Hey guys, welcome back to First Responder Financial Freedom. Today I got Tyler, myself and our buddy from Milwaukee Fire, mike Lowry, who's doing a little bit of real estate, and he's going to share his journey about how he got into that space while working the job. So, mike, thanks for hopping on the show and, if you don't mind, just give everybody the two minute version or story of who you are, where you came from, what you're doing, and we'll take it from there.
Speaker 2:Yeah, guys, thank you for having me on the show. So my journey started in high school. I'm originally from the Upper Peninsula of Michigan. I got involved in, or heard about, investing more so with stocks, bonds, mutual funds in eighth grade about investing more so with stocks, bonds, mutual funds In eighth grade didn't really hear about real estate until a little bit later, until my early 20s Graduated with a finance degree from Michigan Tech and I started with Milwaukee Fire in 2010. That journey was a little interesting. I was a volunteer firefighter before that and realized that working full-time for a fire department was more of a dream of mine than working in a bank sitting behind a desk in a cubicle. I wanted a big city fire department. At the time, detroit wasn't hiring, so I applied for Flint, michigan, grand Rapids, michigan and Milwaukee, and I wound up being in the second class off of the 2008 list. So I began the academy in 2010. And, long story short, have been there ever since. I did have a stint for two years where I was down in Baytown, texas, which is a suburb of Houston, also as a firefighter. My current position is heavy equipment operator Some people call them chauffeurs, but basically driver and then I drive truck nine, which is second busiest truck in the city.
Speaker 2:We take probably about 105,000, 110,000 calls a year citywide. We've got I think now we've got 29 or 30 stations open. It's they've decommissioned some units and brought some units back. So as I first transferred to this firehouse, it houses engine 32, truck 9. They had decommissioned. It houses engine 32, truck 9. They had decommissioned the rig just south of us, engine 28. So I believe it was 2022 or 2021. But for the whole station wide we took like about 95 miles that year. So it was averaging in between like 15 and 20. And the truck was averaging like 12 to 15. So in the mix, to say the least. So it's been fun.
Speaker 2:I've kind of been in that area of Milwaukee where a lot of the stuff happens for about the past five, six years now, so I'm pretty solidified there. As far as real estate goes, I here in Milwaukee being a firefighter. Obviously you get to know the neighborhoods very well. You run down one block 10 times. You know in a month, month and you don't see the next block ever in three years of being assigned to that location. Others in the milwaukee market in 18. That was a time where I feel like the milwaukee market really kind of like took off. People you know it was. It was popping up on yahoo, um, finance, um, it was just popping up everywhere. Everyone seemed to be hearing about Milwaukee, and so we had a lot of out-of-state investors, a lot of foreign investors, coming in, which made the market currently pretty competitive.
Speaker 2:But back in 2017 2017 you could find deals that easily met the two percent rule very at the time. Uh, for instance, I'll just give you a one of one of our deals that we did right away um, we had bought a two bedroom, one bath, uh, ranch home had a basement. All we had to do was was paint and refinish the hardwood floors. We got into that, I think, for $35,000 all in, and we were able to rent it out for like $900 a month. So that's kind of like what we were looking at there.
Speaker 2:With that, we were able to purchase like six units pretty much in like six months it was, and we had a partner out in vegas and uh, so we were kind of 50 50, my brother and I and then our partner in vegas and, um, as we started going with that, we um just yeah, that's kind of where, where we started, um, we've sold off pretty much the whole portfolio. It's interesting working with partners. Sometimes when you start you guys have all a direct line as to where you want to go and how you want to grow, and then obviously things can change. So now I'm working a little bit more just on not necessarily partnerships anymore, but I got my real estate license in October. So I'm working kind of both ends of the real estate and also trying to work and I have yet to get my first syndication deal, but still working on it.
