Mike Stohler: Veteran Scales from Single Family Homes to Global Hotel Portfolio

Embark on a journey through the dynamic world of real estate with Mike Stohler, featured in the latest episode of "The Gould Mine." Mike’s diverse portfolio, transitioning from single-family to multifamily and now international hotel investing, serves as a roadmap for aspiring investors.

Mike shares his experience of maximizing profits during the recession by strategically increasing his investment in cash. He also highlights the superior annualized returns hotels offer, outperforming other commercial real estate classes like office spaces, multifamily units, and retail. Tune in for an in-depth look at successful real estate investing strategies and the entrepreneurial mindset with Mike Stohler.

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Transcript

•  What's up gold miners. In today's episode. I have the privilege of sitting down with Mike Stohler a 25-year real estate investing veteran who has gone from single family investing to multif family investing and now into hotels not just domestically but internationally and we go deep into all of that in this podcast. Early on. In the episode we talk about Mike's recent Ventures outside of the US International Hotel investing and what he's doing to drive business to those hotels overseas. We also go into Mike's early days and how he got started with single family investing and some of the failures that he encountered over those first 10 years of he was a real estate investing jury before he really kicked things off in 2010 to 2012. So whether you're a season investing Pro or you're just getting started in your real estate investing Journey. There really is something in this episode for everyone. This is one of the better podcasts Mike has a lot of knowledge. He's a straight shooter and he is a wealth of knowledge so without further Ado. Everyone m stoer Mike welcome to the gold M sir. It's a pleasure you know it's uh. It's finally good to be able to connect absolutely Absol. I know you you were in Barcelona there for for a hot minute yeah we were trying to get you on the show yeah yeah. Yeah you sent me the link and I was like well. Okay I should I could respond but it's 2:00 a.m. his time uh yeah but yeah. I was over there for a couple weeks finalizing some boutique hotel deals and and trying to make the plunge to go International. We're we're having a good time. I really want to dive into that and and maybe we just start. There you know with and and I'm sure that we'll go back and kind of revisit the story that uh that's gotten you to this point. But you uh you're now focused a lot on hotel deals and it sounds like you're. You're exploring internationally. What was the impetus for you deciding like hey like the US isn't enough of a you know isn't enough like I want to go overseas like what what Drew you to International investing yeah. It's that's a great question. The inflation is really hitting hard with the you know as far as the US. Uh labor is a lot harder in in the US the cost of Labor um. It's it's a bunch of factors you know. I'm getting ready to build this big one in in the US but my God the labor cost the the the cost of lumber. Just everything is so expensive in the United States right now and it's like they're just not getting it. You know they just keep raising in interest rates thinking that we're going to stop doing something. So I I've looked internationally and what you can do in internationally is get older. Estates that are out in the country is where people re retire you think of uh going up to sedone Arizona these different vacation spots yeah um but because the euro is is a little more stable cost of living is a lot cheaper because they do a lot of subsidizing over there um and I can get these 6 700 year old places that people think of as like Destination type places is I want to spend go to my wedding in Spain and an 800-year-old Castle or this Villa that you get to rent the whole place. It's on 30 acres and it's just one of those uh Cinderella type experiences that that people want um a lot of corporate events are being held in these type of places but you can get these this real estate for really really inexpensive and then instead of having 20 people or 30 people. Running my hotel. I have a caretaker and like u a husband wife that does caretaking the cleaning of the rooms and then the maintenance so that just it's a lot cheaper uh and then you know we're looking at Portugal. We're looking at Italy but you don't want to be in the big cities. You just go into these countrysides you know where uh even people in Barcelona want to spend their weekends up in the mountains. So that's it really. It's the cost of living the taxes. Everything's a little little less expensive over there and plus every time I go to Europe. Now I it's a test deducted vacation which is really nice. Hey absolutely you know I got business out there. Baby yeah make yeah I got business out there. Oh. It's gonna love. It man you know that reminds me. I um so I I came up in the residential space um as you may or may not recall and so I I did uh. I did a lot of YouTube videos or still do a lot a lot of YouTube videos. But I would always find wherever I I'd go I'd find an agent uh locally in the Metro or whatever uh that I was visiting and be like hey like let's do a video together and you know showcase some the real estate here and and and that's how and I took it to my CPA and I was like heyy like I was over there doing business and you signed off on it and yeah. So there. There's always like 50 ways of yeah. Exactly of of of you know you just got to you think outside the box so that's that's awesome. Mike um that makes a question though I got I'm putting my investor hat on right now. And I'm like all right well that sounds great and cost of living is lower. But like what are the returns like yeah. This is going to be patient. Capital so number one. We're getting into these boutiques. Let's say it's it's 10 to 12 rooms for a million dollar. I'm going to raise money. We're just going to pay it off. You know plus a couple hundred, for renovations um and then we have to spend money on uh. The back links the the website you know getting the world to know that we're there we're going to have a couple. Influencers come in and basically say this is the place um how can we get a backlink through the Rob report. The wedding different all these different Publications so that's going to cost some money and then we're thinking well the fact that we don't have any debt. We're going to spend 50 to $100,000 on the pr side to get everyone to know that this is the place to go if you have a destination. Uh we're also going to open it up to daily rate but the first return is going to be probably in a year or so and then the re the actual Returns on investment you know based on an irr is just it's going to be based on how well we do the the pr side and then the daily rate for the people coming up. Let's say from Barcelona or uh. Uh you know somewhere else in Spain. It's one of them is very close to France. You know right along the main highway just south of France um so the the actual return on the performa because we don't have any actuals I can't say um well. This is what the comp set is doing in this area like you can in United States yeah. You know um you know what other Boutique Hotel built in 1610 can we do a comp set on you know it's um but here's the thing is each room is going to be $3 or $400 a night $10,000 or more to to rent out the whole place. We're looking at getting a a local PR firm to manage it and uh do that side of it. So we're looking at very very conservatively like pref returns of 15% or so or more. I'm I'm hoping more because there won't be any debt. But I'm I'm I'm going to be just really conservative. After the first year what we can do and that it's just a buildup from there and we could see some pretty. Extraordinary. Returns on such a small property because we don't have any debt. But it's just. It's building up that I can't say whether it's going to be year after year one or after year two.
