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#1 Building Wealth with Mark Malan: Our Journey from Mentorship to Millionaires (Mark Malan) · Own More Doors

• 0:01
  SPEAKER_00: All right, everyone.
• 0:03
  SPEAKER_00: Um, we're launching our new podcast series, and I'm super excited because our very first guest uh is Mark Malan.
• 0:12
  SPEAKER_00: Anyone who has been watching our channel on YouTube will know that Mark Milan was um my mentor, my friend, my business partner, the person who taught me that I could build wealth through real estate.
• 0:24
  SPEAKER_00: Um, this was not something that I learned in books.
• 0:27
  SPEAKER_00: This was not something that my parents were unfortunately able to teach me.
• 0:31
  SPEAKER_00: But watching Mark build wealth firsthand, being able to assist him, learning from him, asking tons and tons of questions, I realized that I could become a millionaire as well.
• 0:42
  SPEAKER_00: And it's interesting because um, Mark, so that that was something that you taught me.
• 0:46
  SPEAKER_00: And now I've years and years later, I'm I feel like I'm uh teaching people um via the podcast that we're just launching now, but also obviously YouTube, which is a very popular channel.
• 0:56
  SPEAKER_00: So, Mark, uh, thank you so much for being on today.
• 0:59
  SPEAKER_00: Absolutely my pleasure.
• 1:01
  SPEAKER_00: Mark, uh, talk to us about um so let me just give a quick background for some people who don't who don't obviously don't know Mark, but um Mark is out of Long Beach, California.
• 1:14
  SPEAKER_00: He has been investing in real estate, I'm gonna say, for over 30 years.
• 1:19
  SPEAKER_00: He has owned um hundreds and hundreds of apartment buildings, uh single-family homes, commercial buildings, hotels.
• 1:26
  SPEAKER_00: He's built the self-storage, he sold the self-storage.
• 1:30
  SPEAKER_00: Um, he's done smaller development, built a lot of ADUs, was the first in Long Beach to do a factory-built ADU, which at that moment he had to teach the city of Long Beach what they were, the process, and really made it easier for anyone.
• 1:44
  SPEAKER_00: Uh, he was the pioneer in that.
• 1:45
  SPEAKER_00: So anyone behind that probably came came after.
• 1:48
  SPEAKER_00: So um Mark has tons and tons of experience.
• 1:51
  SPEAKER_00: Oh, I didn't mention he's an MAI.
• 1:53
  SPEAKER_00: So he's uh kind of the top echelon when it comes to appraisal services, doing a lot of um uh commercial appraisals.
• 2:00
  SPEAKER_00: Uh he's a licensed contractor, has his MBA, and um has taught at the community college level.
• 2:06
  SPEAKER_00: Mark loves to teach, he's a great teacher and he simplifies the process.
• 2:09
  SPEAKER_00: Um, so that's a little bit about Mark.
• 2:11
  SPEAKER_00: Mark, the the question that I want to ask is um, you didn't come from wealth.
• 2:16
  SPEAKER_00: Absolutely not.
• 2:18
  SPEAKER_00: Who who and when who taught you and around what time period did did this you should be investing in real estate?
• 2:26
  SPEAKER_01: You know, I think it was when I went to grand school.
• 2:28
  SPEAKER_01: When I went to grad school, um I happened to stop by a friend's office and I read a term paper.
• 2:35
  SPEAKER_01: Um, I was doing two or three term papers a month in grad school, and I read this term paper, and it was actually an 80-page paper on a parcel, what it was there, what should be there.
• 2:47
  SPEAKER_01: And as I read this full commercial appraisal, I realized, oh dang, this is exactly what I'm it's just a term paper.
• 2:55
  SPEAKER_01: And at the time, I think uh these are a long time ago, you get$5,000 for looking at a car wash or a site that could be a car wash.
• 3:04
  SPEAKER_01: And uh I thought, I should do term papers for cash.
• 3:06
  SPEAKER_01: I think I'll become an appraiser.
• 3:08
  SPEAKER_01: So it was the a foot into appraisal that really got me going.
• 3:13
  SPEAKER_01: Now, at the same time, I guess uh my daughter was graduating uh from college, and uh uh we decided to sell a big house in Orange County and move into Long Beach to buy a house with some units.
• 3:26
  SPEAKER_01: And uh then I started experiencing both in real time owning rentals at the same time as doing these term papers, becoming an appraiser, going all over the country, taking appraisal institute courses so that I could earn the MAI designation.
• 3:41
  SPEAKER_01: And it's knowing that highest and best use that really turned me on.
• 3:46
  SPEAKER_00: Mark, how if if you recall, how how old were you when you bought that first triplex?
• 3:50
  SPEAKER_00: And if I remember, it's the one on Molino, right?
• 3:52
  SPEAKER_00: Yes.
• 3:53
  SPEAKER_01: Uh we'll say 28, maybe it was more like 32.
• 3:56
  SPEAKER_01: I was a late bloomer.
• 3:57
  SPEAKER_00: Okay.
• 3:57
  SPEAKER_00: Yeah.
• 3:58
  SPEAKER_00: I mean, you know, some of our followers are getting started in their early 20s.
• 4:01
  SPEAKER_01: Yeah, that what a gift to have the compounding value, uh starting younger, uh, which I could have, but I didn't know, and I was poor and I hadn't hadn't figured it all out.
• 4:12
  SPEAKER_01: Uh took a while to figure out how to raise the capital, how to do a project, whether you buy it or you sell it.
• 4:17
  SPEAKER_01: There's a lot of decision process, and it was nothing taught to me.
• 4:21
  SPEAKER_01: It should have been taught to me in high school, along with how to balance a checkbook and the evils of credit cards, you know, but they don't teach you that stuff.
• 4:29
  SPEAKER_00: Right.
• 4:29
  SPEAKER_00: Mark, when when when you were doing appraisal, and and I I remember you telling me, hey, Juan, I I realized that that I'll let you tell the story, but it was something along the lines of of if you do appraisals, you just get paid once.
• 4:45
  SPEAKER_00: But if you're the actual investor buying the property that you are appraising, right, you get paid forever.
• 4:50
  SPEAKER_00: Why don't you because it seems to me, just because I've known you for so long, that that is like the one part was like uh call call it like the light bulb moment, maybe that that I thought maybe happened with you.
• 5:00
  SPEAKER_01: Yeah, correct.
• 5:01
  SPEAKER_01: Uh and it's there's a difference between income and wealth, and that's the thing that uh it took I had to get to grad school before I figured that out.
• 5:09
  SPEAKER_01: Uh, you could make$200,000 a year, but by the time you pay your taxes and all the fancy suits you need to be working at, and the paying for the parking$300 a month downtown where you work at the fancy job, you end up with really no retained earnings.
• 5:23
  SPEAKER_01: And I thought, oh, instead of making a lot of income, I wanted to figure out how to make a lot of wealth.
• 5:28
  SPEAKER_01: You need enough income to pay the bills.
• 5:31
  SPEAKER_01: Truthfully, my formula was it takes 40 hours a week of hard work to pay for your housing, your insurance, your food, your life.
• 5:40
  SPEAKER_01: So if you're gonna get ahead, you need to work the other 20 hours a week.
• 5:43
  SPEAKER_01: And if you're working that other 20 hours a week, then all that money can be investment money and can be play money where you're constantly rolling and turning it.
• 5:52
  SPEAKER_01: And that's what I did.
• 5:53
  SPEAKER_01: I used to always work a 60-hour week.
• 5:55
  SPEAKER_00: Mark, talk to us after that first triplex.
