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Mike Morowski's Blueprint for a Resilient Real Estate Portfolio · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big with Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Hey everybody, welcome to the Go Big with Gibb podcast.
• 0:17
  Speaker 1: Today I've got a very exciting guest, mike Morowski.
• 0:21
  Speaker 1: Mike, how are you today?
• 0:22
  Speaker 2: I'm great, gibb, thanks for having me on.
• 0:24
  Speaker 1: Yeah, absolutely.
• 0:25
  Speaker 1: It's a pleasure to have you on and to get started.
• 0:29
  Speaker 1: I'd love it if you just give our listeners a little bit of an introduction and tell them a little bit about yourself.
• 0:35
  Speaker 2: Yeah, absolutely Thanks.
• 0:36
  Speaker 2: So, gibb, I've been in the real estate business for about 30 years.
• 0:41
  Speaker 2: Prior to getting into the business, I had a general contracting business and started out in that business just doing kitchen and bath remodeling and morphed into building room additions.
• 0:54
  Speaker 2: I was building about 25 room additions a year and you know, like any good entrepreneur, in any business, you do everything.
• 1:04
  Speaker 2: So I was doing the marketing and the sales and the appointments and ordering material and hiring people and firing people and doing the bookkeeping.
• 1:14
  Speaker 2: And, gib, I was still in the field banging nails and I remember clearly one morning waking up and looking at my wife and saying I'm burned out, I can't do this anymore, and so I decided I was going to take a year off.
• 1:29
  Speaker 2: Fortunately, I had somebody knocking at my door looking to buy my business and sold my company and took a year off.
• 1:39
  Speaker 2: But you know, gib, I know you're an entrepreneur, I am too.
• 1:41
  Speaker 2: I don't think we ever take time off.
• 1:44
  Speaker 2: You know it's always in your mind and always we're going through it.
• 1:48
  Speaker 2: So I decided I was going to go and buy a couple of two flats and rehab them, and so I was house hacking long before.
• 1:58
  Speaker 2: It was a sexy thing to do.
• 1:59
  Speaker 2: And you know, today I think people get in the investment business because they house hack their way into it, which is a great way to start, and that's how I started.
• 2:09
  Speaker 2: But the key is, along the way, I met a real estate agent who at the time was extremely successful, like to go into the real estate business, and he said, mike, I think you'd be great at it, and encouraged me to go get licensed.
• 2:27
  Speaker 2: During which time I went to him and said you know, hey, could I shadow you and your team and learn how to build a business?
• 2:36
  Speaker 2: He goes no, I'm going to do one better for you, I'll make you a cassette tape.
• 2:40
  Speaker 2: And now, gib, I'm dating myself right, because I don't think we could find anything to make a cassette tape on today.
• 2:46
  Speaker 2: But what he did was he taught me some fundamentals and it's just like these podcasts, right, If people go back and they listen to these over and over again, you're going to pick up a lot.
• 2:57
  Speaker 2: But I took those fundamentals that Todd taught me on that cassette tape and I implemented them into the real estate sales business.
• 3:06
  Speaker 2: So I went in the business as a sales agent.
• 3:08
  Speaker 2: My first eight months, nine months in the business, I sold 78 houses.
• 3:14
  Speaker 2: I was REMAX Rookie of the Year.
• 3:15
  Speaker 2: I went on to build a team selling 125 homes a year and did that consecutively for about 12 years.
• 3:24
  Speaker 2: 2005 started to roll around and I noticed the market was softening and I knew I would have to go do something different.
• 3:33
  Speaker 2: So I'd always wanted to be in the apartment business.
• 3:40
  Speaker 2: You know, back when I was in the construction business I had done a lot of work for a couple of large syndicators in the Chicago market.
• 3:49
  Speaker 2: There was Inland Real Estate and Equity and I understood the model.
• 3:59
  Speaker 2: I understood that you could go out, raise private capital, marry it with a great real estate deal, stay in the middle and, as long as everything went well, everybody made money.
• 4:10
  Speaker 2: So in 2005, I went and syndicated my first apartment deal and I raised you know, just a couple hundred thousand dollars to do that, bought that property.
• 4:23
  Speaker 2: It went well.
