for apartment buildings none of that counts, but it
does count because you still have to make provisions for
repairs and maintenance.
Speaker 2: Right, that's right.
Speaker 1: Absolutely, it's like a bit uncertain to kind of raise
it the risks, so a bit cautious on Florida right now.
In general, I do like it's growing. It's a growing market, obviously,
cash flowing properties. Great place to live a pro pro
owner also great, except that that one thing to put
the damper on things a little bit.
Speaker 4: Yeah, yeah, you know, looks really great, that ocean front apartment.
But go to Fort Myers Beach if you think it's
so great. Years later, two three years later, they're still
cleaning up and they're still demolishing and still waiting for money,
waiting for insurance companies to pay, waiting for FEMA to
do its thing. It's it's nuts. So I got your
point there better. But look at North Carolina. Nobody thought
that was in a hurricane zone. Yeah, they got hurricanes,
you know, in the outer banks, but never one going
up the middle of the state, flooding everything in sight.
Speaker 1: That's a good point. I mean stuff happens, right, stuff happens.
The difference though, is you can you can actually file
a claim and get money from it.
Speaker 2: Right.
Speaker 1: The problem in Florida is that is in question. We
an'll know a single in California. We don't know what's
going to happen there.
Speaker 2: Yeah.
Speaker 4: Well California is easier because nobody will write insurance there
because the place is called burned down, where they'll.
Speaker 2: Be quakes or whatever. Yeah.
Speaker 4: So if you were starting out now, knowing what you know,
what would you do?
Speaker 1: I would get right into apartments. I wasted so time
with a restaurants, so much time with single family house investment.
The only reason that people don't get in apartments they
think that it's heart, they think it's advanced, They think
that they need millions in the bank. And none of
those things are true.
Speaker 2: So how do you buy? How do you buy like
a fifty unit complex?
Speaker 1: You've got to change your mindset a little bit. So
normally people ask how do I do certain things? How
do I raise money? How do I inderwrite deals? How
do I do that? There's a great book by Dan
Selvin called Who Not How, and it kind of articulates
the shift in mindset. When you're trying to scale anything
but real estate in particular, start asking who questions. If
you start asking who questions instead of saying how do
I raise money? You ask questions who can get me money?
If you're saying how do I get experience? Instead, you
ask who can get me experience? And that changes everything.
It changes the entire dynamic because I can actually get
into the business without my own track record, and the
only reason is because I borrow the track record from
others around me. Imagine that a recruited property manager and
the lender and an SEC attorney and some advisor now
have all these seasoned people around me, I all of
a sudden have their track record. And it's just a
shift in mindset that took me years of figure out
that it didn't really need in single family house investing.
Speaker 4: Interesting. Interesting. So so where do you find these who's.
Speaker 1: Well, I mean they're relatively easy to find. I think
the biggest thing the same thing with raising capital, right,
raising capital, there's there's people. Yes, can you learn the
things you can actually learn to raise capital within thirty days?
You know how to raise capital in sixty days. You're
actually relatively proficient within thirty days you can recruit a team,
and in sixty days you have your team built, and
you sound like you've been doing it for a decade.
So it just requires a little bit of education, knowing
how to do certain things which are easily learned, and
then it does require a bit of mentorship. You I
did not do I just because I'm super smart and
I just try to figure everything out my own. But
why back in twenty eleven, in my defense, there wasn't
a lot of support.
Speaker 2: For I reinvent the wheel, right.
Speaker 1: I reinvent the wheel? Why why do that? Why figure
everything out? Takes too long? You make too many mistakes?
Why do that?
Speaker 2: Sure?
Speaker 4: Sure you can benefit you know, they say, a smart
man learns from his own mistakes, a truly wise man
learns from the mistakes of others.
Speaker 1: That's right. It's like trying to figure out what to
do and how to invest my money when I can
just follow what you're doing, and you've already been doing
for so long. Why do I just learn from you
versus me flailing around the markets for a decade?
Speaker 4: So where do you find the buildings to buy? Where's
the best place? In your opinion? Do you just go
to loop dot com, loopnet dot com and look at
their listings or do you need to know more than that?
Speaker 1: Yeah, So loopnet is a joke. Is that where deals
go to die? Lupnett is where a broker's list of
deals that everybody has passed on. But it actually is
a great gateway to where deals can actually be found,
which is or brokers. So with your single family houses,
you're looking at the MLS and you're looking through agents,
but with commercial you don't find them in the MLS,
you don't find them a lootinist, but you will find
them through brokers. And a great way to find brokers
other than the phone book, which no one uses anymore,
is lootenant. Instead of actually saying, oh, look at this deal,
let me make a let me make an offer on it,
you actually create a list of the type of brokers
that are whatever, selling or listing whatever you want to buy,
and you call them and you focus on building a
relationship with them, and within thirty sixty days you are
essentially in their inner circle and you get what's called
off market deals or semi market deal no one else ses,
and that's where the magic hatens.
Speaker 4: Okay, and as far as financing, do you always get
seller financing or combination?
Speaker 2: How do you do it? It's very rare.
Speaker 1: It's very rare. In commercial it's typically sell financing is
common or more common with single family houses or small
multis that are owner operated, but with commercial anything above
I'd say twenty they're owned by an LLC with a
bunch of gatekeepers, and they're not going to want to
sell you know fast, you know, fast clothes, all cash.
They're going to want to call their broker and goes,
give me the most you can for this building, right,
and so so typically they're not seller financed. But on
the other hand, financing is readily available, very relatively low
interest rates, relatively high leverage, non personally guaranteed loans, interest
only for three years. So it's really crazy how affordable
that financing is for apartments.
Speaker 4: Yeah, all right, I think we got a good taste
of it. We're definitely going to have you back on,
Michael to expound some more on some of these points
and go more into like the anatomy of a deal,
how you put it together, how you get the money,
and what you do with.
Speaker 2: It once you got it. If we want to contact
you find you on the web. How do you do that?
Speaker 1: As two places. If you want to be more the
active person, you want to get involved yourself, check out
my free training It's called Apartments one on one and
it's an Apartments one dot co. If you're more interested
in looking at investing passively, go to Nighthawk Equity dot com. Again,
we have a free training course that describes what in
the world are syndications and what does it mean to
invest in them? So two places to find me?
Speaker 2: All right?
Speaker 4: Excellent and the links will be in the show notes
to this interview on Financial Survival Network dot com. You
got a question for Michael myself, shoot me an email
kl at Carrie lets dot com. And while you're on
the site, please sign up for your complementary newsletter, like
over sixty seven thousand other FSN members have.
Speaker 2: Michael, appreciate you coming on and we'll talk to you soon.
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than
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