• 5:58
  SPEAKER_00: And and listen, I know the backstory, it wasn't easy, and you tell the story of at some point you you thought it was a loser.
• 6:05
  SPEAKER_00: Well, and and and I'll I'll let you walk through, you know, tell us about that because it's not always um a straight lineup, and and you've seen cycles.
• 6:14
  SPEAKER_00: I mean, you've I've heard the stories and where where you'll point out properties, you're like, Juan, they couldn't give that property away.
• 6:20
  SPEAKER_00: And obviously now in 2024, we're like, really?
• 6:23
  SPEAKER_00: Because you know, as we look back, we can't believe how far they've come.
• 6:27
  SPEAKER_00: But what talk to us about Molino, some of the the issues that you had because the market did change at that time.
• 6:36
  SPEAKER_00: And then what got you going again?
• 6:38
  SPEAKER_00: And what what were the signs to let you know this is time to buy again?
• 6:42
  SPEAKER_01: Well, with that uh first house with the units, uh it was really bought to flip.
• 6:49
  SPEAKER_01: At the time, I wanted to buy low, make it higher priced, increase the rents for the tenants so the value goes up, and then we would sell it and maybe get a little something nicer.
• 6:58
  SPEAKER_01: How much was the property at the time when you bought it?
• 7:00
  SPEAKER_00: I bought it for three and a quarter.
• 7:01
  SPEAKER_00: Okay, so$325,000 for three units.
• 7:05
  SPEAKER_00: And if anyone knows Long Beach, this is um uh Belmont Heights.
• 7:09
  SPEAKER_01: Right, right, right.
• 7:10
  SPEAKER_01: And and uh it took me about a year because it was the first time I was rehabbing, and I was also doing appraisals at the same time for fee income uh to fix up the house.
• 7:19
  SPEAKER_01: I mean, the house was uh been a rental for decades, so it was really abused.
• 7:24
  SPEAKER_01: Uh but the market changed and I went to sell it, and all I could get was what I paid for it, and I wasn't willing to write off a a year's labor and all of the investment cash, and so I kept it.
• 7:36
  SPEAKER_01: Uh the nice note is I still own it today, it's worth about a million seven, and it creates about five grand a month to the positive.
• 7:42
  SPEAKER_01: So, I mean it's a it's a nice error to have made.
• 7:46
  SPEAKER_00: Right, right.
• 7:47
  SPEAKER_00: So the the thing is that you didn't want to realize the gain, uh no, you didn't want to realize the loss.
• 7:52
  SPEAKER_00: Right.
• 7:52
  SPEAKER_00: You kept it, even though you probably would have just broke maybe broken even in, but but had you done that, you wouldn't have gotten this this this wealth creation that that one specific property gave you.
• 8:04
  SPEAKER_01: Exactly.
• 8:04
  SPEAKER_01: And once you hit that, then you realize, oh, okay, I can do this more.
• 8:08
  SPEAKER_01: I can do it in other neighborhoods.
• 8:10
  SPEAKER_01: You want to know where you're investing, you know.
• 8:12
  SPEAKER_01: Uh uh, and there are strategies on that.
• 8:14
  SPEAKER_01: You know, the guys that buy stuff in Utah or or Nevada, Arizona.
• 8:19
  SPEAKER_01: Mine is more of an investment theory where I want to drive by and kick the tires.
• 8:24
  SPEAKER_01: I like taking a bike ride and driving by a dozen properties that I own.
• 8:28
  SPEAKER_01: To me, that's fun.
• 8:28
  SPEAKER_01: In fact, on my last trip, I was uh just through skiing in Italy, I was excited to get home.
• 8:35
  SPEAKER_01: And I realized that I don't have a boat and I don't have a plane, but I have a bunch of toys, and they all seem to be income-producing properties.
• 8:44
  SPEAKER_01: And it's so exciting to come back and see my properties.
• 8:46
  SPEAKER_01: I'm a more of a hands-on small-time guy.
• 8:50
  SPEAKER_01: I like to see what's going on.
• 8:51
  SPEAKER_01: I I want to know.
• 8:52
  SPEAKER_01: I don't know all my tenants, of course, because I have staff, but uh the truth is that that is the exciting part in my life is to come back, come back and look at my toys and see what I want to do.
• 9:02
  SPEAKER_01: And this needs a paint job, and that needs a roof, and just make a list of things that can get done later this year.
• 9:07
  SPEAKER_00: Mark, when when I met you was 2000, call it 2002, maybe 2001.
• 9:13
  SPEAKER_00: I was still in college, but you were uh uh rapidly buying a lot of apartment buildings in some of the, I guess some of the tougher areas of Long Beach, and you were repositioning them.
• 9:26
  SPEAKER_00: Talk to us about why were you doing that at that moment?
• 9:30
  SPEAKER_00: I mean, at at this point, you've years and years of appraisal.
• 9:33
  SPEAKER_00: So I think maybe maybe you got comfortable with um analyzing properties, figuring out from the people before you, like um, like what was it that made you want to get started?
• 9:45
  SPEAKER_01: The the the business cycle changes.
• 9:48
  SPEAKER_01: It's it's a business cycle.
• 9:49
  SPEAKER_01: And real estate is no different than any other industry.
• 9:51
  SPEAKER_01: You have cycles.
• 9:52
  SPEAKER_01: Okay.
• 9:53
  SPEAKER_01: At that time, uh banks were being foreclosed on by the government.
• 9:59
  SPEAKER_01: There were so many bad loans coming back, they created something called the RTC, the Resolution Trust Corp.
• 10:06
  SPEAKER_01: And they would auction uh properties, they put them up for sale, and so they were all available.
• 10:13
  SPEAKER_01: But because the banks, you see, everybody waits until the interest rates get too low or something.
• 10:18
  SPEAKER_01: There's this motivating trigger where you should just be buying all the time anyway, and I can tell you about that.
• 10:22
  SPEAKER_01: But the important thing was is that the banks weren't making loans on properties, they were selling the properties that they already foreclosed on, and nobody really knew where the bottom was.
• 10:32
  SPEAKER_01: So if they sold it at a loss and wrote off the first loan and now had a new loan on that property and had to sell that one at a loss in a year, I mean that would be really stupid banking.
• 10:41
  SPEAKER_01: So they sold them off.
• 10:42
  SPEAKER_01: And I realized at that time that uh there weren't that many people with cash.
• 10:47
  SPEAKER_01: So I assembled a uh a group of different people of investors and uh raised the cash.
• 10:53
  SPEAKER_01: Not a lot, but raised the cash to actually go out and start buying these properties.
• 10:58
  SPEAKER_01: At the time, there was another niche that you noticed because everything's cyclical and there's always one or two power niches going on.
• 11:05
  SPEAKER_01: And I might, you know, like right now where people say, oh, overbuilt office space, turn it to condos.
• 11:08
  SPEAKER_01: Well, that's a niche that somebody could do if they're a big developer.
• 11:11
  SPEAKER_01: As a small developer, small contractor, I was able to buy five and six unit buildings and turn them into four-unit buildings.
• 11:18
  SPEAKER_01: And I would do that essentially by, let's say, taking out the wall between the two one-bedrooms.
• 11:22
  SPEAKER_01: Well, that gave me an extra kitchen that was a bedroom now.
• 11:25
  SPEAKER_01: It gave me an extra living room that was a bedroom now.
• 11:27
  SPEAKER_01: And next thing I have a four or five bedroom, two-bath.
• 11:31
  SPEAKER_01: I noticed at that time that those rented first because nobody built apartments with four and five bedrooms.