•  It's building up the point to where hey world. This is the most extraordinary place in Northern Spain that you can go to for this destination um and we're also we also have like these shamans and these yogis that are interested. Some of them are very interested right now in holding Retreats and these would be. It's crazy. You know $3,000 a person to go and eat once a day and do Yogi stuff and dance around. And it's like okay you know for three grand. You can dance around the property. All you want and do all these things U but it's you know seeing Kumbaya. I don't care as long as you pay me three grand a person for four days um. But that is that's one of the big big things that is really huge. Right. Now are uh these different Shaman coming in and it's good for them because they'll come in for free as long as they can book the whole place and it looks good on their resume. You know come come to this Yogi retreat in in Northern Spain and they just blast it off to their people and U so those are things we're we're looking at but to give you this a long story short to give you a pinpoint on the returns. It's. It's I I just I can't I I know it's going to be big. But it's just the perform is just so hard to do it after year one on what we could do um it's it's just a perspective and romanticize of the part that hey you own a piece of a boutique hotel in Northern Spain that you get to go visit yep um and say that you own it. But we're looking at 15 20% very very conservative. I think it's going to be more than that since we don't have any debt. I could totally see that and and what you're talking. About too is is looking at the hotel as more than just a PL like heads and beds place to stay kind of thing you're you're really looking at it from a like business standpoint an event center that happens to have beds that you can sleep in and rooms that you can sleep correct which is interesting you know and and I think that there's a lot of Boutique Hotel. There's some boutique hotels in the states that that that do that so I I could see that business model working out really well um. I could also see uh there being a little bit of a ramp up period. So what you're saying. I think is is totally true like you probably won't see returns for for like the first year that begs the question though like since it's more than just like the hotel business. It's it's also an events business right where you're you're trying to draw in people to do you. Know sounds like weddings and corporate events and Retreats and all that good stuff so is it you. That's running the business side of that too. Mike or do you have uh someone helping you like an operator. It's you yeah yeah great question. No. It's not me um do that over here in the States. But it's no no it is not uh. So we already have a team in place for Europe. Uh we have operations people. We have someone that we're interviewing for the for the Northeast ones actually run it. They are they specialize in What's called the msia which is this type of Boutique. Msia is Spanish for Rural house or estate and uh with their contact tax and they're basically an event coordinator person that we're hiring to run a boutique hotel. So we're looking at it as that type of a business. We'll still be on booking and Trip Advisor and things like that for the daily bookings and we'll open that up when we don't have someone renting out the entire place um so we are looking at it in that business side because we're hiring someone that does event coordinations in Spain so that's how we run. We have the CPS. We have the attorneys over there. So we we already have a team uh and unfortunately I'll have to go over there once a quarter just to check things out and stay in the place and that that'll be a horrible experience drink some rioa and make sure everything. I know it's. It's it's horrible but uh the good thing is is the people that invest with us uh at a certain level will have access to the property a couple times a year. You know so they can also have a tux tax deductible vacation in Spain that'll be nice that's awesome so someone's probably listening to this right. Now and saying like man yeah sure is nice to be able to invest overseas and they're that they're not even close to that. Mike so so obviously this is what how how how long into your investing career are we now oh boy um. I started out with the single family house I call the PG days preg Google day so it's been a while oh wow um I I invested in my first house I think in 1998 had eight homes and uh failed miserably because I didn't have podcast. I didn't have Google. I couldn't um type in a search engine on how to be a landlord buying the properties was easy but now what you know so. I failed miserably became an airline pilot. I got really back into it big time after for the last recession you know that's that's when I made all the money is back in 2010 to 2012 is when I ramped back up um when the commercial guys when their notes came due and the banks weren't lending you know because of of uh the crash so I just came in with cash and and that that's when I really ramp back up so about what's that now 12 years ago yep got it. So you've had over two decades worth of of of ram up and it sounds like the last 12 years have been the time where you've made the most amount of moves so walk us through that journey and and actually like what I really love to know is what you just touched on. Right. Now is like that same thing is about to happen. It's like already started to happen where you've got a lot of floating uh rates. You've got a lot of um short-term five-year loans in the commercial sector that are coming do what lessons did you learn the first time that either like that you will deploy this time and or like you would recommend to someone like myself. For example to do this time how to best position yourself for those sorts of opportunities yeah uh great question number one right now don't in the states.