Speaker 1:And obviously you know you keep pushing forward. Okay, so there was and we'll try and fix some of those pauses because it was lagging a little bit there, but okay, so let's back this up a hair. So you went to college, started out as a volunteer. You went to college, got a degree in finance, got hired by the city of Milwaukee in 2010. When did you buy your first real estate deal? I think you said you got interested in finances in eighth grade. Like what are you the Warren Buffett from Michigan? My son's almost there and I have to remind him to breathe, let alone buy.
Speaker 2:Yeah, no, I just had a teacher, mr Downs, and he just he gave an example of how you know if you, if you just I don't even know what it was at the time If you invested 25 bucks a week or something, you could be a millionaire by the time you were you know 30 or whatever. Whatever it was, you know what I mean and so I was just always interested with that compounding interest. So that's kind of what pushed me towards the stock market and into finance in general.
Speaker 1:So did you have real estate we'll call it investments prior to getting on the job.
Speaker 2:Nope, I uh, I was on the job, uh, before I had any, uh, real estate. So the first house that I ever bought was a single family house with my ex-wife in 2012. Um, and then the first investment property that I bought was in 2017. So, uh, basically from November of 2017 to May of 2018, we bought a duplex on land contract and then we bought what was it? Three or three single family units.
Speaker 1:You got into real estate while you were on the job, but your goal was to buy. From what I'm hearing was to buy cash flow real estate. Right, you weren't necessarily flipping per se, or I know you mentioned syndicating now, but it sounds like when you got started in it it was cash flow properties is that correct.
Speaker 2:Yeah, so we bought in um. You know, I would say I would consider them like class c neighborhoods, um, but again, with the background in firefighting I knew the little pockets within the neighborhoods. Um, there's been documentaries on it and stuff like that. Uh, 53206 is like the most incarcerated zip code in like the entire country. Uh, there's not even a grocery store in that zip code here in milwaukee, um, so it's, it's a very interesting, very diverse, very segregated still.
Speaker 1:I would not call that a C-class neighborhood then.
Speaker 2:No, I'm saying I was not investing in those, but yeah, that would be considered. I would think maybe even a war zone. So just to give you an idea, that is like the D, so I was just a step above that. In neighborhoods where people grew up, they still wanted to live. I've never done like section eight or anything like that. So all my tenants you know were are employed and stuff like that.
Speaker 1:So yeah, Employment's not a protected class. So that's sweet, what. What is and I always joke is whenever I first started getting into real estate, the guys at the firehouse called me slumlord, and some still throw that around. And I think because a lot of times the properties not always, but a lot of the times, the ones that were in and out of, like you said, 10 times a week, are those D class, slumlord type clientele, right, but there's plenty of rental properties in our area. I'm sure of it that we've never stepped foot in and probably won't for a long time.
Speaker 1:And you know the C class properties, at least from where I got started, those were like the bread and butter, like because you could buy. We'll call it a C-plus, right, it was nice, probably a little dated here and there, but that guy worked, you know, a steady job at a factory, driving a truck, like he was trying to provide the wife or significant other. She had a job, they probably had a kid or two. They were just the good average, and I use this not in any sort of derogatory way. They were just the good average, hardworking people that were going to work 40 years and die type thing. They unfortunately were probably never going to get out of that cycle if you will. But they were good people, they took care of their stuff and oftentimes they come from just a family and history of renters. Like they don't even think homeownership is a possibility.
Speaker 1:Then you go to the people that they don't even have a grocery store in their neighborhood. They know, they know a lifestyle Also, it's stealing, drugs et cetera. Like you don't want to invest in that neighborhood. But then you go to the other side. You got the class a stuff. Oh man, we lost our guest. I must have. I must have said something. Um.
