This is episode #418, and my guest today is my friend Michael Blank.

Michael is a multi-family investor, but he didn’t start that way. He started his entrepreneurial career by investing in restaurants, which ended badly, and by flipping single-family houses.

Single-family houses are near and dear to my heart…but there’s a lot of appeal to moving the wealth needle much faster with larger multi-family deals.

Today Michael shares how the average person can get started investing in multi-family deals, even if you don’t have a lot of money yourself. He clears some common misconceptions that multi-family is not just for successful single-family house investors that kind of “graduate” to multi-family, and there are ways around concerns that you may have around lack of experience and lack of funding.

Let’s get this party started. Please help me welcome Michael Blank to the show.

Highlights of this show

  • Meet Michael Blank, multi-family real estate investor and mentor.
  • Join the discussion on why Michael chose apartment buildings over single family homes.
  • Learn as Michael shares some great advice on how to raise money for your multi-family deals.
  • Learn how to get started investing in apartment buildings.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: This is the flipnerd.com, Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host Mike Hambright, and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 418, and my guest toady is my friend, Michael Blank. Michael’s a multifamily investor. But he didn’t start that way. He started his entrepreneurial career by investing in some pizza restaurants which ended badly and by flipping single-family houses. He knew real estate was a way to financial freedom but started with a single-family.
Single-family houses are near and dear to my heart, but there’s a lot of appeal to moving the wealth needle much faster with something like multifamily. Today, Michael shares how the average person, people like you and me can get started investing in multifamily deals, even if you don’t have a lot of money yourself. He clears some common misconceptions that multifamily is not just for successful single-family investors. They kind of graduate into multifamily. It’s not some advanced strategy after you’ve conquered single-family houses. There are ways around the concerns that you might have around your lack of experience and maybe even lack of funding to do multifamily deals. We’re going to get a lot out of today’s show. Let’s get this party started. Please, help me welcome Michael Blank to the show. Hey, Michael, welcome to the show.
Michael: Hey, man. I’m really excited to be here.
Mike: Yeah. Good to see you. Good to see you. So, I’m excited. You know, honestly, I think probably I’m not unique in the sense that I’ve been a single-family guy for 10 years and I kind of have, though . . . I have a couple of bugs in my life. One, is I’ve got . . . My wife and I have the RV bug. We’re actually renting an RV. I told you that before. Actually, we talked a while back and then you had done that. We’re going out to Yellow Stone and doing a bunch of stuff this summer.
And I think I have formally been bit by the multifamily bug. Like I have been a single-family guy, done hundreds of deals. I’m really interested in . . . have lots of nice paydays, I have a rental portfolio, but in hindsight, I wish that I had built a lot more wealth through multifamily and by having some friends like you and a few other people that are doing it. I think I’ve got that bug. So, I know we’re going to talk about it today, excited to learn more and share that with our listeners too.
Hey, before we get started though, maybe tell us a little bit about yourself for those who don’t know you.
Michael: Yeah. I mean, look, my background is fairly traditional. I was never surrounded by any kind of entrepreneurs. So my dad was IBM for 35 years. My lesson was, “Go to school, get good grades, get a good job.” And that was exactly what I did until I was like and . . . Until I was like 33-years-old and I finally read “Rich Dad Poor Dad” and I thought I was pretty smart at that point. And I had made a bunch of money with a software IPO and was in the right time, right place, and made all this money. And then I read this book and I was like, “Duh, it’s not how much money you make or have in the bank, it’s how much passive income you get.” And I was making like close to zero, except for one little investment that was sending like a couple of 100 bucks every single . . . I need more of that.
And so that came from investment in a restaurant. In a franchise restaurant. So, I knew a bunch of restaurant franchisees, and my big idea in the day was to get into the restaurant franchise business. And that’s what I did. And I quit my job and I did everything at once. So, I flipped houses, got in the restaurant business, learned how to trade stocks and options, did all the stuff, got into apartment buildings, did a seminar, did all the stuff kind of at the same time. And long story short, subsequently lost my software IPO money through the restaurants, and essentially clawed myself back to the house flipping, and then eventually the multifamily.