•  Um I would not recommend unless you're developing unless you you have a really big project um kind of hold off on some financing right. Now unless you have 40% LTV. You know you know 50%. You don't want to don't get anything for 20% right now if you even if you can maybe even 30% down. For instance you know on the Scottdale project. It's going to be 20 $25 million project. I'm not going to do it unless I can get at least 50% money down so that I can hedge that lower payments I don't have as much debt and that's what really what you want to do. During this time period is don't over leverage yourself during this time because interest rates are high and then you look at the bank and say okay uh no prepaid penal um penalty because when something does happen and it goes back down. I'm I can then refinance without any cost um and that's the only way that I would would Finance now is if I had no prepaid penalty and that I can refinance in two or three years um and then as far as what I did in 2011. 2012 is you have a lot of floating rates. You have a lot of variables you have a lot of the in the commercial space. You have five and seven year loans typically and what happens is they over leverage. They paid a lot of money for this asset because they were speculating that the interest rates and or the economy would just go up up up. You know from five years ago and now you have banks that are like H you know what it's not. It's kind kind of worth what you're saying. But we're no longer going to be in the hotel industry. We're not refinancing your loan. We're not doing anything or even multif family. It's like you know look. The cap. Rates are just too low and interest rates are 6% your cap rates at 4% and we may not want to do that right now. So I go in and do what I did is a lot of seller financing for those type of guys. I just kind of take over their debt. Um give the seller a little bit of money and then just do a you know uh a lease to own or or seller financing. That's that's how I made a lot of my money back in the day was. I'd get these people that are in debt and say look you know you're either going to lose this place you can't refinance it. I'll come in with cash with investors that have cash and give you a little bit of money and then just take it over and then I I'm able to write it out because I have cash and I have investors that are behind me that we can kind of write it out and then refinance and make the money U but it's it's looking for that seller. Not even seller just the owner that's like oh crap you know I'm I'm. I'm stuck how did you uh. How did you do that back in 2010. Back in 2010 2012 what I did was I went to I I saw properties were on the market because they were like going. I saw the price is starting to come down and there I could see that the seller was a little bit starting to panic a little bit and then I just talked to the seller. I said hey what's going on and he go look. This is 100% occupied property but the bank won't refinance it because it's not worth what I owe and then I'd say okay what's the Delta and I'd look at it and i' talk to the bank and he's he didn't you know the people didn't manage it properly. They're only maybe $150,000 difference but I'd go in and work with the bank or work with the seller and say look I I'll pay the Delta the $150,000 or the2 00. Sometimes it was $300,000 of what it's worth to bring it up because you know let's say. It's a million dollar property the bank's only going to refinance it. For 600. He has to come up he or she has to come up with $400,000 the the Delta because it's it's now only worth 600. I'd come in and just pay that that difference keep the same loan and just go for there go from there. Sometimes I did a complete seller financing for three years just to catch him the person up and then at the end of three years I just then refinanced but then that person the owner is completely out of it um I'm paying his payment. I'm paying him. He's paying the bank I gave him the Delta uh and then in three years you know then in like. In 2015 when everything was cool. I would refinance it. So I I did a lot of that type of a thing um especially when the banks were a little get really pulling back um. I did a lot of seller financing what was the messaging like because I I would imagine that going to a seller or an owner and being like hey man you're screwed want to sell your place to me like I don't imagine that that's necessarily gonna go over well so how do you massage that conversation yeah. It's it's a good question you have. To I let them talk say what's your situation you know they they spend an hour. Wo was me you know and screw the banks and the you know they I let them do their the thing and and then it's if it was perfect situation. It's like you know and then I would just say it looks like you're probably going to get foreclosed on what does that do with the credit you know I'm I'm a stupid young investor. What does that mean for your credit. I just kind of fake it yeah. It's going to screw me I'm not going to be able to get another asset for another seven years. I like well what if I could help you out there your credit's going to be fine and at some point you're just going to have to take a loss on this one place. You know because you your alternative is go through 7 years of bad luck. You won't be able to buy another asset or I can just come in and save your credit is going to be fine. It's going to be I'm just going to act as you and pay your bank mortgage. Uh and I'll give you $150,000 for your trouble. But it's going to be you know a three or five year note and now we both win. I get an asset you get your credit soon as it soon as it turns around you get to buy something new and we help each other we both out and then you just shut up and let them speak first you know because now their their wheels are spinning mhm and that's that's how you play it. You just you have to convince them. It's it's their idea that it's it's the best thing that they can do uh to save their credit to save face and just say you know look you're you're going to. There's no good outcome. What's the better of the two outcomes for this property and you have to convince them. You're the better outcome yeah. I hope everyone is taking notes listening right. Now you're like hey like this is good dialogue and a couple things that I observed there number one. What's your situation you get them talking because I think a lot of people that don't understand sales which is a lot of people. They they do all the talking. Then the other person doesn't actually so the only way that you can build rapport is actually by like listening. So I I observe that is like okay you you what's your situation. You let them word vomit for as long as they need to and when you ask you ask them the question that plants the seat of like oh. What's that going to do to your credit oh okay well. Then they they're like oh. It's going to decimate it blah blah blah blah blah well what if I could help you right. So you you you you take them through the whole sales uh uh P do yeah and uh and and I and I maybe and I maybe said five words during the whole conversation. You know so that's the whole thing people is you got to learn how to shut up. They'll tell you exactly what they want and what they need. If you just pay attention and listen and you have to be able to understand what it is and then say Oh. If I'm hearing you correctly. This is what you need. This is what the outcome your unique thing that needs to happen is that correct and then shut up again and then they'll confirm that they want you to help them before we jump topics.