• 4:25
  Speaker 2: Over the next 30 months, gib, I built a hundred million dollar company.
• 4:29
  Speaker 2: We went out.
• 4:30
  Speaker 2: We raised 18 million dollars.
• 4:32
  Speaker 2: I bought 4,000 apartments in five US markets and had a property management company managing 7,500 doors.
• 4:41
  Speaker 2: And I did that in 30 months.
• 4:43
  Speaker 2: So I always tell people I say, hey, I made a few mistakes along the way, I grew too fast.
• 4:48
  Speaker 2: I was very unstable as a company.
• 4:50
  Speaker 2: I was over leveraged.
• 4:52
  Speaker 2: I bought $60 million worth of real estate at 85% loan to value and I teach people today not to do that right.
• 5:02
  Speaker 2: I was undercapitalized.
• 5:05
  Speaker 2: As a business owner, I didn't pay attention to details.
• 5:08
  Speaker 2: So today I asset management at a very high level and watch all the KPIs those key performance indicators a lot closer.
• 5:19
  Speaker 2: But here's what happened, gibb, in 2008,.
• 5:22
  Speaker 2: The world experienced the worst economic crisis we've ever seen and as a result of that and growing too fast as a company, became very unstable and started to unravel.
• 5:36
  Speaker 2: Because of you know, occupancies dropping, people not paying rents, you know unemployment getting so high, businesses going out of business.
• 5:46
  Speaker 2: We started to implode.
• 5:48
  Speaker 2: Gib I had probably at the time I had 38 different properties and should have let 12 of them go to foreclosure.
• 5:59
  Speaker 2: A handful of my investors get hurt, but I didn't want anybody to get hurt, so I thought I could save the company.
• 6:09
  Speaker 2: So I started moving money from profitable companies to non-profitable companies, trying to keep the whole ship afloat, and what ultimately happened was we imploded and my accountant and my attorney both said it was okay to do that.
• 6:26
  Speaker 2: Here's what I thought at the time.
• 6:29
  Speaker 2: I'd been through a couple of down cycles and I saw that these recessions lasted 17 or 18 months, that there was a 10 or 12% correction in the market.
• 6:41
  Speaker 2: But this time it was different.
• 6:43
  Speaker 2: Right, it lasted seven or eight years.
• 6:44
  Speaker 2: There was a 45% correction in the market.
• 6:45
  Speaker 2: But this time it was different.
• 6:45
  Speaker 2: Right, it lasted seven or eight years, there was a 45% correction in the marketplace.
• 6:49
  Speaker 2: It was a hard storm to weather.
• 6:51
  Speaker 2: So I thought, let me try and save the company.
• 6:54
  Speaker 2: I'll move money from profitable to non-profitable companies.
• 6:58
  Speaker 2: We'll shore the whole thing up.
• 7:00
  Speaker 2: When the markets come back, we'll put the money back.
• 7:04
  Speaker 2: Well, I wound up getting in trouble.
• 7:06
  Speaker 2: I didn't disclose to my investors the movement of that money and, as a result of that, I wound up being charged on wire fraud and mail fraud charges and got sentenced to 10 years in federal prison as a result of that.
• 7:22
  Speaker 2: So in 2013, I went off to federal prison as a result of that.
• 7:26
  Speaker 2: So in 2013, I went off to federal prison.
• 7:27
  Speaker 2: And I always tell people, gib, I say, hey, I never flew private.
• 7:31
  Speaker 2: I didn't have a big house, I didn't drive a fancy car.
• 7:33
  Speaker 2: I was the neighborhood baseball coach, I was home every night for dinner and I got ripped from that lifestyle to live in a 12 by 12 room with three men.
• 7:42
  Speaker 2: I didn't know.
• 7:43
  Speaker 2: Nor did I like to live in a 12 by 12 room with three men.
• 7:46
  Speaker 2: I didn't know.
• 7:46
  Speaker 2: Nor did I like wondering what the hell happened in my life.
• 7:47
  Speaker 2: Well, I was in prison for about three weeks and during that time my wife decided she was going to divorce me and it kind of wrecked me at that point and I started to walk around wondering what I was going to do with my life.