• 11:38
  SPEAKER_01: And all of these families that are uh a lot of immigrant families coming over a lot of people, but nothing was available for them of that size.
• 11:46
  SPEAKER_01: And so those rented first, and then the two bedroom, one baths, et cetera, and the rest of the complex would rent up.
• 11:53
  SPEAKER_01: The idea was that I didn't care about a loan at 10%.
• 11:57
  SPEAKER_01: I would take out a loan at 10%.
• 11:58
  SPEAKER_01: And back then, at maybe it was a six or seven percent market, and I'd take out a loan at 10%, knowing that I was only going to have that loan for one year.
• 12:05
  SPEAKER_01: You're saying that the interest rate was 10%.
• 12:07
  SPEAKER_01: The interest rate for what they used to call hard money.
• 12:09
  SPEAKER_01: I call it private money now.
• 12:11
  SPEAKER_00: Okay.
• 12:11
  SPEAKER_00: Okay.
• 12:11
  SPEAKER_00: You don't like the word hard money.
• 12:13
  SPEAKER_01: No, it sounds too desperate.
• 12:15
  SPEAKER_01: Got it.
• 12:16
  SPEAKER_01: Okay, it's it sounds like I gotta get a loan tomorrow or I lose everything I have, and that's that's bad stuff.
• 12:21
  SPEAKER_01: Yeah.
• 12:21
  SPEAKER_01: I liked, and my investors always got all their money back, and they always invested again with me or lent to me again.
• 12:28
  SPEAKER_01: And I still have uh a great lady who actually lives like a block away from me, who was one of my original investors, and she constantly, when I give her back her money, she always says, Well, give me something else to put it on.
• 12:40
  SPEAKER_01: And she doesn't want to manage of this stuff, she doesn't want to be a partner, she just likes the fee income.
• 12:45
  SPEAKER_01: And when you're really good at paying people on time, the money is not a shortage.
• 12:49
  SPEAKER_00: Mark, so it it sounds to me like you were buying at a time that no one else wanted to buy, uh, because the market was was pretty bad.
• 12:55
  SPEAKER_00: And so maybe some people thought you were um not wise in buying, and maybe they thought you were uh uh definitely not wise because you were taking out 10% interest loans, but that wasn't that wasn't scary to you because you knew that there was an exit plan.
• 13:08
  SPEAKER_00: But but the exit plan was get the property low enough, renovate it, and then sell it at a profit because now you've changed the income.
• 13:16
  SPEAKER_00: Mark, one of the most important things that you've ever taught me is um um the higher the income, the higher the value.
• 13:24
  SPEAKER_00: And and so we've always you know gone through different examples of like, hey, Juan, if you raise the rent by$1,000 um per month, so that's$12,000 for the year, a lot of people would think, hey, your property has gone up.
• 13:37
  SPEAKER_00: And it's just kind of simple, like, well, my property went up by$12,000 because I increased the income.
• 13:43
  SPEAKER_00: But early on, and I was in college, you're like, no, Juan, that's not how it works.
• 13:46
  SPEAKER_00: Um, everything sells on a multiplier, and you need to figure out what the multiplier is for the area, but you take that$12,000, you multiply to said multiplier, whatever that could be, and that's really what you made.
• 13:56
  SPEAKER_00: And that's where I'm like, aha.
• 13:59
  SPEAKER_00: That's where money's being wealth.
• 14:01
  SPEAKER_00: But like, I talk to us about because your strategy is simply uh, and it's not simply.
• 14:06
  SPEAKER_00: I mean, it's it's it's very tough.
• 14:08
  SPEAKER_00: Hey, you need to you need to buy smart, you need to do the right renovations, you need to uh increase the the income.
• 14:15
  SPEAKER_00: But talk to us about the importance of understanding that the higher the value uh or the higher the income, the higher the value.
• 14:21
  SPEAKER_01: Okay.
• 14:21
  SPEAKER_01: And that's and we use uh annual income multiplier, or as some people call it a gross income multiplier, GIM, because everything trades, even stocks, if you read The Wall Street and you look at the different stocks and they talk about uh fast food restaurants selling it so many times it's next year's annual gross uh income, everything sells on a multiplier.
• 14:43
  SPEAKER_01: So when you in your example, when you raise it$12,000, well, what's the multiplier in the area?
• 14:49
  SPEAKER_01: And it's very easy to figure out.
• 14:51
  SPEAKER_01: Go look at a couple sales that have just happened, see what the sales price is, know what the income is because it's in the MLS, or you can knock on doors and figure out what the income is.
• 15:02
  SPEAKER_01: Like as an appraiser, you did knock knock on doors and people tell you what they're paying.
• 15:06
  SPEAKER_01: So once you take that sales price and you divide it by your annual income, then it comes up with this multiplier.
• 15:15
  SPEAKER_01: Yeah.
• 15:15
  SPEAKER_01: And you might be in a 10 multiplier neighborhood, you might be in a 20 multiplier neighborhood.
• 15:19
  SPEAKER_01: It seems to be nothing much higher than 20 and nothing much lower than 10.
• 15:23
  SPEAKER_01: So it's somewhere in that spectrum.
• 15:24
  SPEAKER_01: You know that from the other properties nearby.
• 15:27
  SPEAKER_01: You come up that multiplier, and now all of a sudden you know if you raise it by 10,000, it's a 10 multiplier neighborhood, you're up$120,000 in net worth or equity.
• 15:37
  SPEAKER_01: Correct.
• 15:38
  SPEAKER_00: It's it's not rocket science.
• 15:40
  SPEAKER_01: No, you know, a little bit of door knocking and a little time you put into it, and you'll know exactly what that multiplier is.
• 15:45
  SPEAKER_01: And uh to be less specific, you could actually look at the MLS of 30 properties that have sold in that city in the last year and just average all of those, and you at least have a rule of thumb to go by.
• 15:56
  SPEAKER_01: But I like to knock on the doors in the neighborhood.
• 15:59
  SPEAKER_01: It also gets me a flavor for what it is.
• 16:01
  SPEAKER_01: Again, I'm gonna know the property and I typically don't sell, I just collect them.
• 16:05
  SPEAKER_01: Uh that seems to be what people say, what do you do?
• 16:08
  SPEAKER_01: And I go, I collect small properties.
• 16:10
  SPEAKER_01: Got it.
• 16:11
  SPEAKER_00: Mark, when did you realize, like, and and and whether it was a year or or how old?
• 16:18
  SPEAKER_00: When did you realize, oh my gosh, I I I I've actually made it?
• 16:21
  SPEAKER_00: And and Mark, was the goal to become a millionaire or was the goal to have passive income?
• 16:25
  SPEAKER_00: Because those those are the two things.
• 16:27
  SPEAKER_00: What was the goal to leave a nest egg to family?
• 16:30
  SPEAKER_00: Like, what was your driving motivation?
• 16:31
  SPEAKER_00: Because everyone's got a little different, but they're not that different.
• 16:34
  SPEAKER_00: There's um almost like five things that people say.
• 16:36
  SPEAKER_00: Hey, I want time, I want freedom, I want to be able to retire.
• 16:39
  SPEAKER_00: Um, you know, I want to be able to leave something behind.
• 16:41
  SPEAKER_00: I don't want to be working for the man.
• 16:42
  SPEAKER_00: So there's all these things, but there's not that many things.
• 16:45
  SPEAKER_00: What was your motivation?
• 16:46
  SPEAKER_00: When did you know that you made it?
• 16:48
  SPEAKER_01: Long after I had made it.