•  I am curious where were you sourcing this data of sellers. So it sounds like you said you're watching prices drop. So you're probably looking at active listings. But I imagine that isn't the only type or the only criteria that you had so where were you sourcing these potential deals. So the best thing you could ever do is. Investor is networking um get to know the bankers get to know the title agents um get to know where where do you find public records and if a lot of times I went with and also a lot of Brokers. So if they if for instance Brokers know that you're you have money or you have the ability to find money they'll give you off. Market deals so it's like hey Mike. This is I'm talking to this person um or or you can get to know a lot of Bankers is um through networking events. I've actually had Bankers say hey. Mike you know I've got. This guy can't introduce you can't do anything like that but you can maybe stop by the property and then um title agents have the ability to come up with different lists of this person got a loan. All these people got a loan on these apartment complexes 5 years ago mhm and this is the what they owe and then I know then I can have the broker go in and say hey okay give me a list of what all these properties are worth um based on how much debt they have that the title agent gave me. Then I can quickly see that okay these people are upside down and then I just Co call you know I find out their information find out who the owner is through the title agent because they can get the list right and then I just call them write them emails and I just bug the hell out of them um and say hey. It's me again you know and then you know once in a while you get the the thing. It's like look you know. I can you have to write the the letter or the email properly um. But those are the the title agency. A lot of people don't realize that those title agents have a lot of ability. A lot of lists lot of contacts. They can give you anything you want as far as all the different type of properties when they were bought what the mortgage was who the mortgage through because they did all the the title work so that really really helped me gotcha and and that so in 2010 to 2012 your the majority of the deals that you were sourcing. Then were multif family sounds like like a I was all my my entire history was single family multif family. Um I've had manag and know I don't know like, 1500. Keys well well. That's Hotel doors I mean Keys now um I yeah swipe Keys yeah. Now I'm into and now I'm into the swipe um. So I I am a huge. I was a huge multif family even back in the day you know four plexus two plexus 7even. Plexus 8 plexus 50 units 100 units um and it wasn't until over here in Arizona that the cap rates were really really started to get compressed. Yeah and I was like going ah you and I would I had people just randomly just doing what I do randomly call me and give me insane money on my multif family complexes uh and I'm like going H now what do I do what am I going what am I going to 1031 and to you know I'm going to be someone else's fool. They bought it an8 cap. I'm buying it a three and a half or four cap yeah. You know um so that's that's why I made the jump into hotels. Just I I just I don't like to speculate. I don't want to buy it three and a half four cap and my interest rates a six and a half cap. Some people still do it yeah uh. But I don't know maybe I'm too old for that type of stress you know. But I think that what a lot of people don't realize a lot of investors. Don't realize is how great the returns are on hotels. You know um. I Cornell did a study over a 25e period and from 89 to 2015 uh through three bare markets. The highest annualized returns uh amongst all commercial real estate. Asset classes is hot is hotels yep. So hotels hotels outperform office well. I mean easy to do nowadays but multif family retail all that good stuff. I'm not sure about sell storage um. I don't if they like I don't know if they like section that off into like industrial or like light industrial as a whole right um if that's part of that. But it's it's something that a lot of people are unaware of yeah. A lot of people don't realize that individuals and people like you and I can own hotels. They think that they're just these big reats and big corporate things and it's it's wild when people ask what I do and I say own hotels. It's kind of like you get that deer in the headlight look um but yeah you're you're right. You know the biggest difference between the hotels and multifamilies. If you think of my ADR you know my my rate as a rent like your multif family people. I could it's like a gas station. I get to change my rate four times a day. I'm not stuck with a 12month lease or a six-month lease. I can go from 80 to 100 and 120 back down to 70. You know I just it's it floats. So I get to think of a 100 unit multif family at $1,000 a month. It's x amount of dollars. My 100 unit. Hotel I get $100 every day M and then spring training. It's $250 every day or you know. When Waste Management when the Super Bowl was here. It was $300 a day um times 100 and then it just it compounds so the gross revenues are just so much higher. Yes we have more expenses but just the gross revenue of the two is just so much higher and that's that's how you can get um. Double digit returns easily in hotels instead of three or four or five perent. Multif family right now but everyone don't go out and just buy a hotel. This they're completely different. It's a business. It's not real estate okay. Uh it's a business that sits on real estate and I have some hotels that that real estate is really really appreciating and it doesn't matter what's on top of it. People want to buy