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Smart Strategies for Passive Income - Michael Blank #6230 · Financial Survival Network

• 0:00
  Speaker 1: I got to get me some financial freedom, and I
• 0:02
  Speaker 1: just wanted to parlay my IPO millions into passive income.
• 0:06
  Speaker 1: So I learned how to learn how money works. I
• 0:08
  Speaker 1: traded stocks and options for a while. Trade at Iron
• 0:10
  Speaker 1: condos for eighteen months was pretty cool. I flipped a
• 0:13
  Speaker 1: couple of houses for good measure, took a commercial real
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  Speaker 1: estate class. But my big idea, Carrie, was to get into.
• 0:19
  Speaker 2: A you're listening to Carrie.
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  Speaker 3: Let'sa's financial Survival Network where you get valuable information you
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  Speaker 3: just can't find anywhere else to thrive in today's trying times.
• 0:30
  Speaker 3: You need the Financial Survival Network now more than ever.
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  Speaker 3: Go to Financial Survivalnetwork dot com and get your free
• 0:38
  Speaker 3: newsletter and gift. Financial Survival Network now more than.
• 0:43
  Speaker 4: Ever, and welcome you are listening to and watching the
• 0:50
  Speaker 4: Financial Survival Network. This is our first show of February
• 0:54
  Speaker 4: of twenty twenty five. So much going on, so much uncertainty.
• 0:58
  Speaker 4: Nobody knows what the FU sure will bring. All we
• 1:01
  Speaker 4: can do is look at the past and hope to
• 1:05
  Speaker 4: draw inferences and guidelines and over time. Real estate. You know,
• 1:10
  Speaker 4: we're very pro real estate. I've had some significant windfalls
• 1:14
  Speaker 4: in real estate, so never say never.
• 1:18
  Speaker 2: It's always too high. That's one thing I've learned.
• 1:21
  Speaker 4: The price is always too high, but it's always going higher.
• 1:24
  Speaker 4: Maybe doge, we'll solve all of our fiscal problems and
• 1:28
  Speaker 4: we'll start living within our means as a country.
• 1:32
  Speaker 2: But you know what, I'll believe it when I see it, And.
• 1:35
  Speaker 4: If you believe it, then We've got a bridge for
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  Speaker 4: sale on eBay right now and it's going to go fast.
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  Speaker 2: You better go on there and get it. Michael Blank
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  Speaker 2: is with us now. Michael real Estate.
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  Speaker 4: Invents Investor par Excellence into multifamily. Michael, it's great to
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  Speaker 4: have you on the show. So tell us how did
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  Speaker 4: you get involved in real estate?
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  Speaker 1: Yeah, so I kind of consider myself carry the crash
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  Speaker 1: test demmy of financial freedom, and maybe your audience a
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  Speaker 1: little bit. I've done so many different things, you know.
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  Speaker 1: I was first taught to go to go to school,
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  Speaker 1: get good grades, get a job with benefits. And I
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  Speaker 1: have a master's of computer science. Carry. I'm highly educated,
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  Speaker 1: and so I was part of this the software IPO
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  Speaker 1: in March of two thousand, company called What Methods put
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  Speaker 1: a bunch of money in my pocket until I read
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  Speaker 1: rich Dad port At in two thousand and five and
• 2:30
  Speaker 1: threw me for a loop because that was what it was. Gosh,
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  Speaker 1: son of it, son of a gun, really through for loop.
• 2:36
  Speaker 1: So I was like, I have it all wrong. I
• 2:37
  Speaker 1: got to get me some financial freedom, and I just
• 2:40
  Speaker 1: wanted to parlay my IPO millions into into passive income.
• 2:43
  Speaker 1: So I learned how to learn how money works. I
• 2:46
  Speaker 1: traded stocks and options for a while, traded iron condos
• 2:49
  Speaker 1: for eighteen months, was pretty cool. I flipped a couple
• 2:51
  Speaker 1: of houses for good measure, took a commercial real estate class.
• 2:55
  Speaker 1: But my big idea, Carrie, was to get into a franchise,
• 2:58
  Speaker 1: because that's what you would have done. So it was
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  Speaker 1: a restaurant franchise and I and I.
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  Speaker 2: Did like mistake, Yeah, of course.