• 8:05
  Speaker 2: You know, I wondered how I was going to get through today, much less 10 years of this event.
• 8:12
  Speaker 2: And I, you know, honestly, I probably would have killed myself, but I was too afraid to pull the trigger.
• 8:24
  Speaker 2: About six weeks into that prison stay, I walk into gym one day and I always tell people I say, hey, I wasn't looking to work out, I was just window shopping walked in to see what was going on I'd gone from running marathons to being 35 pounds overweight and hated myself.
• 8:43
  Speaker 2: But this guy walks up to me that day and Gib, I always think we have these defining moments in our life where we have these choices that we can make.
• 8:53
  Speaker 2: And this guy said to me that day and I'll never forget him for this.
• 8:58
  Speaker 2: But he said hey, these people, all they wanna do is beat you.
• 9:03
  Speaker 2: Don't let them take from you what you have.
• 9:06
  Speaker 2: He said they can take your business, they can destroy your family, but what they can't take is who you are and what you're made of.
• 9:14
  Speaker 2: They can't take what helped you to build that company you built.
• 9:18
  Speaker 2: They can't take your knowledge and your desire.
• 9:21
  Speaker 2: He goes.
• 9:22
  Speaker 2: You can get it all back.
• 9:23
  Speaker 2: He goes.
• 9:24
  Speaker 2: Here's what you need to do Start coming to my class, start working out.
• 9:28
  Speaker 2: You'll start to lose weight and feel better.
• 9:30
  Speaker 2: And I don't know what it was, but at that moment somebody flipped the switch and I said, okay, I started going to this guy's class.
• 9:38
  Speaker 2: I started working out, I started to lose weight, my energy came back.
• 9:42
  Speaker 2: My, my, my cognitive thinking came back.
• 9:46
  Speaker 2: I wound up going to college.
• 9:47
  Speaker 2: I got a bachelor's degree in theology.
• 9:50
  Speaker 2: I decided to write a couple of books.
• 9:53
  Speaker 2: I wrote a book called Exit Plan your Complete Guide to Multifamily Investing and why you Need an Exit Plan Before you Buy.
• 10:00
  Speaker 2: I wrote a book on property management.
• 10:02
  Speaker 2: I wrote an ethics course and in prison I taught real estate, investing, property management and ethics.
• 10:10
  Speaker 2: For six years I taught those classes but how ironic right A federal inmate in prison teaching ethics.
• 10:18
  Speaker 2: I was on an outreach program.
• 10:22
  Speaker 2: I went into the community, I told my story to small business owners and college students and wound up meeting a professor from the University of Minnesota.
• 10:32
  Speaker 2: He and I co-authored a paper together that got published in the Business Journal of Ethics that gets taught today at the collegiate level for forensic accounting and sales and marketing classes.
• 10:43
  Speaker 2: For forensic accounting and sales and marketing classes.
• 10:47
  Speaker 2: And you know, gib, I thought I'm going to go home.
• 10:48
  Speaker 2: I'm going to go into coaching and training business and teach people how to build a multifamily business and not make the mistakes I made, which I did.
• 10:54
  Speaker 2: I came home, I started a coaching business, a training company, and I teach people how to scale their multifamily business methodically without making those mistakes.
• 11:04
  Speaker 2: But I found a deal along the way that I went to a couple of my coaching clients with, and wound up partnering on, a multifamily property in Florida.
• 11:15
  Speaker 2: And our securities attorney came to me during the process of putting this all together and said hey, I think I can get you approved by the SEC to go back and be an issuer of securities and a sponsor of deals again.
• 11:30
  Speaker 2: I said great.
• 11:31
  Speaker 2: So she went and got me approved by the SEC to go back and do what I absolutely love to do, which is syndicate multifamily deals and sharing the profits with our passive investors.
• 11:43
  Speaker 2: So today I do some coaching and training and I work with individuals that want the business as bad as I do, and every deal that I'm in today I'm in with a couple of my coaching students.
• 11:58
  Speaker 2: So I'm back doing what I love to do kid.
• 12:01
  Speaker 1: Wow, what a captivating story.
• 12:04
  Speaker 1: You really hit on so many good different points there.