Speaker 1:So then you go to the a a class properties. Well, there's no margin really to be made, especially with guys like us. You know that's more for like wealth preservation, the syndication guys. But like the guys like us, we're just trying to get in that like sweet spot where you don't want to have to carry the ar to the property to collect rent but you know it doesn't have a marble entrance into the clubhouse either in the community. So like you kind of need that sweet spot of uh in that market, so can you walk us through the price. And so like you kind of need that sweet spot of in that market. So can you walk us through the price? And I know you said it was a ex-wife, so I'm assuming the dust has settled there. But could you just kind of give us the? How did you get into that first property? What did it look like? How did you find it, fund it?
Speaker 2:Yeah, so so the the first property with the ex that was, that was I was just kind of given the narrative of like, that was the first property I'd ever purchased was in 2012. Um, as far as you know, that was, that was just a personal residence. Um, my first investment property actually was a retiring landlord. Um, complex, or to our finance, so we got in you're all reenacted for everybody listening.
Speaker 1:Mike got into this property with seller finance and then he apparently got very scared. Based on this space, I don't know what's going on. How are you on mute bud?
Speaker 3:what do you want to do? Try to, because it's frozen completely again. Yeah, there you go. No, you there, mike uh-oh EET phone home. We can see you Now. You're working.
Speaker 2:Okay, okay, cause I was like I can, I was hearing my like myself, but I couldn't see you guys. But anyways, uh, 8,000 duplex, uh, so we put 10,000 down, we put about another 15 grand into it, uh, and then we were renting each one of those units out for 750 a month, so 1500 a month. We were taking in. We had an amortized over 30 years on a five-year balloon, so I believe we were paying the previous owner about five, 600 bucks a month and then, essentially, you know cash flowing. The rest, we actually wound up selling that at the five year mark and we sold it for, I believe, 160 or 165. And the crazy thing is is we gave the, we gave the lady who we bought it from a check I believe was for like 71 grand to pay off the land contract, and then we cashed a check of like 73 grand. So that was, you know, kind of kind of and and cool as, as a first deal, a success.
Speaker 1:So, yeah, we'll call that not necessarily typical. Yeah, let's rewind that, cause I always like to and I know I say this pretty much with all the episodes but I kind of like to think about the person that's listening to this in their cruiser in the end, or whatnot, or in their drive home, and they're like, how do I get that first one? It's real easy to sit here and talk about some of these things, but it's like, ok, you mentioned seller finance, land contract, all these things. But it's like, okay, you mentioned seller finance, land contract, all these things that are just phenomenal. How did you find this deal? Was this on the mls or was this off market?
Speaker 2:um, you know it, I somehow I got connected with her son, who was a realtor, and I don't, for the life of me I can't remember. Um, okay, either way, you, you threw something out For the life of me I can't remember.
Speaker 1:Okay, either way, you threw something out, dude, do you see that? So Tyler just messaged you. He goes is your finger? Okay? Sa is still high. Yeah, so I wear a metal wedding ring and I was working out at the gym and I don't even know. I went to go do pull-ups and I looked at it it, and I said to my wife I'm like what happened? So, yeah, I took it off, it's fine, it looks gnarly. Yeah, I could get a tattoo. But all right, sorry, squirrel, what was I saying You're?
Speaker 1:asking about you basically put it out there at some point that you're looking to buy a property and I can assure you that all of this information is great, but without any action, none of it matters, right? And if you sit there and just now, with social media and the way it is, like I've bought numerous deals just off of posting on social media I've had numerous people offer to you, know, lend us money off of social media. So you can literally and I say this like you can use social media to like be a producer, not just a consumer. So, like you could sit there, how you could get started today is like, hey, I'm looking to buy my first rental property. If anybody know is looking to sell, let me know. Okay, is it kind of like a? It's a little bit of fishing Like you probably aren't going to get a deal right out the gate, but if you're consistent with it, like, hey, I'm walking this property today, I'm doing this, I'm doing that Pretty soon.
Speaker 1:The brother that works over at you know, engine 44 knows that you're doing this and their brother's retiring landlord. It may never work out, but it might, and all it takes is one or two of those connections or degrees of separation. Now, your community is helping you know, achieve what you're looking to do, so so how did you finance it, though? Because you said land contract and seller finance, like those are things that get tossed around, and you know I've used both of them and they're great, but like what exactly does that mean to the guy that's looking to say, like, hey, I got 10 grand, but like, then what?