it just because of the real estate. It sits on but you have to do your learn how to do hotels don't just jump into them. It's they're they're a beast of a business. Yeah I could not agree more and I think that you know coming from residential and then getting into hotels myself. The the good thing for me was that I had transitioned from just a realtor to like actually owning and operating a full-fledged like real estate team that operated much like a business and so I had the I I knew how to read a p&l you know I like the basics but even still there's so many layers to the hotel business so that begs the question then Mike. When you bought your first hotel. What lessons did you learn the hard way oh good good question um the due diligence you know I'm used. I was used to doing the due diligence the multif family way and not really looking at the due diligence as the business side mhm and and one of the big things is what I learned is. The a lot of the hotels are some of them that are individually owned or owned by the families. You know you dad's the GM. The wife is ah head of housekeeping. You have the kid at the front desk uh so they're uh especially in the when Indians own. It you know the patels and and people from India um. The whole family gets involved so the the salaries and the payroll is very very skewed because they only take so much just to live and put it all back and I realized that they were going to these little grocery stores. They were they were doing things which which is all fine but it wasn't a true p&l based on me coming in and hiring everyone uh to run it and having a full payroll so that was one of the biggest things. It's like okay uh keep that in the brain if it's a family run are they making their breakfast are they buying it from Cisco. You know how are. They are they going to Costco. You know what are they doing and then because they're so maybe stingy. They're doing just the minimums you know getting by with a lot of things and it's not really they're not they're running it as it would a small business. Not a not a full-size business. So that was the biggest thing and then uh thing I learned is just just handling people. You know all of a sudden. You have 15 people um employees. It's just learning that side of it you know from multif family. You may have a maintenance person. A salesperson now I have 15 20 people um just managing expectations and managing that type of um pay. Ro you know just the personalities that was that was another big thing and then my guy just looking at all. The different vendors what's necessary and coming in and um oh. The other biggest thing is when you come in and buy a franchise. Let's say a choice hotel. They're going to come and say you need to do. We have what's called a pip and they're going to say hey you you have to do. These three pages worth of stuff in order to buy this well.
•  I didn't know any better. I'm like going holy crap okay uh so you do it well. I didn't realize it most of that's fluff that's like going we'll see. If this we'll see. If Mike's an idiot and actually do this stuff um. I was an idiot and and I was not going to be an idiot again you know for instance. You know the hotels that I I I've bought. Since then you get the three and four pages. I will it down to one you know and I make them pay me how bad you want me you know especially. I'll go in and maybe change it from a choice to a Windom or things like that. Then I'm like going hey hey Windom how much you give me $150,000 to go with you and they do it yep you. So those are kind of the bigger biggest lessons is PIP is a big thing yeah. That's um that is a big one and if someone you know because there's a lot of people. I'm sure that are listening that are like hey. I'd like to get into hotels and you're like hey don't don't don't do it unless you know what you're do it. So what would what would your advice be to someone yeah who wants to get into hotels. It's like every asset class everyone you know people. It's get a mentor um get a business coach. I don't I didn't go from. You don't go from single family to even multif family. You you know I'm not talking fourplex or sixplex. You don't just go out and buy a 50 unit unless you know what you're doing um. I ended up partnering with someone that had 25 five years experience in the hospitality industry and that's what made us grow yeah. Now I can look at Assets. Now. I can manage the investor side and let this person go out and say this is how you run it. This he he deals with the day-to-day um so or invest in someone like me that does syndications and then learn how to do it. I've had some investors say Mike I want to invest but I want you to teach me how to do it uh and then we come up with an agreement you know how to teach them you know things like that. Um. Everyone wants me to start doing like some seminars and things like that just or or like workshops because there's no one who does Hotel workshops. So I've been. People have been pestering me to do some workshops you know so find learn get business coaches um get with people like that have done it but don't just go out and buy it it'll be the same with with even multif family learn how to do it first and this would be a great time to mention that all of Mike's contact information is going to be in the description box down below so if you are wondering how to get in touch with him either learn more about how to invest with him as an LP on the syndication side or want to learn more about mentorship or any of the above right uh you. We'll we'll get your contact information down there in the description below so um. That's awesome that's awesome M well. Let. Let's switch gears here a little bit because we spent a lot