And then as I look back on all the stuff I’ve done, and I was like, “Man” because I was looking for a financial freedom. That’s when I read this book. And then seven years later, I had I was in a state of semiretirement for like six years and then all of a sudden the crap hit the fan. And I was in real big trouble. Lost millions of dollars on this experiment. And I was like, “Man.” You know, what actually worked.
Okay. The house slipping worked really well, made a tons of money but it was active, right? If I wasn’t buying, fixing and selling a house, I wasn’t making any money and if I sold it, there’s no residual. Meanwhile, my apartment buildings were sending me mailbox money. I was like, “Daggonit. I think I need to do more of these apartment building thing.” And so I looked at all these things and I decided to focus only on multifamily, and once I had some success with raising money and putting these deals together, I started blogging about it. And people were like, “How do you raise money? How do you do apartment building deals?
And so, essentially, today, my mission to the millions is apartment buildings. If you want to quit your job and you’re thinking real estate in your brain, apartment buildings. The problem is most people are thinking single-family houses.
Mike: What are some of the differences? I mean, you’ve got a lot more of experience with multifamily, I’ve got lot of experience with single-family, and I know some of the pros and cons, the challenges of a single-family. And it’s been a good business. I mean, we’ve achieved financial freedom through single-family, right? But, like you said, it’s very active. We actually closed on a house the other day here, made way more than I made in the last when I was a corporate schlep, like that was a year salary for me, right. So it’s nice. Then the money stops. You have got to go do it again. You have got to go do it again.
I’m not here to bash multi . . . To bash single-family for sure but, share us, in your experience some of the differences between single-family investing and multifamily.
Michael: Yeah. I don’t want to bash single-family either because I flipped three years in houses, right? But there are certain things that I really like about a commercial real estate and multifamily in specific. In no particular order, I can easily get non-recourse financing. Right? Non-recourse financing means that I don’t have to personally guarantee the loan. I can get unlimited financing. I can get 80% loan to value financing, which is unbelievable. And the rates are so low, and the reason that you get so much financing is because the banks view multifamily as a very low risk.
And if you look at the performance, for example, of multifamily, over the recession where we had lots of defaults on that residential site, 4% actually, the default rate of multifamily was 0.4%. So, it performed very, very well in the recession. If you look at the rents, they went down slightly. Occupancy down went slightly but people, they had to go somewhere, right? So I really like the way it performed. I like the tax benefits of buying whole real estate in general and multifamily in specifically because of the depreciation. I can raise money for it, right? People really have a comfort zone with real estate and multifamily so it’s actually relatively easy to raise money for that.
Let’s see what else. I can control the value of the building. So I buy this box and it’s worth a million dollars and the one next was worth $1.3 million, right? Why? Well, because the $1.3-million box produces more income than the one with 1 million. So, I can buy the one million, fix it so that it produces more income, and then either sell it for a profit or better yet, do a cash out, refinance it at a higher valuation. So in other words, I can control the value.
And then number . . . I don’t know where we are. Five, really, it allows me to more quickly achieve my goals, which is quitting my job passive income, right? So I can scale a lot faster. I can start small and then get bigger. And I only need three to four deals until I’m done. And so I look at all the combination, and of course, the passive nature of the multifamily, you put a proper manager in there who does a fantastic job managing everything. You put all these . . . You check off all these boxes and you’re like, “Wow. Where else can I find a business like that?” and that’s what gets me excited about multifamily.
Mike: Yeah. Yeah, it’s definitely easier to scale. And that’s the appeal for me. It’s like if I want to go do something big like in single-family houses, which I’ve done for 10 years, obviously, but I have to go, you know . . . I guess single-family doesn’t generally get a lot easier if it’s your 100th deal versus your first deal like, every time I’m dealing with a different buyer and seller, I have to go find them all individually. So that’s some of the challenge, which, again, it’s a good business for active but for a passive stuff, it’s hard to really scale up.