• 12:07
  Speaker 1: So how long has it been since you've been out of federal prison?
• 12:11
  Speaker 2: Just four years now, kid.
• 12:12
  Speaker 1: So in that four year period of time you've been reinstated to where you can now do.
• 12:18
  Speaker 1: You know you can participate in rule 506 offerings and you've gone out and you've gone back to doing what you love and been able to do it with a lot of success.
• 12:29
  Speaker 1: Talk to me a little bit about your acquisitions, since you've been out Like, how many apartment complexes have you acquired within the past four years?
• 12:39
  Speaker 2: Yeah, we have about five deals we've bought and it's about just under 500 units.
• 12:42
  Speaker 2: About five deals we've bought and it's about just under 500 units.
• 12:45
  Speaker 1: Now, where do you currently live?
• 12:47
  Speaker 1: I know we met you know, in Phoenix, arizona.
• 12:50
  Speaker 1: Are you based in Illinois?
• 12:52
  Speaker 1: I want to say Chicago.
• 12:58
  Speaker 2: Illinois.
• 12:59
  Speaker 2: Yeah, so I lived in Chicago forever, gib.
• 13:00
  Speaker 2: This year I made the plunge and moved to the West Coast, so I'm living in Southern.
• 13:03
  Speaker 1: California now, okay, fantastic.
• 13:04
  Speaker 1: Well, I love Southern California.
• 13:06
  Speaker 1: I went to school at Pepperdine so I've spent a lot of time out there in Southern California so you've acquired a bunch of properties since you've been out.
• 13:15
  Speaker 1: You said about five properties, 500 units total.
• 13:18
  Speaker 1: What markets are you focused in?
• 13:20
  Speaker 2: So we started out in the Southeast Gibb, really like the Florida market.
• 13:26
  Speaker 2: You know, if you looked on a map between Dallas and Raleigh, that whole Southeast smile of the US, like those primary markets in there.
• 13:35
  Speaker 2: The problem is nothing's penciled.
• 13:37
  Speaker 2: So we've kind of backed away from those markets and started to look heavily in the Midwest.
• 13:43
  Speaker 2: We like markets in Tennessee, we like markets in Northwest Arkansas and very heavily vested in the Tulsa market.
• 13:53
  Speaker 1: Today yeah, let's talk a little bit about the Tulsa market.
• 13:57
  Speaker 1: I'd love to hear more about that.
• 13:59
  Speaker 1: I saw on your website that you had properties in that area.
• 14:02
  Speaker 1: Tell us a little bit about what do the economics look like in Tulsa and why do you love that market.
• 14:09
  Speaker 2: So, as a market-driven investor and you know I just have to comment on this really quick I have one of my coaching clients that told me this morning that she had met a couple other people that are in other coaching programs and that they've been in these programs like double the time she's been in a program with me and they didn't even know how to pick a market.
• 14:34
  Speaker 2: And I think that one of the key fundamentals and there's a few of them, but one of the key fundamentals in multifamily investing is picking a market.
• 14:46
  Speaker 2: And I learned a long time ago.
• 14:49
  Speaker 2: You got to look out for the traps right.
• 14:51
  Speaker 2: You got to look out for the traps right and it starts.
• 14:56
  Speaker 2: You know, the top four things are population growth, job growth, household income and employment diversification.
• 15:01
  Speaker 2: And I almost believe that employment diversification needs to be at the top of that list because that's what drives everything else.
• 15:13
  Speaker 2: So you know, I like Tulsa today because of the diversification there.
• 15:19
  Speaker 2: You've got aerodynamics, medical education, distribution, manufacturing, industrial, you have transportation and technology.
• 15:40
  Speaker 2: You know Tulsa.
• 15:40
  Speaker 2: Two years ago Tulsa had a program running that they were paying tech workers $10,000 to work from home and they ran out of money about nine months into the program and they still had 1500 people move to Tulsa as a direct result of that program.
• 15:55
  Speaker 2: Well, they just reinstituted that program again March 1st this year.
• 15:59
  Speaker 2: So you know there's a key fundamental right on the population growth.
• 16:06
  Speaker 2: The government just committed to a $3.1 billion expansion of the Tulsa airport for international travel.