• 16:50
  SPEAKER_01: I'm gonna tell you long after you.
• 16:52
  SPEAKER_01: I already made it 10 years before I realized that I made it.
• 16:54
  SPEAKER_01: And I went to my bookkeeper, who's been with me for 20-something years, you know.
• 16:59
  SPEAKER_01: And I go, God, I'm just tired of being poor.
• 17:01
  SPEAKER_01: How come I'm poor?
• 17:02
  SPEAKER_01: She goes, You're not poor, you're really rich.
• 17:05
  SPEAKER_01: And I go, how come I don't have the$100 bills just flying out of my pockets?
• 17:09
  SPEAKER_01: And she goes, Well, you keep buying properties and you keep using all of your excess income to put down payments and rehab expenses into your properties.
• 17:19
  SPEAKER_01: So you're still rich, but you don't.
• 17:22
  SPEAKER_01: So the answer to the question is, I think it was my bookkeeper who told me I was rich when I figured it out.
• 17:28
  SPEAKER_01: I always saw the net worth growing up, you know.
• 17:30
  SPEAKER_01: And I remember uh one time, oh, years ago, it was so cute.
• 17:34
  SPEAKER_01: You uh I my net worth shot over$10 million, and you called me a DECA millionaire.
• 17:40
  SPEAKER_01: Priceless.
• 17:41
  SPEAKER_01: Priceless.
• 17:42
  SPEAKER_01: At that time, I really knew for sure.
• 17:44
  SPEAKER_00: Okay, okay.
• 17:45
  SPEAKER_00: And I'm I'm sure now it's much, much higher than that because you you've you've been consistent with continuing to buy.
• 17:51
  SPEAKER_01: Absolutely.
• 17:52
  SPEAKER_01: And you know, the the the amazing thing is is that if you just buy regularly, uh whether it's once a year or once every two years or something, if you keep buying, pretty soon you've got this uh property portfolio.
• 18:06
  SPEAKER_01: And let's say for just example that your portfolio was$20 million of value.
• 18:11
  SPEAKER_01: It doesn't mean you have the 20 million worth of net worth, it means of total market value.
• 18:17
  SPEAKER_01: Appreciation runs between eight and twelve percent over time in our market.
• 18:21
  SPEAKER_01: But let's just for easy math say five percent return.
• 18:26
  SPEAKER_01: Well, twenty million, that's a million a year.
• 18:28
  SPEAKER_01: A million a year of net equity being increased, not because you're out slaving in the in the ditch, laying the pipes, but because you own and manage the asset.
• 18:39
  SPEAKER_00: Mark, I'm I'm glad you're you're we're talking about appreciation, and then I'll bring up cash flow as well.
• 18:45
  SPEAKER_00: A lot of our channel, uh sometimes people get upset at me because they say, oh, oh, because I'll tell people, hey, this is a good deal, and they're gonna look at the cash flow and say, uh, hey, that doesn't pencil, that doesn't break even, hey, that's slightly negative, uh, I'm not gonna buy it for those reasons.
• 19:00
  SPEAKER_00: And I'm like, well, um, you realize that if you buy this property, it it should go up conservatively, maybe 60,000 for the year.
• 19:09
  SPEAKER_00: And so although you you're seeing a loss of 12,000 from a cash flow perspective, you're actually leaving, uh, you're missing out on the opportunity of 60,000.
• 19:17
  SPEAKER_00: And they're like, oh, there you go again with appreciation.
• 19:19
  SPEAKER_00: Like they hate that, like they're so impatient for that.
• 19:22
  SPEAKER_00: But you're here telling me as someone who's done it for decades that that's how you made it as well.
• 19:27
  SPEAKER_00: Absolutely.
• 19:27
  SPEAKER_00: How help me explain to the to our viewers, to people who tune into us, how how do you look at deals when it's uh, hey, the cash flow, it doesn't pencil one.
• 19:38
  SPEAKER_00: Why would I buy it?
• 19:41
  SPEAKER_01: There's a big question.
• 19:42
  SPEAKER_01: Why are you buying it?
• 19:43
  SPEAKER_01: Okay.
• 19:44
  SPEAKER_01: Are you buying because you like the neighborhood?
• 19:45
  SPEAKER_01: Are you buying because you've got two or three others in on that vicinity that you're going to be uh making your management easier because you can walk between the different properties?
• 19:54
  SPEAKER_01: There's a lot of different reasons to buy.
• 19:57
  SPEAKER_01: Uh of course the cash is important.
• 19:59
  SPEAKER_01: It doesn't need to be the only one, but the cash is important and appreciation happens.
• 20:05
  SPEAKER_01: It just happens.
• 20:06
  SPEAKER_01: Even when we went into a recession, well, it wasn't quite a recession, like a couple it was a couple months of depression in uh 2010, 2011.
• 20:17
  SPEAKER_01: Uh so things didn't go up.
• 20:20
  SPEAKER_01: The only people who lost were people who sold in the down market.
• 20:24
  SPEAKER_01: All they had to do was wait another three years and it was worth way more than whatever they bought it for, and now they're in a positive cash flow business.
• 20:31
  SPEAKER_01: It's really tricky about buying properties that are negative cash flow.
• 20:36
  SPEAKER_01: And sometimes that's not good unless you have a lot of other money coming in from stock, royalties, uh something where you want to work to have a the negative cash flow is good for you because it's also a deduction.
• 20:50
  SPEAKER_01: I like to not buy on the negative cash flow.
• 20:52
  SPEAKER_01: I want to know everything I buy in one year is making money.
• 20:54
  SPEAKER_01: Uh, so when I buy it, I have a plan that in one year it's positive cash flow.
• 20:58
  SPEAKER_01: Sometimes it's three months, but always one year.
• 21:00
  SPEAKER_00: Okay.
• 21:00
  SPEAKER_00: Uh, and and I tell people, give it 18 months, but there has to be a game plan.
• 21:04
  SPEAKER_00: When I say game plan, it's just um what's your business plan?
• 21:08
  SPEAKER_00: Because I'll I'll tell you this, Mark.
• 21:09
  SPEAKER_00: And this is, you know, I've I learned a lot of uh sayings and quotes by spending a lot of time with you.
• 21:14
  SPEAKER_00: But one of the things that I that I created is is that the income of today is not the income of tomorrow.
• 21:18
  SPEAKER_00: Because here's the most interesting thing, Mark.
• 21:21
  SPEAKER_00: People look at a deal and um the cap rate's not high enough, okay?
• 21:27
  SPEAKER_00: And I need to remind people, hey, the cap rate is a snapshot of the next 12 months.
• 21:32
  SPEAKER_00: You're gonna own this how many years?
• 21:34
  SPEAKER_00: And in most cases, it's like uh, well, 10, 12, 15 years.
• 21:37
  SPEAKER_00: So you're gonna make an investment decision because you don't like the snapshot of one year.
• 21:42
  SPEAKER_00: Did you not look to year two?
• 21:44
  SPEAKER_00: Did you not look to year three?
• 21:46
  SPEAKER_00: And so um most times listen, here at our office, we're analyzing deals like 10 deals a day.
• 21:54
  SPEAKER_00: I mean, especially with with up with all the agents we have, and most times they're they're not money makers.
• 22:00
  SPEAKER_00: Yet.
• 22:01
  SPEAKER_00: But we need to make a moneymaker.
• 22:02
  SPEAKER_00: And that's why working with us, we we uh we teach what you taught me, and it's and it's um how can we bring more value?
• 22:10
  SPEAKER_00: How can we make this bit this building better so that a tenant's willing to pay more?