One of the things you probably agree with this, I know we’re going to go talk a little bit more about raising money today, but what I found is when I have . . . I have access to some private money and I know a lot of people that have raised money and sometimes people go from, “I don’t know how to raise money” to . . . It’s really easy to go from like, “I don’t have any money, I have never raised it.” to “Wow. I’ve raised way more than I need” for a single-family, right? Because you’re like, “Hey, I found some guy that has worth 10 million, he wants to invest a couple of million dollars with me.” And then you’d have to say, “Yeah. But I only need like $80,000 right now” because you only have one house, right?
But with multifamily, obviously you can move the needle a lot faster and that’s when people . . . People are thinking of themselves when they’re like, “I need to raise money” but when they find people that have money . . . Sometimes they find people that have a bunch but they want to apply it all right now. Not just like, let it sit in a kitty somewhere in case you need it. Right?
Michael: Well, exactly. And then some don’t want the money back after six months and some do want it back. So you’re left to look at what you investor is. I think the point is, for me, when I first raised money for house flips, I had this light bulb go off because I didn’t really know you could raise money. And that was like a big thing. And when someone says, “Oh, yeah. I’ll loan you $25,000” and I pay at 12% interest for 6 months, this giant lightbulb went off. And then once you will realize it, you’re like, “Oh, my gosh. I can scale my business as big as I want. It doesn’t matter what my personal financial situation looks like. That was huge for me.” And once you do it once or twice, your confidence goes up.
And then finally it becomes a lot easier to raise that money and then you do run into the situation that you describe. It’s a good white-collar problem to have, I’d like to say, is that you have investors who want to invest more money than you can take. And that’s when your ability to scale becomes very important. So, for example, there’s a lot of money raisers out there but really, they don’t want to raise anything less than a million dollars. So, if you got a couple of house flips, you can’t actually use that money because it takes in the same amount of work to raise a million dollars and do due diligence than a small house flip. Again, all small problems to have . . . The biggest aha moment for me was you can actually raise money and it’s a lot easier than people think.
Man: If you’re an active real estate investor already doing deals and looking to double or triple your business, you should consider joining The Investor Fuel Real Estate Investor Mastermind. We’re a small group of investors that share our best practices, tips, and tricks with one another in effort to all win. We limit our membership to only one to two members per market, so everyone shares their knowledge, tips, and tricks openly and honestly. Our members include some buying one to two houses a month. Up to some of the most respected investors and leaders in the real estate investing industry, some of which have personally done over a thousand deals. If you’d like to be considered for our invitation-only, world-class mastermind, please visit investorfuel.com, to request your personal invitation. Our next meeting is coming up quickly. Go to investorfuel.com now to learn more.
Michael: Your confidence goes up, and then finally, it becomes a lot easier to raise that money. And then you do run into the situation that you describe. It’s a good white-collar problem to have, I’d like to say, is that you have investors who want to invest more money than you can take and that’s when your ability to scale becomes very important. So, for example, there’s a lot of money raisers out there but really they don’t want to raise anything less than a million dollars. So if you got a couple of house flips, you can’t actually use that money because it takes them the same amount of work to raise a million dollars and do due diligence than a small house flip. Again, all small problems to have . . . The biggest aha moment for me was you can actually raise money and it’s a lot easier than people think.
Mike: Yeah. Yeah. So there’s I do a lot of events, I do a lot of coaching. In fact, we have a big event coming up here this weekend, a three-day event actually. And I know, just because I get out and speak to a lot of people, and because of all the shows and everything we do like, there’s no shortage of people that see real estate as an opportunity for a financial freedom. Right? They see this is a way to get out of their current situation, get out of a job they don’t like, do something on the side to generate income or whatever. So, there’s a lot of benefits to a multifamily.
Why don’t more people do multifamily? Or more of the, the kind of what I’ll say . . . There’s obviously a lot of people doing it but more of kind of the . . . Your next-door neighbor, the everyday man or woman that sees real estate as a vehicle but they tend to focus more on single-family or think that way.