• 16:19
  Speaker 2: So that right there starts to tell you wow, some things are going on in this market that we need to look at.
• 16:26
  Speaker 2: You know, amazon just built their third distribution hub there and there's a new electric car manufacturer called Canoe that's building their international headquarters there.
• 16:38
  Speaker 2: They're building a theme park that's supposed to rival Disney outside of town in Tulsa.
• 16:44
  Speaker 2: So all of these fundamentals that are backing everything else that's going on in the market.
• 16:52
  Speaker 2: So I've got good population growth, good job growth and the household income is growing, which is really giving me the opportunity to look at some distressed deals and be able to operate those as a good business and bring them back to the market.
• 17:11
  Speaker 1: What are you seeing in terms of pricing right now, Mike?
• 17:14
  Speaker 1: Are you seeing these types of multifamily properties can be purchased at a discount from what they were, say, one to two years ago?
• 17:23
  Speaker 2: So the pricing that I've seen.
• 17:26
  Speaker 2: You know there's been a big disconnect between the bid-ask and what sellers have wanted.
• 17:32
  Speaker 2: That's one of the reasons we pulled out of those Southeast markets.
• 17:35
  Speaker 2: There's a little bit, little bit closer connection between the bid ask in the Midwestern market.
• 17:42
  Speaker 2: You've had more cap rate decompression in those markets so it's caused the price to go down as a result of cap rates going up and you've got cap rates today that you know are a bit higher than interest rates, which you know again drives the fundamentals in those multifamily deals.
• 18:05
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 18:08
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 18:22
  Speaker 1: If you want to secure your financial future, go to investwithgibcom to schedule a 30-minute introductory meeting with me.
• 18:29
  Speaker 1: Gib Irons Again, that's investwithgibcom.
• 18:32
  Speaker 1: Gibb Irons Again, that's investwithgibbcom.
• 18:38
  Speaker 1: I agree with you that it seems like there's been a discount in what some of the properties are selling for, but I agree like a lot of the sellers you know across the country are not trying to slash their prices quite yet.
• 18:49
  Speaker 1: You know the amount that a buyer is willing to pay for a property is.
• 18:54
  Speaker 1: There's still a disparity between that figure and what the seller wants to sell for, and when you get such a big disparity between the bid ask, as you said, it makes it really hard to do deals.
• 19:06
  Speaker 2: Yeah, 100%.
• 19:07
  Speaker 2: So if you can, you know, get a seller.
• 19:12
  Speaker 2: That's negotiable.
• 19:13
  Speaker 2: One of the things we've been doing these days, too, is we're assuming debt and a lot of debt.
• 19:19
  Speaker 2: You know, in the last five properties we bought, we assumed debt at under 4%.
• 19:24
  Speaker 2: You know, when you look at the market today and you're going to go put new debt on a property, you're at mid sixes at best.
• 19:31
  Speaker 2: You know, if we can assume something that's a couple hundred basis points below where debt's at today, we know we're going to do well, even if we make a little mistake along the way.
• 19:44
  Speaker 1: Sure, I think that's always comforting when you have that kind of a cushion in a deal where you know, generally speaking, I always tell folks you know, a lot of our projections and the pro formas are based on, you know, perfect execution and nothing in life is perfect, and so we expect the unexpected and we expect there to be a couple of wrinkles in the plan and hopefully we've got enough of a delta there that, even if something goes wrong, we still are profitable and we're still doing well, and that's why we go through such a rigorous process when we're doing our due diligence and underwriting these deals.
• 20:21
  Speaker 1: I'm curious so I know you mentioned that you like the DFW area in Tennessee.
• 20:27
  Speaker 1: Are you talking about, like the Nashville area or some other part of Tennessee?
• 20:32
  Speaker 2: Yeah, so we monitor about 40 sub markets, and so three markets in Tennessee we look at right now are Nashville, Clarksville and Knoxville.
• 20:43
  Speaker 1: And you mentioned Northwest Arkansas.
• 20:45
  Speaker 1: You know I wasn't very familiar with that area up until a couple, maybe a year ago I was asked to invest in a property called Pinnacle Heights, which is in northwest Arkansas.