Speaker 2:Yeah, so I mean to be honest, like you said, you put yourself out there. The biggest thing is, in my opinion, is making connections. So, like you said, tell people that you're interested in buying real estate and then I don't think there's ever been anyone that I've ever talked to about any deal, uh, whether I was interested in it or not, that I haven't asked if they would be willing to sell or finance, because, because obviously that's just the easiest way to go right, um, and then, and then you have the ability to, from an investment standpoint, from an investor standpoint, to structure it in a way that kind of benefits you, if you know, if, if they go for that, um, but yeah, I mean, so we wound up getting the capital. So my brother and I wound up getting capital. Actually, our sister had cancer and she wasn't passing away and so we wound up leaving some, or she left some money from us um or to us, um, so we we had about 44 grand and, uh, through bigger pockets, um, I'm sure most people have heard of that by now, but bigger pockets was pretty in its infancy back in 2015, 2016.
Speaker 2:But through BiggerPockets, we had met John, who we partnered with, and John is originally from Wisconsin but lives out in Vegas, and so we pooled our money together. We basically had $88,000. And we just said, hey, how can we go out and get properties? So I started with Facebook, I started getting into REI groups, meeting people, talking to realtors who are also investors, so on and so forth, and eventually a lot of people talk about that synergistic effect, like, hey, once you close that first deal, the next deals will will come subsequently. And, honestly, like that's how it was for us.
Speaker 2:I mean, we closed that first deal in November and, like I said, by May we we had five units and I was really into the thick of it. You know managing the properties my brother doesn't live in Milwaukee, he lives in Michigan. And obviously John, our partner, he lives out in Vegas. So you know, I was building systems, figuring out how to you know manage tenants, how to screen them. You know what needed to be done to you know get the highest rents, like that. But as far as you know, just just being into it, I mean like, like you said, you just you just have to put it out there. I think, like anything else, right, like you, just you just have to put it out there.
Speaker 1:And yeah, you literally and I look at this way the only people that are gonna on that idea or the guy's not doing anything, and you just have to be willing to know that, accept it and realize you wouldn't ask them for financial advice. So don't like listen to any of the hate either. I mean, I'm not saying it doesn't bug you at some point, especially early on, but once you start getting some traction, man that's, you can't even hear that noise, right? So you kind of touched on something that's near and dear to my heart. Right now is operating at the systems, and before we get to that, I just want to. You mentioned the 2% rule. So anybody that's not familiar could you just kind of like briefly describe the 1% or 2% rule and how you were evaluating these deals to see if they made sense?
Speaker 2:yeah. So basically, um, okay, so if you buy a property for a hundred thousand dollars, then roughly you'd want, uh, two percent of that in monthly rent. Um, so in milwaukee we were able to, like I said, we were getting fifteen hundred dollars, um, on an eighty88,000 property. We had roughly a little over a hundred thousand into it, so that was like a 1.5%. Another property we had purchased for, like I said, I think all in we were 30 grand. So we were renting that out for 900 a month. We were renting that out for 900 a month. So obviously that was a 3% rule in that case.
Speaker 1:Was that a lower class area? Was that getting close to that D area?
Speaker 2:No, that was actually all. The properties that I'm referring to were, I would say, within like two miles of each other. All I would say C neighborhood.
Speaker 1:Yeah, it's easy to look back now, but there's a lot of properties I passed on that would have meant that like one to one and a half percent role that I'm like no, no, no, and now I'm like geez, if I would have bought those Right. But you know, again looking back, it looks a lot better from this vantage point than at the time Um, because I was working off the 2% rule also. And that then leads me into the next thing is like you're sitting there looking at these things based off what they're either currently producing or the pro forma, so to speak. But once you get in there and you just mentioned systems and operating and this is what I was saying is near and dear to my heart right now is because finding the deal at first that's like the first mountain and then the second mountain is actually operating the deal.