Michael: Yeah. I mean, there’s a variety of reasons and I was the same way. I mean, everybody around me was doing single-family. Wholesaling, flipping, land lording. That’s what everybody does when you go to the local REIA meetings. They’re all sitting there going, “Yes, real estate. I’m going to quit my job for the real estate.”
But if you look at the number of people who actually quit their jobs with single-family houses, you, frankly being one of the exceptions, most people quietly do it with apartment buildings. But the reason people don’t do is they think as an advanced strategy. They think something like this, “Mike, I’m going to do . . . You know, I hear what you’re saying about apartment buildings but you know what? I’m going to flip houses for the next 5 or 10 years, and I’m going to use that experience, and the money I make and I’m going to transition into apartments later down the road.”
And it’s because in their mind, they think it’s an advance strategy that you, quote, “graduate to” and one that you need experience first, and that you need money for. And what I’m here to tell you, and look, and I’m same exact way. And, in fact, most of my guests on my podcast had a very similar journey. We started with single-family houses and then end up actually going to apartment buildings and when you ask them the question, “Hey, what would do differently?” they literally, all of them including myself going, “You know what, I wish I would have skipped the single-family house stuff.”
And the reason is because of what we now know. There’s two problems people have. One is, “I don’t have the experience. Let me get some,” and “I don’t have any money. I don’t have any money. Let me save up some,” and the truth is, you can get started with apartment buildings like today, regardless of where you are, whether you have experience or not, and you can get started with apartments even if you have none of your own cash.
Mike: That’s awesome. That’s awesome. So, talk about the average person that could use multifamily as a vehicle. They don’t have a lot of experience, they don’t have their own cash. So like you said, they kind of think, “Well, I can’t do it then.” So, talk about how the average person could get involved in multifamily.
Michael: Yeah. So, one of the things I really like about multifamily is this law of the first deal. And this is important to grasp because when someone says . . . They’re thinking, “How do I get into multifamily so I can quit my job? How many hundreds of units do I need?” and they think about it and it completely overwhelms them.
What I have found is, there’s something called the law of the first deal which says, “If you do a multifamily deal of any size, you will be financially free in three to five years.” And, frankly, it’s more like one to three years. It really depends on who you are. And it’s all about that first deal.
So, what I have observed, literally dozens of times now, people do their first deal, and it’s normally the hardest to do and it’s the smallest. So let’s say you start with a duplex. Okay? And most people can wrap their head around the duplex. Okay? But let’s say that I want to get a multifamily. All I can wrap my head around is a duplex. Let’s say it takes them a year to do this duplex, which is a ridiculous amount of time to do a duplex, but let’s say it does.
What happens after that first deal is that second and third deals come along and almost in a rapid fire automatic succession. Because what happens is they become a deal magnet and they become a money magnet. And their comfort zone has expanded. And so the second deal is typically around 10 to 20 units. And once they do the second deal, the third deal is usually between 30 to 50 units. And by that point, most people control 100 units and that’s typically enough to cover their living expenses. So they’re literally done in three deals.
And that’s what’s so powerful about the law of the first deal. So what I tell people is, when they’re thinking about getting started, don’t be overwhelmed by the 150 units that they have to do. Just focus on the first deal because the other two deals will follow automatically. It’s just a head. But the things is, we have got to talk about getting them over regardless of their experience and the lack of cash. That’s the two biggest objections.
Mike: Yeah. Yeah. So it’s stepping stones. Like a lot of people . . . I feel even with . . . There’s a lot of people that are like . . . You know, I coach and mentor a lot of people and I always spend a lot of time on, “What are your goals? Like, what is it you want to accomplish?” and I firmly believe you can accomplish anything you want with real estate, right? I know you believe that too. The problem is a lot of people are like, “Well, let’s just say an example I’m making $80,000 a year in my job and like, “Yeah. I really want to do it. I want to make a half million dollars in my first year.”
And it’s like, “Okay. I’m not saying you can’t do that, but, why set the bar so high?” Like, you should really focus on replacing your income and then some first, right? Because once you do that, like you said, these blinders come off as to what’s possible and you’re like, “Okay. Now I can take it from here. Right?” So a lot of people just think of some big-end goal and they get overwhelmed that, “I don’t know how to get there.” And it’s like, “No. no. Just put some stepping stones out. Let’s take these first steps first.” Right?