of time on on hotels and what I want to understand is like you uh obviously you had you had what it sounds like is. You had a crash and burn moment uh before the do uh bust and then you spent the next eight years or so rebuilding mhm and then what were the lessons that you learned the first time that allowed you to succeed the second time around yeah great question. What I did is. I learned buying properties is easy. Anyone can go out and buy a property. Um. I ended up finding a mentor finding a coach that taught me. That's that's the missing piece. Everyone anyone can go out go to seller financing buy a house fix it up um but to be a landlord. It's you know what's what's a notice how what what are the laws. What's what's the the tenant landlord regulations. Especially you know in the different cities where maybe they're Pro tenant not pro- landlord or vice versa learn you know there's a reason why you're listening this podcast because you you've made the first step you learn in. Uh find a mentor don't go to seminar land um because they're not KN. They're they I count tell you something. I count on maybe two people that actually do it and then do the seminars you know one of my mentors. His name is John Burley um. He actually owns a couple thousand homes and he does seminars four times a year he doesn't do seminars in every single City. You know 50 times a day and and the last time he bought. Something was a 19 or you know 1999 or something like that you know um this. He actually does it so find out that type of seminars is good because they're actually doing and the actually and you actually get to talk with the person and and the the the expert um through his programs. He's still a very good friend of mine to this day um. But that was the biggest thing is I I sat down I like okay what piece am I missing. I don't know how to do be the laying Lord part um. I didn't I learned how to build a team. That was the most important thing. It's. It's those Growing Pains that sit there and say okay find your unique ability. What is my unique ability. It's not bookkeeping. It's not you know managing people because I I started managing people. Then I start hating people you know and you know then. It's. It's like you're doing what you flushed what down the drain and just like what are you you know um you're yelling at the person down the bathtub drain. You know. It's like on like what the hell's wrong with people um. So I gave up and and just concentrated on finding assets. That's what I'm good at I'm I'm good at finding investors. Delegate. Find a team find a mentor you're either going to spend your money. The Hardway and possibly losing money by learning you know spending money and and losing or you might as well. Just spend the money the right way so that you can succeed quicker. Uh either way you're going to spend money. So whether would not you lose it or you gain it. I could not agree more you know and I I can share from personal experience here when I was in real. When I started in real estate. I had you know. I had all the ambition all the drive in the world right but ambition and drive and. Tenacity were work ethic. It's not enough you know especially when you're getting into a new business. A new Venture like you need that guidance and so the the hard part is for a lot of people to like cast their ego aside. The money is also a a part of it too. It's ego and and money. But the second I got a coach. My business exploded in real estate and so I took that same experience and I applied it to hotels and so when I got into hotels the first thing I did was try to live for a mentor and and find someone to coach me and what's crazy is that you know and I really feel. Like this is the future of of Education because I think people are finally started to realize like what a joke University is you know and like like how impractical it really is to like spend four years at an institution like get a degree and then go out and do nothing like with it. You know um versus uh. The coach is like okay maybe a third half of what one year's tuition would be at like one of these institutions and then you you you've set yourself up for massive success because you have paid to learn all of their mistakes absolutely. It's something that I I think um I I could not agree with you more on and it sounds like you. You took that lesson you applied it you found your mentor and then the the your Mentor helped you grow and helped you understand okay like the the business/ landlord side of it. At what point did you feel confident enough to be like okay like I think I've got this and like I'm going to I'm going to go like do this on my own again yeah. You know it's you never really get that even now I don't get that there there's always self-doubt. But at one point you I'm also ex-military um. So at some point you just got to make the leap the hardest part for everybody. I've met people when I've spoken at seminars across the country. Uh you see the same people seminar junkies and I'm like you know have you done your first deal. No you know just one more seminar you know. I'm almost there need a little more coaching. The first part is just like you just just do it jump in and do it. So I was not comfortable when I got back into it because look I lost everything uh I was newly married. I had to move in with my in-laws and we took a large hit uh and one thing it makes me a better. Mentor or a better investor is I'm one of those people like in instead lying to everyone. I'm like I failed miserably. U most people are like oh. I made my first million dollars in five months and everything was hunky doryan. It's just like a HGTV episode. It was just perfect you know bull crap yeah. It's yeah. It's it.