• 20:58
  Speaker 1: It's in a little town called Rogers and it's a 295-unit apartment complex there.
• 21:05
  Speaker 1: I flew out there to take a look at it and I was really surprised.
• 21:10
  Speaker 1: Northwest Arkansas seems to be a very affluent area.
• 21:13
  Speaker 1: You mentioned you like that area as well.
• 21:16
  Speaker 1: Is there anything specific that you like about that market?
• 21:20
  Speaker 2: No, we're just watching the deals that come up in those markets.
• 21:23
  Speaker 2: You know, it's only a couple hours from Tulsa to Bentonville.
• 21:28
  Speaker 1: Yes, yes, they're close.
• 21:29
  Speaker 2: Yeah, so I believe you know that that whole market, yeah, so I believe that that whole market and here's what I say, and I've said this a lot recently is I believe we're in Tulsa before the smart money gets there.
• 21:41
  Speaker 2: I have a friend who's been in the business a little bit longer than I, have a lot smarter than I am, and he's with a group that these guys have done about $10 billion in multifamily in their career.
• 21:56
  Speaker 2: He told me the other day that they're starting to look at the Midwest and Tulsa was like number eight on their top 10 list.
• 22:06
  Speaker 2: You know what that tells me is that when the smart money catches on that, that market is going to totally turn around.
• 22:13
  Speaker 1: Let's talk a little bit.
• 22:14
  Speaker 1: I'd love to dig down a little bit more about you know, when you were telling your story at the very beginning of the podcast, you talked about how you know we had the economic crisis in 2008 and you had 38 different properties and you said you were doing 85% loan-to-value.
• 22:32
  Speaker 1: Talk to me more about with your coaching students.
• 22:35
  Speaker 1: Now I would love to unpack a little bit more what kind of lessons you learned from experiencing the 2008 crisis and how you're and telling how you're coaching your students in terms of things that they need to be careful of and avoid those kind of pitfalls.
• 22:55
  Speaker 1: You know, I know Rod Khleif will talk about you know how he amassed a really large portfolio and he lost everything and then he built it back and that's really kind of his story and I know you're familiar with that.
• 23:12
  Speaker 1: But tell me a little bit about what kind of advice are you giving to your students in terms of not being, you know, over leveraged or anything else about how they approach multifamily acquisitions?
• 23:25
  Speaker 2: So I think that there's two really key factors in the multifamily business, and the first thing is you have to be able to build good strategic relationships and raise capital.
• 23:39
  Speaker 2: So raising capital is the key in this business.
• 23:44
  Speaker 2: If you're going to do this business, you have to build relationships with investment partners who are going to participate in the profits that you can provide as an operator.
• 23:56
  Speaker 2: And then the second thing is you need to know how to underwrite, because underwriting tells the story.
• 24:03
  Speaker 2: It tells the construction story, it tells the rent growth story, it tells your exit plan story, it tells the whole story and it pulls together your business plan.
• 24:15
  Speaker 2: Now, even if you're not the underwriter on the team, you still need to know how to do it, because, gib, if I'm going to come to you and raise capital and ask you to invest in my deal, I need to be able to tell you about those numbers and tell you that story.
• 24:29
  Speaker 2: So you need to know it.
• 24:30
  Speaker 2: So I think those are the two big things, and then the other fundamentals that fall in are you know how to pick markets, what type of deal you're looking for.
• 24:39
  Speaker 2: You know, in the multifamily space you could look at senior housing or medical or student housing.
• 24:48
  Speaker 2: I'm a market rate, rent multifamily buyer.
• 24:51
  Speaker 2: I like to be able to buy broken businesses, re-engineer them, and these are the things that I teach my students that I work with, and I only work with people who I think that there's some effect, that we're going to do a deal together down the road, right?
• 25:12
  Speaker 2: So you know, I know there's a lot of coaching programs out there.
• 25:15
  Speaker 2: You know you mentioned Rod and you know there's a number of other people.
• 25:20
  Speaker 2: I, you know I'm more hands on and you know I don't have a hundred coaches working for me and I'm just so.
• 25:30
  Speaker 2: This goes back to the story I said earlier that one of my clients was talking to somebody in another program that said you know it had been in the program double the amount of time she was in it and they didn't know how to pick a market.