Michael: That’s right. Yeah. I mean, you can’t fault people for not thinking big. And not everyone reads the same, you know 10X books. Right? The problem I found is that thinking big disconnects their vision from the plan. Right? They have a vision or a dream but they don’t have a plan to get there. And so someone tells me that first of all, I say, look, that’s great. I don’t fault you for thinking big, but let’s walk backwards from that. Okay? Let’s start with your first deal. So, what are your goals? How much income do you want to replace? What are your expenses? And what are your personal financial resources? How much money do you have? What does your sphere of influence look like? And from that, we can construct a meaningful first deal because our first deal is so critical. That’s where we focus everything on.
Mike: Yeah. I know you put a lot of effort . . . You talk a lot about using other people’s money, raising money. So how do you get people to take you seriously when you’re new?
Michael: Oh, this is the problem, right? This is why people think, “Oh, my gosh. Let me get all this experience. And when I have the experience, I will then go into the apartment world.” And I thought the same way. I flipped three dozen houses, I felt pretty good about myself. And what I found is, I would call up the multifamily broker and they would immediately would ask me for my apartment building resume and proof of funds. I’m like, “Ah, what just happened here?” They wouldn’t return my phone calls and it was clear that was my house flipping resume literally had no bearing on multifamily. It’s like I was selling ice cream for a living. Like I had no bearing.
And then number two, I was making mistakes. So as I was reaching out to these brokers, I was actually making mistakes as I was calling them. And so after I figure this out, now I know how to fix that. Right? The first one is you have got to educate yourself. So, you can’t sound like a newbie. You have to use insider words like cap rate, or stabilization, or distress. You know, stuff like that. Where you’re using insider terms when someone talks to you are like, “Oh, this guy kind of sounds like he knows what he’s talking about.” So you have got to educate yourself. You know, we have scripts that people use.
And then the other thing, this is real important is, if you don’t have experience, well, then don’t talk about yourself, talk about your team. Right? So, we always teach people how to build your team and one of the key members is obviously your property manager. Right? So you got Frank the property manager who manages 5,000 units in let’s say, Atlanta, right? And I namedrop Frank to the broker I’m talking about, he goes, “Frank’s a good guy. Yeah. We’ve we know each . . . That’s great . . . ” and all of a sudden the conversation is no longer about you. It’s about Frank. It’s about the real estate attorney that you have in your team, it’s about the CPA, it’s about the lender you already talked about, right?
So do a little bit upfront work, educate yourself, get some scripts down, and build your team, and when you have that, when you then call a broker, and you use language, and you talk about your team, you talk about that you’re working with high net-worth individuals, there’s a 98% chance that the broker will not ask you for proof of funds, they’re not going to ask you for some kind of resume, they’re going to actually take you seriously. And that’s with a little bit, I’d say four weeks of education, you can completely overcome the quote, “lack of experience.”
Mike: Yeah. Yeah. Even on the money-raising side too, you could probably agree to this. I’d like to hear your insights on it is people often don’t want to be the first but after somebody else is on board, then it gives a lot of validity. I heard a story before I was here. I run a mastermind Investor Fuel but I know somebody . . . I just heard a story from . . . This is a big-name speaker, I won’t even say the name but said, “Hey, I knew a guy that was a kind of . . . He was executive at out pharmaceutical company and he had the idea of, “Hey. I’m going to run a million dollar a year mastermind for like C-level pharmaceutical people.”
And so he went to the first guy that was a CEO of his company and said, “I’m starting this mastermind and I’d like you to be a part of it. It’s a million dollars a year. But what I’d like to do is have you join for free. Now, you can’t tell anybody else that you’re not paying, right?” and then after he’s like, “Yeah. I’ll do it.” And then he went to this, “I’ve got Joe is in.” And then everybody else feels this pressure of like, “Joe’s in? Well, I have got to be a part of it.” So there’s something there about raising that first person, right? And then giving validity to what you’re trying to do there.