•  This is not easy everyone you know and you're going to fail but what do you do um. I've never learned when I've succeeded. I've learned when I failed and so I just you just have to make that that I knew that real estate was it. I knew that if I stayed in a cubicle one more day I was going to like go postal and so it's just went bam. It's like I'm getting back into it. Here we go let's start small but then because my mentor had owned a bunch of properties and did he you know here's the forms. Here's the applications here's how you do it. Here's how you how to be a landlord. Uh I was successful because I had the business side of it and then it was another one. Then another one. Then you you kind of build the confidence up and then when you get an apartment complex. Then you get scared again. You know it's kind of like okay am might am I ready for a 20 unit complex. You know it's like going of course. You are you have 10 single families yeah. Now you have everyone in one spot. Now. I'm not traveling all over the place um. So you're all there's always that kind of self-doubt you know when I buy another asset especially now when you have investors. Uh. It's like okay you kind of overanalyze over. It's like do I want to do this. Is it safe is it is it the type of hotel I want uh. So there's all you're always going to have that you look at every rock star every golfer. They're always nervous on the first te. They fit millions of golf shots. But they're still nervous so you're still nervous. But you just you you now have the confidence knowing that you can succeed yeah. That's uh one one my coaches says uh calls it borrowed belief. You know it's like hey like you uh a great mentor. A great leader can Inspire others through like allowing them to borrow their belief until they themselves can like feel confident enough to go out there and do it and but once. But once you get there you have to continually draw on that you know it's like. It's not enough to do it the first time it's like no like there's still that like every single time you go out there. So I appreciate you you know sharing that because anyone back at home who's listening and and whe whether you're a seasoned investor just getting started just know that like it doesn't get easier from a um you know there's always going to be that even Kobe got nervous right like you said right so there's always going to be those those um those thoughts. But the the the difference between the people that are the seminar junkies as you call them right. Mike and and the people that that are like Mike are those that just can cast those fears aside and and just do yeah. It becomes an excitement you know instead of an anxiety. It becomes okay. I'm nervous but man all right. I have another asset on my belt. Everything I've done my due diligence. I've done all my checklist. There's nothing else. I can do except pull the trigger and you have to have faith in your team and your checklist and your due diligence uh and something else. I can tell people don't get emotional with your asset. Mhm. Um make sure it checks every box if it doesn't check every box. Don't do it there'll be other assets don't get us like oh my God I always wanted a thing you know a castle in Spain well. I did but I had all the checkbox you know. There. There are other castles in Europe so you you know and it's like everything else. It's you know hotels and make sure make. Sure you check all the boxes so you hit on it right now and and you talked about the team team right and You' mentioned it before so what what is your. What does your team look like right now and and how is that structured just genuinely curious. I always have offsite bookkeepers that are not part of my team that's just part of my separation of power. When you have investors. I don't I don't want them to say well the bookkeeper works for you. They're going to do whatever you want um. So I an offsite bookkeeper I have uh area managers. I have operations people. I have uh people that concentrate on sales and marketing. I have someone that concentrates on what we call Engineering in the hotel world. It's basically the maintenance but they're they're called engineering and then you know each hotel has its own general manager and that's about it. You know Sal sales and marketing oper operations um the mechanical the engineering part MH the bookkeepers and then you know the the the actual CPA is make sure that man I learned the hard way make sure your CPA knows real estate. Okay don't get just a regular CPA um after 10 years. In the business. The guy goes did an audit on my taxes. It's like going you're not deducting as a like a full-time real estate. Guy. I don't know you know as a real estate professional. He goes you're a real estate profession AR I'm like yeah and he goes your last CPA who doesn't know anything about real estate. I never took that I'm like going oh my God U you know so just make sure that CPA I pay a lot for my CPA but they do a lot um and they're they know commercial real estate. Um don't get your H&R Block guy or or whoever just your regular CPA that does normal people's taxes because you're not a normal person at some point in your real estate career wow I mean the dollar fig I I I I hope you didn't calculate the dollar figure on that like in my head. I'm like uh oh well. That's uh holy cow well yeah. That's um actually. It's Sim slightly similar story. I um I had a a CPA. You know just a cookie cutter kind of guy for my first few years in in the business and then I had a monster year like my first Monster year in 2017 and and uh couple years later my I got a new CPA who was a real estate guy like understood real estate backwards and forwards. He worked uh not some commercial um real estate uh accounting firm and he looked at my my previous years and he's like dude. You overpaid by like I'm not going to say the number. But like he he gave me the number and I like I was so mad and I was I was livid and I was like I should sue that old I was like you know what like forget it but yeah. No it really. It really does make a difference and um and you know people. That say I'm going to do my own taxes and I'm like oh. My God are so dumb yeah so dumb because you're you're saving you know $1,000 maybe $500 but losing tens tens tens of thousands. You know it's the same. It's the same person that said Mike have you ever considered. I'm seeing that you're not doing cost segregations and I'm like what does that mean no no and this is back in the day people. This is not like two years ago yeah. This is when I first started and he was like oh okay do cost so it's everyone. There you know a lot of you probably just starting out or now. Googling cost segregation because just like me back in the day it's like oh you don't realize when you get big enough. All these different things you can do that are within the tax code to accelerate depreciation and just do all these different things to help your business and cost segregations be a huge one to give you an idea um you know back. In the day I bought a $5 million Hotel. My first year. Depreciation with cost segregation was 1.2 million and the investors were extremely happy on their k1s for that um but cost segregation can save you a lot of money up front yeah absolutely and that's uh and that's definitely one of the powers of investing in especially assets. Like you know larger commercial assets like hotels is I mean hotels too because you got the case good. You've got other stuff just the every L yeah.