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  Speaker 1: But I also invested passively and with a developer, which
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  Speaker 1: I said, which I had subsequently lost, and had a
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  Speaker 1: bunch of stuff with equity. So I've done a lot
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  Speaker 1: of things. I'll experienced a lot of things. And yes,
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  Speaker 1: the franchise did not go well for me. I I
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  Speaker 1: lost my IPO millions, and I had eight restaurants at
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  Speaker 1: the height and uh and uh, I did flip three
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  Speaker 1: dozen houses. Try to flip my way out of I
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  Speaker 1: had a few rentals and uh, those were pretty cool,
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  Speaker 1: you know, not very not very passive, unfortunately, and uh,
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  Speaker 1: twenty twenty eleven got into apartment buildings and that changed everything.
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  Speaker 1: So we that is actual more passive, much more scalable.
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  Speaker 1: So I've done a bunch of stuff. Where do you
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  Speaker 1: want to take it from here?
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  Speaker 2: All right? So got into real estate? How do you
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  Speaker 2: how do you like? You know, how do you find
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  Speaker 2: a building to buy? How do you raise the money?
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  Speaker 2: And how do you what do you do after God forbid?
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  Speaker 2: It all work and you own the building?
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  Speaker 1: Well, you're jumping through whole whole minds of hoops. First
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  Speaker 1: of all, line the world would you get in a
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  Speaker 1: multi family in the first place? Like, what's wrong with
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  Speaker 1: flipping and rentals? You just prove it right past it.
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  Speaker 1: But let's say you move back past The problem with
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  Speaker 1: that is it's hard to scale and it's not very passive.
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  Speaker 1: That's the biggest problem with single family house I've found
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  Speaker 1: is I've done a bunch of it, and so apartments
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  Speaker 1: is actually much more scale, will much more passive, and
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  Speaker 1: I would argue also less risky, which is important if
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  Speaker 1: I want to get into a strategy I want to
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  Speaker 1: be able to scale it, but I don't want to
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  Speaker 1: have to arder either, and I can't. I can't have
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  Speaker 1: spent five years building a business and then lose it
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  Speaker 1: to some market event or some legislation that I can't foresee.
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  Speaker 1: And that really puts the damper on things. And so,
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  Speaker 1: after all the things I've done, apartments really is the
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  Speaker 1: one thing that's stuck, and it sucks. Think it has
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  Speaker 1: stuck since then, and it has performed well over the
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  Speaker 1: last you know, you know, decades as well, So I
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  Speaker 1: really like the acid class.
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  Speaker 2: How'd you do during the pandemic?
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  Speaker 1: Pandemic was surprisingly positive?
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  Speaker 2: Right?
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  Speaker 1: It was privately because we all thought that no one
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  Speaker 1: would no one would pay rents and then you couldn't
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  Speaker 1: get them out because of the directions, and the exact
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  Speaker 1: opposite happened. Right, People actually pay their rents Number one,
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  Speaker 1: I think because people's the one thing they control as
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  Speaker 1: a roof overhead, because their jobs were on the line.
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  Speaker 1: There was death in the streets, so they actually paid
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  Speaker 1: the rent and the ones that didn't guess what the
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  Speaker 1: government paid for them. And so our elections actually went
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  Speaker 1: up wild.
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  Speaker 2: Wow, yeah, unbelievable. What markets do you like Michael.
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  Speaker 1: I like any market status growing where I can get
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  Speaker 1: cash flong properties. So for example, we like Atlanta, that's
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  Speaker 1: where a majority of our portfolio is in. But there's
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  Speaker 1: a number of other markets, you know, Houston, Dallas, Austin, Huntsville,
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  Speaker 1: or number of markets. It won't be either coast. It
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  Speaker 1: won't be Boston, won't be New York, it won't be
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  Speaker 1: San Francisco, LA. While they may be growing. Again, it's
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  Speaker 1: tough to get cash flong properties.
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  Speaker 2: There, understood.
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  Speaker 4: And what about the laws of the jurisdiction getting rid
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  Speaker 4: of non paying tenants, Like in New York, you know,
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  Speaker 4: you might as well marry your tenant because you're stuck
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  Speaker 4: with them for life, and then if you want to
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  Speaker 4: get rid of them, it's going to cost you a
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  Speaker 4: ton of money.