Michael: Absolutely right. Again, it’s that first person. And there’s different firsts. So, the one is your first person where you can reference a person, “Hey, Joe just got on board” and whether or not Sam knows Joe or not, there’s just some other one dumb enough to try to invest with you, right? So you can namedrop that person. And then there’s going to be investors who are going to wait until you’ve done your first deal.
And I would say the majority of people, that’s what they wait for. They say, “Let me hold off on this and let’s see how the first one goes.” So you have all these investors you talk to, some jump in because of that and then some people wait. And then what happens, and this is why the law of the first deal is so powerful, once you actually do your first deal and you let a month go by and you haven’t lost your shirt, or you haven’t lost it in foreclosure yet, people kind go, “Daggonit. This Mike guy, maybe he knows what he’s doing. Maybe I’ll get in before I miss the boat.”
And so all these investors that were kind of on the fence now kind of jump on board and they talk amongst each other. They’re like, “Oh, invested in this deal. It’s actually doing pretty good.” And it’s like this giant magnet. So it’s the same exact way. And it’s, again, getting that first investor on board is often the hardest, and then you kind of leverage that to bring in a second, third, and before you know it, after a few months, you have more than enough money and what happens then, Mike, hard to believe, is your biggest problem is not going to be money, it’s going to be finding the next deal, or the next deal after that.
Mike: Do you advice people that they need to have their own money? I mean, I know that you could do it without. Does it give the deal more validity if you have your own money, or can you do it literally with no money?
Michael: So, it depends. Philosophically, if you have your own money, great. It doesn’t mean you actually have to use it. Okay? And, number two, it’s eventually going to run out. So those people say, “Look. I got $500,000, I’m going to do my first deal and then when I go out, I have much more track record and confidence” I said, “That’s a good plan” okay? Some people say, “Well, I’m just going to do my own thing and see how it goes.” And they’re not wrong either.
I had a guest on the podcast just the other day who did just exactly that. It was a seven-year and he bought three properties over that course of bought and sold without ever raising a dime and he did very well because the market’s been going up very nicely. But the thing is, even if you have money, what it does is accelerates the process early on, but eventually, you’re going to run out. And then what are you going to do? Right?
The ideal plan is that, plan A, is to raise money, and plan B, if you can’t, is you use your own, right? Or you do a combination. But once you’ve learned that skill of raising money, the sky is the limit, like, it’ll just blow your mind.
Mike: Yeah. So, Michael, I know you have a book that’s just come out. I was fortunate to get an early copy of it, and we’ll share that with listeners in a little bit how to get it. For folks that are listening and they’re like, “Hey, this sounds awesome.” We’re kind of obviously high-level here because we have a fairly short podcast, but, do you have a blueprint? Or what’s the blueprint that you ask people to kind of follow?
Michael:Yeah. The key is, first of all, getting your mindset off of single family to apartment buildings, right? And it’s really learning some of those critical skills to learning money. And I talk a lot in the book about raising money. It’s like the biggest objection, the biggest skill. We talk about creating experience, or becoming more experienced about building your team.
Another thing that confuses people is, “Oh my gosh, analyzing deals sounds so complicated.” In fact, it’s not at all. Right? So we kind of take that off the table. One of the critical skills is learning how to analyze deals but we have tools and techniques to make it really, really simple. People are like, “Oh, my gosh, how can I find good deals? Is now a good time to buy?” So, we talk a lot about where can we find the deals and then people say, “Well, what should I do now?” right?
So what is that blueprint to actually getting your first deal?” So I spend a lot of time step by step going into the entire process of finding, analyzing, making offers, getting into the contract, doing due diligence, and getting at first deal to closing. So I spend like half the book on literally that.