• 25:46
  Speaker 2: So let me teach you these things so you can go be successful.
• 25:50
  Speaker 1: Yeah, yeah, no, absolutely.
• 25:52
  Speaker 1: I think having a mentor to guide you through the process is just so critical.
• 25:57
  Speaker 1: And you know, multifamily is a a team sport and you do have to have people that are good at different things.
• 26:04
  Speaker 1: And you know, I found that a little bit off putting at first, cause I didn't want to be a part of a team, but which is funny, you know, because I can, I'm a good team player.
• 26:15
  Speaker 1: But when it comes to, you know, investments, I had normally acted alone and but you really can't, you really can't be successful in scale but so big on on your own, and so I think that that's critical.
• 26:29
  Speaker 1: Talk to to me about your books.
• 26:32
  Speaker 1: You wrote two books and one of them you mentioned was Winning Strategies and the other one was Exit Plan.
• 26:39
  Speaker 1: Winning Strategies is about property management or asset management.
• 26:44
  Speaker 1: Is that right?
• 26:46
  Speaker 2: Well, it's about property management.
• 26:48
  Speaker 2: You know, I firmly believe today, because of the lessons I've learned, learned that there's a big difference between property management and asset management.
• 26:57
  Speaker 2: I believe these multifamily deals are made and broken at the asset management level.
• 27:02
  Speaker 2: And if you're not paying attention to those details, everything from you know and I have a 13 point checklist that people and I have a 13-point checklist that people and actually, if any of your listeners want a copy of that, they can direct message me and I'll send them a copy of it but it's a 13-point checklist that starts with what's the traffic coming to the property?
• 27:26
  Speaker 2: And then I get into the repairs and maintenance and the financial fundamentals.
• 27:30
  Speaker 2: I need to know that every week Because if my occupancy is down, where's my traffic coming from?
• 27:37
  Speaker 2: How many applications am I taking?
• 27:39
  Speaker 2: What am I approving?
• 27:41
  Speaker 2: You know, I need to know all of that from the asset management vantage point because that's how you can direct the deal right and make it work.
• 27:51
  Speaker 1: Sure, yeah, no, that's a great point Like if you're failing.
• 27:54
  Speaker 1: You know, even if you've acquired the asset and you've done all the underwriting and capital raising, if you can't effectuate the business plan then you're doomed to fail.
• 28:04
  Speaker 1: Really is an important part of it.
• 28:06
  Speaker 1: Now, did you own a property management company that managed 7,500 doors?
• 28:12
  Speaker 1: Did I hear that correctly?
• 28:14
  Speaker 2: I did it.
• 28:15
  Speaker 2: Yes, before I got in trouble, I vertically integrated a property management company and we managed 7,500 units.
• 28:24
  Speaker 2: I believe today that I'm better off as an asset manager than I am as a property manager.
• 28:32
  Speaker 2: I want to have boots on the ground at the property plus have my property manager then asset manage, so now I have three levels of management in my deals, so I'm really able to make sure that things are operating properly and somebody's always on the job doing something to push the envelope forward.
• 28:53
  Speaker 1: Yeah, that sounds like that's really helpful insight for you when you're working on these deals.
• 28:59
  Speaker 1: Talk to me a little bit about Exit Plan.
• 29:01
  Speaker 1: What was the book about?
• 29:04
  Speaker 2: So you know, it's kind of funny how I had a brainstorm one day.
• 29:09
  Speaker 2: I said you know, I've been to all these trainings and coaching events and seminars and read books and everybody talks to you about how to find a deal, buy it, operate it, but nobody teaches you how to get out.
• 29:22
  Speaker 2: And it occurred to me one day to teach people how to exit a deal, because it's not just selling out the property, but there's multiple ways of exiting a property where you can give up control, keep control, keep a little bit of control along the way.
• 29:37
  Speaker 2: So I wanted to write a book that taught those fundamentals and I believe that when you're buying a piece of real estate, be it a retail center, a commercial building, multifamily or just a single family house, that you need to know what your exit plan is before you get to the closing table.
• 30:00
  Speaker 2: So I teach people how to build those exit plans and my book, you know, is a number of stories and deals that we've done along the way and how we looked at them, how we built those plans around exiting those deals.