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  Speaker 2: So it's just like a marriage.
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  Speaker 1: Yeah, my first deal was in Washington, DC, again because
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  Speaker 1: I didn't have someone advising me at the time, and
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  Speaker 1: that was a nightmare, nightmare very much so, very difficult
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  Speaker 1: to vect people, very easy for tenants to sue the
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  Speaker 1: landlord for no reason whatsoever, impossible to get out, and
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  Speaker 1: then actually really hard to sell. They actually weird topa
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  Speaker 1: laws and so it is important to find the right
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  Speaker 1: jurisdiction you're in, and that disqualifies Great State of New
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  Speaker 1: York or California or places like that. It just makes
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  Speaker 1: it more difficult to do business.
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  Speaker 4: So what's your favorite market overall in terms of value
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  Speaker 4: and in terms of landlord friendly jurisdiction.
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  Speaker 1: There are so many. I mean I just mentioned a
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  Speaker 1: number of them. We happen to be Atlanta, but like again,
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  Speaker 1: you can be in Dallas, you can be in Austin,
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  Speaker 1: you can be in Houston and Huntsville, Birmingham, Chattanooga. These
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  Speaker 1: are all in the South Southeast, are all relatively the
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  Speaker 1: landlord friendly growing and the.
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  Speaker 4: Cashflow positive real estate. It sounds like you have reluctance
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  Speaker 4: or issues with Florida. Yeah, yeah, because a little bit
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  Speaker 4: of it unknown.
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  Speaker 1: As you know, with the within, with the hurricanes and
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  Speaker 1: the insurance and insurance, it's becoming increasingly difficult to get insurance,
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  Speaker 1: which is a problem. I mean, if I could say
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  Speaker 1: insurance goes up twenty percent of a year, I can
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  Speaker 1: put that on writing. It's not a problem, but it's
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  Speaker 1: a bit certain. So I'm a little cautious about Florida.
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  Speaker 3: Yeah.
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  Speaker 4: Well, they've made some changes, but you know, then you
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  Speaker 4: got the engineering thing and the reserve funds. Well, I
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  Speaker 4: guess for apartment buildings none of that counts, but it
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  Speaker 4: does count because you still have to make provisions for
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  Speaker 4: repairs and maintenance.
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  Speaker 2: Right, that's right.
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  Speaker 1: Absolutely, it's like a bit uncertain to kind of raise
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  Speaker 1: it the risks, so a bit cautious on Florida right now.
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  Speaker 1: In general, I do like it's growing. It's a growing market, obviously,
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  Speaker 1: cash flowing properties. Great place to live a pro pro
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  Speaker 1: owner also great, except that that one thing to put
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  Speaker 1: the damper on things a little bit.
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  Speaker 4: Yeah, yeah, you know, looks really great, that ocean front apartment.
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  Speaker 4: But go to Fort Myers Beach if you think it's
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  Speaker 4: so great. Years later, two three years later, they're still
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  Speaker 4: cleaning up and they're still demolishing and still waiting for money,
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  Speaker 4: waiting for insurance companies to pay, waiting for FEMA to
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  Speaker 4: do its thing. It's it's nuts. So I got your
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  Speaker 4: point there better. But look at North Carolina. Nobody thought
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  Speaker 4: that was in a hurricane zone. Yeah, they got hurricanes,
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  Speaker 4: you know, in the outer banks, but never one going
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  Speaker 4: up the middle of the state, flooding everything in sight.
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  Speaker 1: That's a good point. I mean stuff happens, right, stuff happens.
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  Speaker 1: The difference though, is you can you can actually file
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  Speaker 1: a claim and get money from it.
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  Speaker 2: Right.
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  Speaker 1: The problem in Florida is that is in question. We
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  Speaker 1: an'll know a single in California. We don't know what's
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  Speaker 1: going to happen there.
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  Speaker 2: Yeah.
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  Speaker 4: Well California is easier because nobody will write insurance there
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  Speaker 4: because the place is called burned down, where they'll.
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  Speaker 2: Be quakes or whatever. Yeah.
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  Speaker 4: So if you were starting out now, knowing what you know,
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  Speaker 4: what would you do?