And then the financial blueprint from that first deal is simply leveraging and allowing the law of the first deal to just to run its course and take over because I know for a fact, if I can get you to do your first deal, you don’t need me anymore, okay? Because you literally will attract deals and money, and it’s going to be game over. And within another 12 to 18 months, you will have covered your living expenses. That’s what I see over and over and again. And that’s why I’m really excited about this message because it would have shaved like a decade off of me and probably saved me a couple of million dollars of loses had I figured that out back in 2007 or 2008. So that’s what the book is about. It’s really about shifting mindset and then once, hopefully, I’m successful at that, showing you how to get there.
Mike: That’s awesome. One of the probably mindset issues that I have I think for a long time, and maybe a lot of people that are listening right now have with multifamily is that you kind of say, “Well, that must be a professional owner or it’s institutionally owned.” You’re kind of like, “Well they don’t have problems,” right? But the truth is it’s just like single-family. A lot of these multifamily deals are owned by a couple, or people that were friends, or whatever. They’re the lead of the deal, right? And they have life issues just like single-family people. Like death, divorce, inheritance. There’s all sorts of issues that people that own multifamily have. They’re the same people that do multifamily, right? They’re the same type of people. There’s nothing that’s unique to them. And honestly, there’s also a lot of people that mismanage their property, right?
Michael: And we love that.
Mike: It opens up a lot of opportunities. Right.
Michael: That’s exactly right. Just like you have mismanagement from out-of-state landlords on the single-family house, and that’s who we send postcards to. And we have the same thing on your apartment size. And we love that. These are normally the self-managed, the out-of-state self-managed, the semi-state managed. In other words, the non-professionally managed buildings. We love that. Because maybe they had them for 10 years, they’ve paid off the loan, they don’t want a lot of drama. You know, they want to keep their tenants, they’re not pushing the rents, they’re not really keeping up with the repairs. Meanwhile, the building next door is all nice and shiny and it’s being professionally managed.
So we love taking that, paying fair market for the income that box is generating, then we put our professional manager in place, they go and they make everything look pretty. And they slowly raise rents because now it’s a better-quality place to live. And then within 12 to 18 months, the income is as high as the nice and shiny one next door, and that will just raise valuation of the deal. Now we can do a cash out refinance, take the money and do it again. And then hold on forever, right? So, really, really love that model. So, yeah, we love self-managed stuff.
Mike: Yeah. I think that’s one of the misconceptions out there. I guess false beliefs is that that is more of a business and therefore it must be efficient, right? But there’s all sorts of apartments. You start to look around and there’s like, like you said, “There’s one that like . . . kind of looks like that. Even from outside you can tell that thing hasn’t been updated in like 15 years, right? And there’s people that own those that are just like people that we all know in our lives or you run into in the single-family space. They’re just too cheap to like reinvest in the property and keep it up, right? Or they have health issues or it was an inherited property and the family doesn’t even know what the hell dad was doing with that building. Or whatever it might be, right? There’s lots of opportunities.
And so the reason that I say all these things is sometimes people say, “Hey, the market’s overvalued right now. It’s not a good time to get into multifamily because people are overpaying right now.” But the reality is this, there are situations just like there are in single-family—death, divorce, inheritance, people that are too frugal to invest back in their property and keep it up. That offer opportunities. Those value-add opportunities, right?
Michael: And that’s exactly right. You know, and here’s the thing is . . . Everybody knows in this game that the real estate is a numbers game. And it baffles me when someone says, “Oh, I’ve made a half dozen offers and none of them got accepted. This must not work.” I’m like, “Dude, if you’re a single-family house investor and you told me that, I would die laughing,” right? Because everybody knows, first of all, that I have got to make more than a half a dozen offers to get anything accepted.
And on the flipside, the people who are doing deals, well, they’re hustling, right? They’re calling brokers, they’re meeting brokers, right? They’re building relationships with brokers, they’re building relationships with property managers, they feed them deals. They might even drive for dollars, right? They might even knock on doors. So these guys are hustling. And like I said, that first deal is a kind of a hard nut to crack but once you do, guess what, brokers are going to call you up. They’re going to call you up because now they know that you can close on something, right? Before they weren’t sure, now they’re calling you up. And you attract all these deals.