• 22:14
  SPEAKER_00: And then we've changed the income.
• 22:15
  SPEAKER_00: And voila, you change the income, whether it's 12 months, 18 months, 24 months, you change the income, you change the value, and now you're in a better cash position.
• 22:26
  SPEAKER_01: Absolutely.
• 22:27
  SPEAKER_01: The future is is why you're buying it.
• 22:28
  SPEAKER_01: It's the future value of cash.
• 22:30
  SPEAKER_01: When you look at what it's going to be, and then you look at what you're paying today, most times it's fair what you're paying today.
• 22:36
  SPEAKER_01: In fact, I've learned through hard lessons not to pay too much.
• 22:42
  SPEAKER_01: I will literally I lost a beautiful former beacon storage building that is now self-storage by fifteen thousand dollars because I got too tight.
• 22:53
  SPEAKER_01: Another time I I lost another property.
• 22:55
  SPEAKER_01: It's like if you're buying, let's say you're buying a million dollar property and your bid is 950 and someone else is at a million, if you want two million fifty, so what?
• 23:06
  SPEAKER_01: It doesn't matter.
• 23:08
  SPEAKER_01: First off, you're probably financing some of that, so it's not like you need it in your right away out of your pocket.
• 23:12
  SPEAKER_01: The kids aren't gonna go hungry at home.
• 23:14
  SPEAKER_01: More importantly, the million dollar building in ten years is gonna be worth two million dollars.
• 23:19
  SPEAKER_01: Who cares about the fifty thousand too much that you voluntarily ripped yourself off for by bringing too much?
• 23:25
  SPEAKER_01: It's like get the asset.
• 23:26
  SPEAKER_01: If you want the asset, get the asset.
• 23:28
  SPEAKER_01: You'll figure out a way to make it.
• 23:30
  SPEAKER_01: The income will continue to go up from the tenants or or whatever you're doing with that building.
• 23:35
  SPEAKER_01: Uh and maybe that doesn't work in a lot of uh instances for institutional investors, but I'm talking to you about guys that have zero or twenty million dollars, and that's where we got to not worry about the going in interest rate because we know we're gonna refinance it, it's gonna be worth a lot more, and we're gonna get a better rate as the income goes up.
• 23:59
  SPEAKER_01: The cost of rehab has to be a consideration as well.
• 24:03
  SPEAKER_01: Uh, if you're gonna buy something for a million dollars and it costs you a hundred thousand dollars down uh to to reposition that property, uh, that has to be in your in your cash flow as well.
• 24:13
  SPEAKER_01: Otherwise, uh you're not gonna get the increased rents that you might be planning.
• 24:18
  SPEAKER_00: Mark, um, one of the things that I that I hear, um you know, I guess this is more like seller-based, is uh uh we don't like the statewide rent control, we don't like the direction that California is going, um, it's time to sell.
• 24:34
  SPEAKER_00: And and then they really poo-poo a lot on on California.
• 24:37
  SPEAKER_00: But then I'm like um you know, and and typically I I encounter this because I represent a lot of sellers who who a lot of them seem to have the same uh thought process when it comes to that.
• 24:48
  SPEAKER_00: And and what they and I'm like thanks to the uh why you know, and you know, typically they they own 10 million, 12 million, they're 30 million dollars worth of California real estate that they're now hating on.
• 25:00
  SPEAKER_00: Yeah, and so I guess my question is you you continue you continue to buy and invest in California, and um what are your thoughts about like I mean some people are saying, hey, it's going downhill, don't invest here.
• 25:13
  SPEAKER_00: How do you see it?
• 25:15
  SPEAKER_01: Uh it's a golden state.
• 25:16
  SPEAKER_01: It's always been the golden state, and investing in California just makes sense.
• 25:21
  SPEAKER_01: Uh we have appreciation, we have population, and boy, do I hear the stories about how we have a net outflow of people.
• 25:29
  SPEAKER_01: It's so get on the 405 freeway at five o'clock and start guessing about how many more people you'd like to have move out of state.
• 25:35
  SPEAKER_01: Uh, I don't I don't see it.
• 25:37
  SPEAKER_01: I'm not affected by it.
• 25:39
  SPEAKER_01: It may hit some tertiary markets, but as far as the primary markets, there is more demand than there is supply, and that's of commercial properties and of residential properties uh in our in our local area.
• 25:52
  SPEAKER_01: And that's what you want to be is a sharp shooter of your area.
• 25:55
  SPEAKER_01: Don't don't buy one 50 miles to the east and the other one 65 miles to the north, and you can't see them and you can't touch them, and you don't know what's going on in the neighborhoods as far as what city might be doing uh rehabs of their own town center, making them more popular.
• 26:09
  SPEAKER_01: Uh Long Beach has had uh billions of dollars dropped into it in the in the last decade.
• 26:15
  SPEAKER_01: It's phenomenal when you think about the convention center and the aquarium of the Pacific, and it just goes on and on.
• 26:21
  SPEAKER_01: And downtown there's so many new buildings that are four and five story apartments on top of retail.
• 26:27
  SPEAKER_01: It's just uh mind-boggling how much money has come in and these apartments are filling up.
• 26:33
  SPEAKER_00: Hey, Mark, um, you know, we talk about we read in in in the Alley Times that that the that we are losing a a small percentage.
• 26:42
  SPEAKER_00: It's a very small percentage.
• 26:43
  SPEAKER_00: I mean, like then, you know, they'll say, hey, this year California lost so much.
• 26:46
  SPEAKER_00: But what people don't know is that we've been losing a population for the last 30, 40 years, but but it's been very small.
• 26:53
  SPEAKER_00: But but the one part that I that I kind of want to get into because I know you're gonna be familiar with it too, is um is um we might be losing uh a very small percentage, we just call it like 1% or less than 1%.
• 27:04
  SPEAKER_00: Uh, but we're gaining, and it's and the LA Time calls it the brain gain.
• 27:09
  SPEAKER_00: Talk to me about the brain gain.
• 27:11
  SPEAKER_00: I haven't done a video on it yet, but it's so powerful.
• 27:13
  SPEAKER_00: And tell me what you know about it, and I'll kind of give you my thoughts.
• 27:17
  SPEAKER_01: Okay.
• 27:17
  SPEAKER_01: It's it's just where the success and the money goes.
• 27:22
  SPEAKER_01: And so then you end up with a uh a more professional clientele or uh more uh educated.
• 27:28
  SPEAKER_01: Uh, you can look at the blue-red map, you can see who's the educated, who's not the educated, and and where the great successes are.
• 27:34
  SPEAKER_01: And I mean, even if you go into a red state like Texas, you go to uh San Antonio and all of a sudden it's it's very popular.
• 27:42
  SPEAKER_01: Uh but now I just read in today's Wall Street Journal that uh Texas is now overbuilt and prices have stabilized, they've started to decline.
• 27:51
  SPEAKER_01: So the whole dream of leaving one area to go to another area doesn't make sense.
• 27:55
  SPEAKER_01: I mean, but if you if you like the golf more and you're retired, then going to Arizona might make a lot of sense.
• 28:00
  SPEAKER_01: But I wouldn't take my family's roots out of this area and go to another one uh just because of a perceived uh loss of population, which uh like I I can't find the effect of.
• 28:13
  SPEAKER_00: Right.
• 28:13
  SPEAKER_00: No, and and and I would say that it is perceived.