•  Every stapler every desk every piece of soap. I you know well not soaps or anything like that. But every case good. It has a depreciable time period yeah and it's uh. It could really start to add up so well. Mike. We're we're coming up towards the end of our uh our time here just a couple other things I wanted to touch on real quick. So first one is I I really would like to know because you you're definitely someone that I think would would have a great answer to this is what is a contrarian point of view that you have about real estate investing that you stand by but maybe most people don't necessarily agree. You agree with you oh. What can I say about that um. What I look at is nowadays with especially the younger Generations. They want that McDonald's Quick Fix how can I flip something make 10 grand 20 grand. I don't look at it. That way I number one once you get into an income. I I don't want returns. I want a long term. I want. I look at the Great thing with multif family and hotels is not the quick fix or the quick flip. That is so popular today. I can own an entire asset class portfolio and I can be 80 85 years old and never have to retire. I just go to the board meeting or do this do this or that so my Outlook is that I am building patient Capital something that just appreciates over time. I don't look at one to two year flips that is so popular. I want a 10-year project. I look at you know this 20 $25 million project. I'm not going to flip. In three years I could to a re um. But I want to know that I have a portfolio gives me hundreds and hundreds of thousand a month and it just sits there. And uh so that's my kind of contrarian is is I like the patient Capital where that's not popular right. Now what what's the dialogue that you have with invest because you know I think one of the the main reasons at least on a syndication level that we we talk about you know five year. Exits or so is is because the that the investors want their money back uh what what what are the strategies that you use to kind of what are the what's the dialogue there that you use with with the investors to to get their Buy in to do uh to to think like that yeah. Number one I I try to find investors that don't don't need a return you know most of my investors are sophisticated. They don't need a return. They don't need a monthly or quarterly return uh and if they do they won't just put it back into the business. But what I do is. I tell them it's like look. If you want a quick return go find a Fix and Flip multif family um. What I'm going to do is give you 2.3 times your money or whatever it is down the line that will happen but it's going to be 7 to 10 years. But you'll be getting money you'll be getting returns but we're not flipping you know these are uh. These are your retirement in instead of putting it their 401K your IRA putting in stocks and you know with your stock market. You're going to keep it there. For 10 15 years. You know and just build up your stock portfolio. Now you're diversifying into a hotel that's going to give you better returns long run run. It's an asset that depreciates or appreciates but you get depreciation how many of your stocks are going to give you a dividend. You know every quarter and appreciate like the real estate does so I kind of do it. As you've got the money um you're diversifying your stock portfolio or whatever into land real estate a hotel. But it's going to be that same type of you know 7 to 10 year thing and then some of them are like. We want. I want longer you know when you refy because they don't. They don't want the the their money back they they want to keep it going. They want that long-term um so it's just explaining to them upfront that this is a business. I can't do this to a hotel. In three years you know or or five years. It's not to say that that some of them you know we've sold in five years or so like that but but we have because people just come in and say hey I want to give you this amount of money for it and I'm like yeah okay. You know we'll do that um. But you know it's a good question. It's just explaining to people that this is a long-term hold just like you would in the stock market you buy stocks. You just keep it there for until you retire. It's it's kind of like that instead of this quick real estate fix flip Airbnb you know put lipstick on it and sell it in three years um. I'm I a I just tell them up front. I am a long-term hold GP yeah and and it's long you're transparent and and there there are plenty of investors out there. That um that would sign up for that I know like you especially the ones that want to keep their money working for them. They don't really need that like return of capital and by the way like refinancing is also a very viable strategy especially right now with the debt market like if you can find an opportunity right. Now. I know you said don't invest and and and I think the the message. There was don't invest with super high leverage which um I would agree unless you're getting like a smoking deal. But if you can if you can weather this storm. There's a good case to be made you know three years down the line being able to refinance in to a much better rate and pull out likely the majority of the equity and at that point you can decide well do. We want to hold on to this asset do we want to get R of it. But at that point why would you you know if you've got a great rate and it's cash flowing and the investors have their money back. Let's go buy another deal to put it in right and just infinite. Returns on this one so yeah yeah the be like the Scottdale. One is you know we're going to get it an interest rate that I don't like but I know that that asset is going to appreciate so much and and the interest rates will come down and you're right. I'll I'll just refinance it in a couple years and and either pay off the invest. You know there's other things that GPS can do if you want if you want to go on. That side is just cash out the investors and then you keep it yourself cash out some of the LPS and and hold on to the LPS that want the long term you. There's so many things you can do right 100 100% well. Mike in traditional gold wine fashion going to leave us with uh your final gold nugget gold nugget yes every yeah so all of you want either are into. Investments or want to be getting into. Investments don't go into this looking for money. Okay money will come um if you're patient enough there's God's not making any more real estate and you look at all. The the richest people in the world you know a lot of them are are in real estate find out your why why do you do this.
•  Why are you wanting to do this for me. It was I wanted to build a life that I didn't need a vacation from and I can do that I can be anywhere in the world and work. Anytime I want and I I don't have two weeks of vacation. You know it's something that I love what I I I'm doing and I can do it. When whenever I can be an art RV I can be in Spain. I can be on the cruise be anywhere in the world and and run my hotels uh so find your why but make sure that why is not money because the money's it'll come if you're if you do it right fantastic. Goodby I appreciate that Mike love it love it so thank you for coming on the show. This was uh a lot of great great. Now. I'm I'm really glad that we got to spend some time there uh especially on the international stuff and and on the hotel side of things lots of great things for the people back at home to go out there and and Implement whether they are seasoned or whether they're brand new. So Mike thanks for stopping by thanks a lot a pleasure all right man.