So the message really, it’s just like with any other real estate whether you’re wholesaling or you’re flipping houses, man, you have got to hustle a little bit. You know, they’re not going to fall on your lap right now.
Mike: Right. Yeah. I mean, that’s the beauty of this business is a lot of people are lazy and if you’re willing to work hard and make it happen, then there’s always opportunities to be had.
Michael: That’s right.
Mike: Yeah. Yeah. Hey, Michael. So you’ve got a podcast, you’ve got a new book out, you have got a lot of ways people can learn. Tell us how folks can find some of those things.
Michael: Yeah. Okay. So my website is themichaelblank.com. So, it’s T-H-E michael blank, B-L-A-N-K. So that’s my website. If you’re interested in multifamily, just spend hours and hours reading all my blog posts, listen to my podcast, my YouTube videos. And then when you’re bored of that, you can check out my book. It’s this one here. It’s called “The Financial Freedom with Real Estate Investing” and really excited about this, this took me a long time to write. So this is not some kind of on a short e-book. This is a substantive work and you can find it on Amazon or the financialfreedomthebook is the URL. financialfreedomthebook is the URL. So, thank you so much.
Mike: Awesome. Awesome. We’ll add some links down below and the notes here for those that didn’t hear it but I know you can get access to it on themichaelblank.com too if you’re driving right now. Like don’t like try to email it to yourself or something. So we’ll have it in the show notes here for anybody that wants to find out more. Hey, thanks for sharing some information with us today, Michael. This is good stuff.
Michael: Oh, man. I really enjoyed it, Mike. Thank you so much for having me.
Mike: Yeah. Yeah. Our mission here at FlipNerd is literally I told you this one when you first shared your book with me. That is our tag line, we help real estate investors achieve financial freedom. We have pretty much our tag line, what we do at FlipNerd is the name of your book literally almost word for word. So, we definitely are on the same pace there. So, appreciate you again.
Everybody, hey, this is episode number 418 with Michael Blank. Good stuff here about building wealth with real estate. If you haven’t yet, please subscribe to us on iTunes, Stitcher Radio, Google Play, you can subscribe to us on YouTube. All of our videos are on YouTube. We literally have over 1,500 shows and podcasts that we put out here over the past few years. And we’re going to keep them coming at you especially if you give us a positive review that kind of keeps us motivated to keep moving forward. So, of course, you can watch and listen to everything that we have on flipnerd.com as well. Appreciate you guys, have a great day. We’ll see you on the next one.
If you’re an active real estate investor already doing deals and looking to double or triple your business, you should consider joining The Investor Fuel Real Estate Investor Mastermind. We’re a small group of investors that share our best practices, tips, and tricks with one another in an effort to all win. Real estate investing can be a lonely business for successful real estate investors. But it doesn’t have to be. Investor Fuel members meet four times a year, but we talk to each other 365 days a year. And we focus on improving the profitability of our businesses, improving the quality of our lives. That’s why we do this, right? And making an impact on those around us so we can truly leave a legacy.
We limit our membership to only one to two members per market, so everyone shares their knowledge, tips, and tricks openly and honestly. Our members include some buying one to two houses a month. After some of the most respected investors and leaders in the real estate investing industry, some of which have personally done over a thousand deals. If you’d like to be considered for our invitation-only, world-class mastermind, please visit investorfuel.com, to request your personal invitation. Our next meeting is coming up quickly. Go to investorfuel.com now to learn more.
Thanks for joining us for this episode of the flipnerd.com Investing Show. If you’re not yet an elite member of FlipNerd, you’re missing out. We have tons of great training, including a new detailed masterclass published each month, and live training webinars with experts twice a month. Plus, you’ll get access to all of our archives where we already have a growing library of master classes and other training videos. Elite members also get membership in our incredible online mastermind group, where many of the top real estate investors from across the country, including many of the hundreds of guests I’ve had on the show in the past are already members. Whether you’re brand new, looking to get started, or a veteran, you simply must join today. I promise you won’t be disappointed. To learn more, or join today, please visit flipnerd.com/lab. That’s flipnerd.com/lab. See you on the next show.