• 28:15
  SPEAKER_00: So so the brain gain is uh people from um Michigan, Idaho, Ohio, Iowa, um, all these all these states come out with really good degrees and engineers, software engineers, and they're looking for, hey, where can my where where can I get a better lifestyle and where can I get a a job that's gonna pay me well?
• 28:38
  SPEAKER_00: And um and California seems to fit that bill.
• 28:41
  SPEAKER_00: And so the brain gain is while we might be losing population, and and in some cases, yes, they are retirees, in other cases, they're um lower economic, um, that are that that simply can't can't afford to stay here, but they're being replaced by professionals with degrees who then look for rentals that you have, Mark, and I haven't.
• 29:03
  SPEAKER_00: And you know this, you and I own um a duplex down the street, and we have, I mean, one we we had um uh two doctors living in, yes, and then when they moved out, it got replaced by another doctor.
• 29:15
  SPEAKER_00: And I and and we keep thinking that's part of the brain game.
• 29:18
  SPEAKER_00: They are not originally from California, and so and so the way that I look at it, Mark, is is um when you buy an apartment building, you're buying a business, right?
• 29:27
  SPEAKER_00: You're buying a business that you don't have to go to every day, right?
• 29:31
  SPEAKER_00: And and and it's a business that the day you close escrow, if you had a vacancy, I promise you there's gonna be people contacting you without you putting out a um a for lease sign.
• 29:42
  SPEAKER_00: There's I think people don't sometimes, you know, I'll sell it.
• 29:46
  SPEAKER_00: Like I'm I'm selling a fourplex this week and it's in Los Angeles, and it's gonna be delivered with one unit vacant, which is huge, right?
• 29:52
  SPEAKER_00: Right.
• 29:52
  SPEAKER_00: So it's a very, very big positive thing.
• 29:54
  SPEAKER_00: And so um the buyer, sweet lady, she said, um, is it gonna be hard for me to rent this out?
• 30:00
  SPEAKER_00: And I started laughing.
• 30:01
  SPEAKER_00: I'm like, oh, you have no idea.
• 30:03
  SPEAKER_00: You have no idea, like the hundred people that are gonna show up to rent your property because there's that much demand.
• 30:10
  SPEAKER_00: And so, Mark, I tell people, you are if you're fortunate enough, and listen, I know we're simplifying this on this thing, like, hey, buy one every year, people are probably thinking, well, where the hell do I get the money to buy my first one, right?
• 30:22
  SPEAKER_00: And and we'll get into that too, you know.
• 30:23
  SPEAKER_00: So, but but um, but the thing is, is that once you realize that how much demand there's gonna be for a vacancy, once you realize that there's 20 qualified tenants that you would love to have, I don't know.
• 30:39
  SPEAKER_00: I always get the thought of like, oh my gosh, I have to choose one, they're gonna be great tenants, ma'am.
• 30:44
  SPEAKER_00: But what about these other 19?
• 30:46
  SPEAKER_00: I want to house them too, right?
• 30:48
  SPEAKER_00: So how do I do that?
• 30:49
  SPEAKER_00: I guess I gotta go buy more properties.
• 30:51
  SPEAKER_01: Exactly.
• 30:51
  SPEAKER_01: No, I've got the same thing where I just uh did one uh and the two ladies wanted it, but I gave it to somebody else, but they were perfectly good.
• 31:00
  SPEAKER_01: I would love to have had these two ladies, and uh they came by even though the sign was down, and they said, Is it still possible?
• 31:07
  SPEAKER_01: And I said no, but I then I could refer them to another vacancy that I'd just gotten, and they went out and looked at it.
• 31:12
  SPEAKER_01: And if you do a nice job, the people like it.
• 31:14
  SPEAKER_01: This particular neighborhood that we're in, uh when you're a block or two from the beach, is really high demand, and you get people that have a lot of income.
• 31:23
  SPEAKER_01: So when you have a higher rent, it doesn't seem to bother them so much because they have more income.
• 31:28
  SPEAKER_00: Yeah, no, I I completely understand.
• 31:31
  SPEAKER_00: Mark, uh, talk to us.
• 31:32
  SPEAKER_00: Listen, you caught you taught at the college level, you're you're great on stage, you're a great instructor.
• 31:38
  SPEAKER_00: Um, someone's listening to this.
• 31:40
  SPEAKER_00: Let's let's help someone, let's coach someone through maybe buying their first fourplex.
• 31:46
  SPEAKER_00: Right.
• 31:46
  SPEAKER_00: Um, they just came out um a few months ago that they made it Fannie Mae adjusted their their loan requirements.
• 31:53
  SPEAKER_00: So if you if you are a first, well, no, you don't even have to be a first time, you could essentially buy a duplex, a triplex or a fourplex with five percent down, one condition, you had to live in one of the units, which by the way, sure that's what you did, Mark.
• 32:05
  SPEAKER_00: I mean, maybe not through the Fannie Mae program, but you bought like yes, like you bought a triplex.
• 32:10
  SPEAKER_00: Yes, and and yeah, listen, it's a single family home with a duplex, but it's one parcel, it is a triplex, in my opinion.
• 32:16
  SPEAKER_00: And so you did this, right?
• 32:18
  SPEAKER_00: It worked for you, call it 30 years ago, 40 years ago.
• 32:21
  SPEAKER_01: Yeah, yeah.
• 32:23
  SPEAKER_01: Forever ago.
• 32:24
  SPEAKER_00: Can it work now?
• 32:25
  SPEAKER_00: How like talk to us for the for the the person who doesn't have their units yet, but maybe they've been saving up and with five percent down, the interest rates.
• 32:35
  SPEAKER_00: So here's what they're gonna tell you.
• 32:36
  SPEAKER_00: They're gonna say the interest rates are high, and I'm gonna be paying more than rent.
• 32:41
  SPEAKER_00: Why would I do this?
• 32:42
  SPEAKER_00: Uh what do you say to that?
• 32:43
  SPEAKER_00: Perfect.
• 32:43
  SPEAKER_01: Well, you first you get a tax benefit that's gigantic.
• 32:46
  SPEAKER_01: Uh, you've got the uh mortgage and you have the uh property taxes that you're paying.
• 32:53
  SPEAKER_01: So that is a is a great offset that you see uh in your second year.
• 32:58
  SPEAKER_01: You don't see it in your first year because you haven't done that yet.
• 33:02
  SPEAKER_01: So you'll see that in your second year.
• 33:03
  SPEAKER_01: Additionally, your rents will go up every year.
• 33:06
  SPEAKER_01: So if you just did a 5% increase on your rents, uh that will assist you, and you'll be it changes the cash flow for the second year.
• 33:14
  SPEAKER_01: Uh some people have not had their rents increased for a long time, and you can increase their rents immediately uh to whatever the maximum is.
• 33:23
  SPEAKER_01: I think we're about 8.8 right now or something like that.
• 33:25
  SPEAKER_01: 8.3.
• 33:26
  SPEAKER_01: 8.3.
• 33:27
  SPEAKER_01: Okay.
• 33:27
  SPEAKER_01: The economy keeps getting better and the amount and the inflation keeps going down.
• 33:32
  SPEAKER_01: So the amount of money that we get to increase our rents is less.
• 33:34
  SPEAKER_01: Uh I typically don't do the max anyway.
• 33:37
  SPEAKER_01: But uh, but the point is go buy it.
• 33:40
  SPEAKER_01: Go find the property, go buy it.
• 33:41
  SPEAKER_01: It's a million dollars and you don't have enough money.
• 33:44
  SPEAKER_01: There's get a partner.
• 33:46
  SPEAKER_01: Get a partner.