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  Speaker 1: I would get right into apartments. I wasted so time
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  Speaker 1: with a restaurants, so much time with single family house investment.
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  Speaker 1: The only reason that people don't get in apartments they
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  Speaker 1: think that it's heart, they think it's advanced, They think
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  Speaker 1: that they need millions in the bank. And none of
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  Speaker 1: those things are true.
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  Speaker 2: So how do you buy? How do you buy like
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  Speaker 2: a fifty unit complex?
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  Speaker 1: You've got to change your mindset a little bit. So
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  Speaker 1: normally people ask how do I do certain things? How
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  Speaker 1: do I raise money? How do I inderwrite deals? How
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  Speaker 1: do I do that? There's a great book by Dan
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  Speaker 1: Selvin called Who Not How, and it kind of articulates
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  Speaker 1: the shift in mindset. When you're trying to scale anything
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  Speaker 1: but real estate in particular, start asking who questions. If
• 9:42
  Speaker 1: you start asking who questions instead of saying how do
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  Speaker 1: I raise money? You ask questions who can get me money?
• 9:48
  Speaker 1: If you're saying how do I get experience? Instead, you
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  Speaker 1: ask who can get me experience? And that changes everything.
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  Speaker 1: It changes the entire dynamic because I can actually get
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  Speaker 1: into the business without my own track record, and the
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  Speaker 1: only reason is because I borrow the track record from
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  Speaker 1: others around me. Imagine that a recruited property manager and
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  Speaker 1: the lender and an SEC attorney and some advisor now
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  Speaker 1: have all these seasoned people around me, I all of
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  Speaker 1: a sudden have their track record. And it's just a
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  Speaker 1: shift in mindset that took me years of figure out
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  Speaker 1: that it didn't really need in single family house investing.
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  Speaker 4: Interesting. Interesting. So so where do you find these who's.
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  Speaker 1: Well, I mean they're relatively easy to find. I think
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  Speaker 1: the biggest thing the same thing with raising capital, right,
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  Speaker 1: raising capital, there's there's people. Yes, can you learn the
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  Speaker 1: things you can actually learn to raise capital within thirty days?
• 10:37
  Speaker 1: You know how to raise capital in sixty days. You're
• 10:39
  Speaker 1: actually relatively proficient within thirty days you can recruit a team,
• 10:43
  Speaker 1: and in sixty days you have your team built, and
• 10:45
  Speaker 1: you sound like you've been doing it for a decade.
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  Speaker 1: So it just requires a little bit of education, knowing
• 10:50
  Speaker 1: how to do certain things which are easily learned, and
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  Speaker 1: then it does require a bit of mentorship. You I
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  Speaker 1: did not do I just because I'm super smart and
• 11:01
  Speaker 1: I just try to figure everything out my own. But
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  Speaker 1: why back in twenty eleven, in my defense, there wasn't
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  Speaker 1: a lot of support.
• 11:07
  Speaker 2: For I reinvent the wheel, right.
• 11:09
  Speaker 1: I reinvent the wheel? Why why do that? Why figure
• 11:12
  Speaker 1: everything out? Takes too long? You make too many mistakes?
• 11:14
  Speaker 1: Why do that?
• 11:14
  Speaker 2: Sure?
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  Speaker 4: Sure you can benefit you know, they say, a smart
• 11:19
  Speaker 4: man learns from his own mistakes, a truly wise man
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  Speaker 4: learns from the mistakes of others.
• 11:25
  Speaker 1: That's right. It's like trying to figure out what to
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  Speaker 1: do and how to invest my money when I can
• 11:28
  Speaker 1: just follow what you're doing, and you've already been doing
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  Speaker 1: for so long. Why do I just learn from you
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  Speaker 1: versus me flailing around the markets for a decade?
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  Speaker 4: So where do you find the buildings to buy? Where's
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  Speaker 4: the best place? In your opinion? Do you just go
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  Speaker 4: to loop dot com, loopnet dot com and look at
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  Speaker 4: their listings or do you need to know more than that?