• 30:13
  Speaker 2: That's fascinating.
• 30:16
  Speaker 1: What would you say to you know, I know you coach not only capital raisers and asset managers, but you also coach just real estate investors, right that may be getting started on their real estate investing journey.
• 30:31
  Speaker 1: What is it about multifamily syndications that really sparked your interest in the first place and then kept it for all this time?
• 30:40
  Speaker 1: I mean, you've been doing this for a long time and you've got a ton of experience.
• 30:45
  Speaker 1: To those people that are considering investing in multifamily real estate, what is it that really, you know, excited you about this asset class?
• 30:54
  Speaker 2: So it's the economies of scale.
• 30:56
  Speaker 2: You know, I had a portfolio of a couple hundred single family houses, you know, and I had 200 roofs, 200 furnaces, 200 hot water heaters and a whole onslaught of problems because of that.
• 31:09
  Speaker 2: But if I can own 200 units in one condensed location, now I have 10 roofs, 10 hot water heaters, 10 furnaces All my problems are single located, you know.
• 31:25
  Speaker 2: So it's easier to control and the economies of scale is greater, because one of those single family houses, if somebody is not living there and I have to pay the mortgage every month out of my pocket, that's painful, but if I have a complex and I'm 20% vacant, I can still pay my bills.
• 31:47
  Speaker 2: I love that.
• 32:02
  Speaker 2: I love that.
• 32:04
  Speaker 2: Well, tell me this, mike, for anybody that's listened to the podcast today that wants to get in touch multifamily deal as a private investor.
• 32:12
  Speaker 2: And one thing that I would say, gib, is what I offer my private investors who want more education.
• 32:22
  Speaker 2: And I always tell you know I don't sell an expensive coaching program or platform.
• 32:30
  Speaker 2: And I tell people I say, if you have $40,000, you should invest some of that passively because you're going to learn from that process.
• 32:41
  Speaker 2: So anybody who invests with me passively, I just give them my coaching program for them to participate in, for you know whatever level they want to learn at.
• 32:52
  Speaker 2: But you can find me on social media.
• 32:55
  Speaker 2: I'm on social media everywhere.
• 32:56
  Speaker 2: I have a public Facebook group which is called Multifamily Unplugged, and you know, of course, my podcasts that we kind of talked about early.
• 33:09
  Speaker 2: But if anybody wants a copy of my book, you can go to my website, which is mikemorowskicom, and get a copy there.
• 33:19
  Speaker 2: I have a ton of free information that you can participate in.
• 33:23
  Speaker 2: As I mentioned earlier, if you want the 13 point checklist on asset management, send me a direct message, you can email me or you can call me.
• 33:34
  Speaker 2: I love to network.
• 33:35
  Speaker 2: If you just have a question or a comment, don't hesitate to reach out.
• 33:39
  Speaker 1: Sounds great.
• 33:40
  Speaker 1: Yeah, to the listeners out there.
• 33:42
  Speaker 1: Mike's been doing this a long, long time.
• 33:45
  Speaker 1: If you want to take advantage of all the free information that he's got to offer, go to his website.
• 33:51
  Speaker 1: Of all the free information that he's got to offer, go to his website Again.
• 33:54
  Speaker 1: It's MikeMorowskicom.
• 33:55
  Speaker 1: Mike, it's been a pleasure to have you on and I really appreciate your time today.
• 34:00
  Speaker 1: Thanks.
• 34:01
  Speaker 2: Gib, I appreciate it.
• 34:03
  Speaker 2: It's been a pleasure and I look forward to connecting with you again real soon.
• 34:08
  Speaker 1: Absolutely Sounds good.
• 34:10
  Speaker 1: Thanks, mike.
• 34:11
  Speaker 1: Thanks, all right, stay on.
• 34:15
  Speaker 1: Stay on with me for a minute or two so they can do the upload thing.
• 34:19
  Speaker 1: Yeah, thank you for listening to this episode of Go Big with Gibb.
• 34:27
  Speaker 1: If you haven't already go, follow us on social media at GibbIrons.
• 34:31
  Speaker 1: We'll see you next time.