• 33:47
  SPEAKER_01: Uh there's no shame in that.
• 33:49
  SPEAKER_01: Uh you could have a good buddy.
• 33:51
  SPEAKER_01: If you can't do business with family and friends, you shouldn't be doing business.
• 33:54
  SPEAKER_01: That's always been my motto.
• 33:56
  SPEAKER_01: So go, hey, ask a dad or a mom to uh come up with matching amount down payment, okay?
• 34:03
  SPEAKER_01: Uh that would double the amount of money you have to put down.
• 34:06
  SPEAKER_01: If you don't have that, well, who are you carpooling with?
• 34:09
  SPEAKER_01: Who are you going to Carl Jr.'s with at lunch today?
• 34:12
  SPEAKER_01: Talk to those buddies.
• 34:13
  SPEAKER_01: Each one of them.
• 34:14
  SPEAKER_01: Get 10 grand out of each one of your three buddies.
• 34:16
  SPEAKER_01: That's your 30 grand plus the 30 or 40 you already have.
• 34:19
  SPEAKER_01: Now you're talking you got 5% down for a million two property or something like that.
• 34:24
  SPEAKER_01: It's doable.
• 34:25
  SPEAKER_01: Just do it.
• 34:26
  SPEAKER_01: Now, yes, you're gonna need some paperwork, but you don't need a fancy attorney to drop a$10,000 agreement for you.
• 34:32
  SPEAKER_01: You just write down what it is in simple terms, who put what in, what their percentage of honor is, who's gonna be the manager, who's the responsible party.
• 34:40
  SPEAKER_01: Just simple things.
• 34:41
  SPEAKER_01: You sit down and when you when you've you can you can do it with a notepad and a couple beers, and you come together, now you got a syndicate, but you're really just partner guys, and you're doing this stuff together.
• 34:51
  SPEAKER_01: And it's nice to do it with partners.
• 34:53
  SPEAKER_01: It's fun to share the the ooh and the ah.
• 34:55
  SPEAKER_01: It's nice to share profits, of course.
• 34:57
  SPEAKER_01: It's nice to have distribution.
• 34:59
  SPEAKER_01: We could every time I bring over a distribution check for you on, I'm I'm happy.
• 35:03
  SPEAKER_01: I'm thinking, dude, look at this.
• 35:05
  SPEAKER_00: Uh uh, so for the listeners, Mark and I own several buildings together and and that we bought through the years.
• 35:11
  SPEAKER_00: We we still own them.
• 35:12
  SPEAKER_00: And um, and and it it is nice when when Mark will bring a check.
• 35:17
  SPEAKER_00: Oh, okay.
• 35:18
  SPEAKER_00: He's bringing me a check because the property is pass uh positive cash flow.
• 35:23
  SPEAKER_00: So uh reminder that didn't happen year one or year two.
• 35:27
  SPEAKER_00: This was, I mean, we've owned them for so many years now that now and that so I just tell people to be patient, right?
• 35:33
  SPEAKER_00: When it comes to the cash flow.
• 35:35
  SPEAKER_00: Um, you really don't have to be patient for the appreciation.
• 35:38
  SPEAKER_00: I mean, life goes by fast, and before you know it, it's five years later, and oh my gosh, it's gone up by 300,000.
• 35:44
  SPEAKER_00: And I know that we simplify, but that is all I've seen.
• 35:48
  SPEAKER_00: Yes.
• 35:48
  SPEAKER_01: Mark, for the for the person who's buying, you know, for the listeners out there, if you're in Topeka, it may not work the same.
• 35:55
  SPEAKER_01: Right.
• 35:55
  SPEAKER_01: If you're in Cincinnati, it may not work the same.
• 35:58
  SPEAKER_01: Okay, you've got to know your market.
• 36:00
  SPEAKER_01: Okay.
• 36:00
  SPEAKER_01: We're sitting in California and thinking, oh yeah, California's the Gold Coast, and everybody wants to come to a coast.
• 36:05
  SPEAKER_01: And but uh some Californians move over to Florida because they want a different coast.
• 36:09
  SPEAKER_01: There's a but know your local market.
• 36:11
  SPEAKER_01: Know your local market, you can find it.
• 36:13
  SPEAKER_01: Uh my daughter has income property and her tenant comes out of Cincinnati.
• 36:19
  SPEAKER_01: And that man, they just have the apartment to vacation at.
• 36:25
  SPEAKER_01: That man owns a nice house and 75 rental houses because he bought all these rental houses for$10,000 and$25,000 a piece because they were foreclosed on and they were dumpy, really bad condition.
• 36:36
  SPEAKER_01: But he would buy them, fix them up, put in a tenant.
• 36:39
  SPEAKER_01: And if the tenant is paying$10,$1,000 a month, that's$12,000 a year.
• 36:44
  SPEAKER_01: And the guy, even if he paid$35,000 for it, it's like a three-year payback.
• 36:47
  SPEAKER_01: It's that's the same as a 33% rate of return.
• 36:50
  SPEAKER_01: Uh, so find the deals.
• 36:52
  SPEAKER_01: What's going on in your market?
• 36:53
  SPEAKER_01: Every market has something special going on in it, and that's what you have to analyze and jump on.
• 36:59
  SPEAKER_00: Mark, thank you for that.
• 37:00
  SPEAKER_00: Um, talk to us.
• 37:02
  SPEAKER_00: I know you've been building um last couple years, you've been building ADUs, accessory dwelling units, um, um, which is so in California, and this is not every state, they're allowing us to either convert the garage or the backyard build build another dwelling because why we don't have enough housing.
• 37:22
  SPEAKER_00: Um, talk to us about the I guess the importance of building ADUs, but also kind of the economic drivers.
• 37:29
  SPEAKER_00: Like uh, I mean, clearly it's making money, otherwise you really know that's true.
• 37:34
  SPEAKER_01: Uh but it's when you're making housing, it's it's uh it's a noble cause.
• 37:40
  SPEAKER_01: Okay.
• 37:40
  SPEAKER_01: It's it's something really important that you're doing, especially if you're taking someone's backyard, which really has no purpose to it.
• 37:46
  SPEAKER_01: It's somebody's paying$100 a month to a gardener to maintain it, perhaps, or slaving every other weekend on it themselves.
• 37:53
  SPEAKER_01: And you put a house back there, you've made more housing.
• 37:56
  SPEAKER_01: And to me, that is uh rewarding.
• 38:00
  SPEAKER_01: It's just psychologically rewarding now as far as financial, sure.
• 38:04
  SPEAKER_01: Uh, if your ADU costs you$250,000, your house goes up about$500,000, and you've made$250,000 new equity just by putting another house in the backyard of what was a rental house to begin with.
• 38:18
  SPEAKER_01: So uh the the the money is there, it's absolutely a moneymaker.
• 38:23
  SPEAKER_01: Uh I can't understand why uh the state just doesn't come out and fund everybody with an ADU.
• 38:30
  SPEAKER_01: Let everybody who has a backyard big enough, who has the desire to have additional income, just fund it for them and create the housing.
• 38:37
  SPEAKER_01: I look at these uh uh articles where the uh housing in like Los Angeles just put up a big high rise for the homeless and the unhoused.
• 38:51
  SPEAKER_01: $600,000 a unit is what they paid to get this building converted into it.
• 38:55
  SPEAKER_01: I I'm talking I'm gonna give you a three-bedroom, two-bath home for$250 or$300,000 in your backyard, you know.
• 39:01
  SPEAKER_01: It's like and it's and it's worth the the value of the of the house.