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  Speaker 1: Yeah, So loopnet is a joke. Is that where deals
• 11:51
  Speaker 1: go to die? Lupnett is where a broker's list of
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  Speaker 1: deals that everybody has passed on. But it actually is
• 11:57
  Speaker 1: a great gateway to where deals can actually be found,
• 11:59
  Speaker 1: which is or brokers. So with your single family houses,
• 12:02
  Speaker 1: you're looking at the MLS and you're looking through agents,
• 12:04
  Speaker 1: but with commercial you don't find them in the MLS,
• 12:07
  Speaker 1: you don't find them a lootinist, but you will find
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  Speaker 1: them through brokers. And a great way to find brokers
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  Speaker 1: other than the phone book, which no one uses anymore,
• 12:14
  Speaker 1: is lootenant. Instead of actually saying, oh, look at this deal,
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  Speaker 1: let me make a let me make an offer on it,
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  Speaker 1: you actually create a list of the type of brokers
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  Speaker 1: that are whatever, selling or listing whatever you want to buy,
• 12:25
  Speaker 1: and you call them and you focus on building a
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  Speaker 1: relationship with them, and within thirty sixty days you are
• 12:31
  Speaker 1: essentially in their inner circle and you get what's called
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  Speaker 1: off market deals or semi market deal no one else ses,
• 12:37
  Speaker 1: and that's where the magic hatens.
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  Speaker 4: Okay, and as far as financing, do you always get
• 12:43
  Speaker 4: seller financing or combination?
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  Speaker 2: How do you do it? It's very rare.
• 12:49
  Speaker 1: It's very rare. In commercial it's typically sell financing is
• 12:53
  Speaker 1: common or more common with single family houses or small
• 12:56
  Speaker 1: multis that are owner operated, but with commercial anything above
• 13:00
  Speaker 1: I'd say twenty they're owned by an LLC with a
• 13:02
  Speaker 1: bunch of gatekeepers, and they're not going to want to
• 13:04
  Speaker 1: sell you know fast, you know, fast clothes, all cash.
• 13:07
  Speaker 1: They're going to want to call their broker and goes,
• 13:09
  Speaker 1: give me the most you can for this building, right,
• 13:12
  Speaker 1: and so so typically they're not seller financed. But on
• 13:16
  Speaker 1: the other hand, financing is readily available, very relatively low
• 13:20
  Speaker 1: interest rates, relatively high leverage, non personally guaranteed loans, interest
• 13:25
  Speaker 1: only for three years. So it's really crazy how affordable
• 13:29
  Speaker 1: that financing is for apartments.
• 13:31
  Speaker 4: Yeah, all right, I think we got a good taste
• 13:33
  Speaker 4: of it. We're definitely going to have you back on,
• 13:35
  Speaker 4: Michael to expound some more on some of these points
• 13:39
  Speaker 4: and go more into like the anatomy of a deal,
• 13:42
  Speaker 4: how you put it together, how you get the money,
• 13:45
  Speaker 4: and what you do with.
• 13:46
  Speaker 2: It once you got it. If we want to contact
• 13:50
  Speaker 2: you find you on the web. How do you do that?
• 13:52
  Speaker 1: As two places. If you want to be more the
• 13:54
  Speaker 1: active person, you want to get involved yourself, check out
• 13:56
  Speaker 1: my free training It's called Apartments one on one and
• 13:59
  Speaker 1: it's an Apartments one dot co. If you're more interested
• 14:02
  Speaker 1: in looking at investing passively, go to Nighthawk Equity dot com. Again,
• 14:06
  Speaker 1: we have a free training course that describes what in
• 14:09
  Speaker 1: the world are syndications and what does it mean to
• 14:11
  Speaker 1: invest in them? So two places to find me?
• 14:14
  Speaker 2: All right?
• 14:14
  Speaker 4: Excellent and the links will be in the show notes
• 14:17
  Speaker 4: to this interview on Financial Survival Network dot com. You
• 14:20
  Speaker 4: got a question for Michael myself, shoot me an email
• 14:23
  Speaker 4: kl at Carrie lets dot com. And while you're on
• 14:26
  Speaker 4: the site, please sign up for your complementary newsletter, like
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  Speaker 4: over sixty seven thousand other FSN members have.
• 14:33
  Speaker 2: Michael, appreciate you coming on and we'll talk to you soon.
• 14:37
  Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network your
• 14:41
  Speaker 3: solution to today's trying times. For the latest, go to
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  Speaker 3: Financial Survivalnetwork dot com. Financial Survival Network now more than
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