• 39:06
  SPEAKER_01: And so I it there's so much money to be made in it.
• 39:09
  SPEAKER_01: Uh the question is, is how hard do you want to work?
• 39:11
  SPEAKER_01: Uh if you want to work really hard, uh if you're making$200,000,$300,000 per ADU and you did five of those in a year, there's a million and a half of uh untaxed equity.
• 39:23
  SPEAKER_01: So it's there, it's very easy.
• 39:25
  SPEAKER_01: It's just doing it.
• 39:27
  SPEAKER_00: Mark, um, we're gonna be wrapping up here in a little bit, but I wanted to get your thoughts um for the folks listening to us, they're gonna say, is this still is this still a good time to buy?
• 39:37
  SPEAKER_00: Are you still buying, Mark?
• 39:38
  SPEAKER_01: I am still buying.
• 39:40
  SPEAKER_01: It is a good time to buy, and and do not be afraid about the loans.
• 39:45
  SPEAKER_01: Okay.
• 39:45
  SPEAKER_01: Uh our friend Caleb has that horrible, horrible sale that you're marrying the property, but you're only dating the loan because as soon as the rate changes, you're gonna go out and get a new lower rate, so your payments will drop.
• 39:57
  SPEAKER_01: This is the time to buy because some people are sketchy and afraid of it.
• 40:02
  SPEAKER_01: And so just pull the trigger.
• 40:05
  SPEAKER_01: Just go buy.
• 40:06
  SPEAKER_01: It's you you're you're not gonna go wrong.
• 40:08
  SPEAKER_01: You're the the market's not gonna crash.
• 40:10
  SPEAKER_01: There aren't so many people are gonna move out of California that uh uh the house has no value because nobody wants to be here.
• 40:17
  SPEAKER_00: Uh some of the things that uh that that I'm gonna say on behalf of the people who who I talk to is hey Juan, there's a recession, there's an election year, I don't know who's gonna win.
• 40:26
  SPEAKER_00: This is just a bad time.
• 40:27
  SPEAKER_00: The interest rates are high.
• 40:28
  SPEAKER_00: And Juan, the values never dropped.
• 40:29
  SPEAKER_00: Why would I buy?
• 40:31
  SPEAKER_01: That's right.
• 40:32
  SPEAKER_01: The values aren't dropping.
• 40:34
  SPEAKER_00: That's why you buy.
• 40:35
  SPEAKER_01: That's why that's why you buy it.
• 40:36
  SPEAKER_01: I swear to you, I was in my house for like uh five or six years, and some lady walking down the street, and I'm sitting on the porch, and my and my wife is doing some gardening in the front yard, you know, and uh the lady comes down the house street and she goes, you know, you got the last great deal in this neighborhood.
• 40:53
  SPEAKER_01: And it was because she wanted to do it but didn't pull the trigger.
• 40:56
  SPEAKER_01: Okay.
• 40:56
  SPEAKER_01: And so we got the last great deal.
• 40:58
  SPEAKER_01: No, every time you buy, you just got the last great deal.
• 41:01
  SPEAKER_01: And if you pay a little bit too much, don't worry about it.
• 41:04
  SPEAKER_01: It will be completely covered over 10 years from now.
• 41:07
  SPEAKER_01: You know, you'll laugh when you tell your friends, yeah, yeah, no, I when I bought it, I paid$25,000 more than what the listing price was, and everybody thought I was a chump.
• 41:15
  SPEAKER_01: And I bought it with a 10% loan.
• 41:17
  SPEAKER_01: But then, you know, but three years later, and now you're sitting with a 5.5% loan, it's making a whole lot of money.
• 41:23
  SPEAKER_01: Just pull the trigger, be smart about it, do your research, do some homework, or use a broker who knows the market.
• 41:30
  SPEAKER_01: And it's like you your broker can't know what's going on in Seattle.
• 41:34
  SPEAKER_01: That's a Seattle broker.
• 41:36
  SPEAKER_01: Go talk to them.
• 41:36
  SPEAKER_01: But if you want to know what's going on in Southern California, specifically this Long Beach, South Bay area, uh, they'd be a fool not to call you.
• 41:44
  SPEAKER_01: You've got more experience in this than most anyone out there.
• 41:46
  SPEAKER_00: Uh Mark, thank you for the shameless plug.
• 41:49
  SPEAKER_00: I I appreciate that.
• 41:50
  SPEAKER_00: With that being said, Mark, um, I'm going to give you the final say.
• 41:53
  SPEAKER_00: If there's if there's people who want to get a hold of you, if there's anywhere that you want to uh tell people to check out, anything you're working on, please let us know.
• 42:01
  SPEAKER_01: You know, uh very easy.
• 42:03
  SPEAKER_01: I respond to emails.
• 42:04
  SPEAKER_01: I check it almost every day now.
• 42:06
  SPEAKER_01: That's about as high on my technological skill level I can go.
• 42:09
  SPEAKER_01: But I am Mark Milan.
• 42:10
  SPEAKER_01: That's M-A-R-K, M-A-L-A-N at Outlook.com.
• 42:14
  SPEAKER_01: And uh drop me a line if you got a question, and I'd be more than happy to answer it.
• 42:18
  SPEAKER_01: Uh, I don't take on clients now.
• 42:21
  SPEAKER_01: I'm uh my my my one and only client is myself.
• 42:24
  SPEAKER_01: It seems that I have uh less conflict in my life that way.
• 42:28
  SPEAKER_01: So uh, but I do have a lot of experience, a lot of knowledge, and I'd love to share something with you, especially if it's what you need to decide to actually pull the trigger, go buy something and be on it.
• 42:40
  SPEAKER_00: Um, I gotta share the story.
• 42:41
  SPEAKER_00: So be because of Mark's urging and him setting an example, and and and grant, I have to remind people like this is not something that my brothers taught me, my parents taught me.
• 42:50
  SPEAKER_00: I learned this from Mark.
• 42:51
  SPEAKER_00: And so uh there was one time where you know Mark got me going on my investment journey, and and I had bought a condo, and then we bought a triplex together, Mark and I did, and then then I was in a position where there was two really good deals on condos, and I said, Mark, um, then we were out to lunch, I'm like, which condo do I do do I buy?
• 43:09
  SPEAKER_00: And Mark says, buy both.
• 43:12
  SPEAKER_00: And I was like, no, you gotta be crazy.
• 43:13
  SPEAKER_00: That's too much.
• 43:14
  SPEAKER_00: I'm gonna take too much debt.
• 43:15
  SPEAKER_00: He's like, buy both.
• 43:16
  SPEAKER_00: And I did, and I was able to sell one for a profit like really quickly.
• 43:19
  SPEAKER_00: And so it's um, listen, if Mark is willing to give himself, um, make himself available to assist you, uh, he is um, you know, I'll always tell people a lot of my uh education, my background, my motivation when it comes to real estate came directly from Mark.
• 43:35
  SPEAKER_00: And so if anyone could could could learn from him and make um him your mentor, you'd uh you should take him up on that um on that offer.
• 43:43
  SPEAKER_00: So, Mark, thank you so much.
• 43:45
  SPEAKER_00: Thank you so much for being here.
• 43:46
  SPEAKER_00: Uh, we're you and I are still buying stuff.
• 43:48
  SPEAKER_00: We're still looking at deals.
• 43:50
  SPEAKER_00: And um we're gonna have you back again.
• 43:52
  SPEAKER_00: Thank you so much for being our first guest.
• 43:54
  SPEAKER_00: And until next time, good luck with your podcast.
• 43:57
  SPEAKER_01: Bye bye.