Speaker 1:And whether it's a your first rental property or what I'm dealing with right now is a storage facility that we bought that has a I say big, but it's not comparatively speaking but like a lot of parking, outdoor parking. So the operation side of this deal, finding it was one thing, but now like operating it and operating it efficiently and undoing the years of just mess is a whole different thing. So what kind of systems and procedures did you set up or have you been utilizing and I don't know if you're still self-managing. I know you mentioned you sold some of your stuff, but the guy that gets his first rental five rentals, whatever it is what are some systems that you're utilizing or did utilize to help make that manageable, considering you were the boots on the ground, so to speak, and this guy's in Michigan, this guy's in Wisconsin or Vegas, whatever, what was? What did that look like?
Speaker 2:Yeah, so having it. So first things first, if you're going to manage your properties, you have to treat it like a business. I think we see a lot of people they say, hey, I'm going to, I'm going to get into real estate, and then what they do is they're just like oh, I'm going to rent to my buddies and oh, well, you know, my mom's friend is having trouble paying rent, but you know, I didn't sign a lease with her because she's my mom's friend and to me you just, you just can't do that. Like you're not running it like a business, you're running it like a hobby. Like you know, my hobbies are playing hockey and golf and going out for runs. So if I half-ass those things, that's not that big of a deal, right, because it's a hobby. But when you start half-assing real estate, in my opinion. So first advice that I get for operating is you really got to treat it like a business. With that being said, I keep spreadsheets, like just in Google sheets, um, so every month tracking, tracking your income and expenses, um, and then you have to manage that. So that first property that we bought, duplex I learned very quickly that when you so, there was always some like snow removal, lawn care, who gets to park in the garage, who has to park on the street there's always some mix of things that was happening, um. So that's kind of why we focused on single family. After that, then you usually get a couple or a single parent with with children and this and that, and there's there's not so much of the the nitpicking stuff, um. But I, as far as operating and managing, I believe if you treat your tenants how you want to be treated, then you're good to go. When you coming, coming from being a firefighter and public service to, you're in that situation where you're running calls and you have to show compassion, um, you have to care for that person. So if you kind of take that into how you're operating, I think people respect you.
Speaker 2:So, for instance, you know I have we all have, you know electricians, plumbers, you know whatever you need, right. So you get a call in the morning saying, hey, I didn't, I didn't have any hot water. When I try to take a shower before work, I made sure that there was a new hot water heater installed. It wasn't just like, well, hey, go. I wasn't telling my plumber hey, just go, put a band-aid on it. No, just give them a new hot water heater. It's gonna cost you know, at the time it was you know a thousand bucks or something to install it and and you know, and then all of a sudden the tenant comes home that evening and they got a new water heater and you know they, they think you're awesome for it.
Speaker 2:I actually had a tenant leave the duplex.
Speaker 2:She moved into one of the single families that we bought and then she moved out of the single family and to this day, like every six months, she calls me and asks if I have any vacancies, because she just appreciated how I was treating her and the types of things that I did as a landlord. So, ultimately, if you treat it like a business, a landlord so ultimately, if you treat it like a business or your family, that's, in my opinion, the you know going deeper into that. You know, if you know a reliable electrician, if you know a reliable plumber, if you know a reliable email, things will take you a long way. So you can. What I always do is I always just basically send those contractors right to the tenant, and they even have a relationship with that tenant then too, and that leaves a lot of headache off of my plate too. Um, and for all the people out there who think that you're going to get the phone call at 2 am for the clogged toilet, like I've never had that happen.
Speaker 1:Um, my tenants also, you know, like the fire when you're at work you got to deal with that but not at home for your own property.
Speaker 3:Yeah.
Speaker 2:Well, and like I think too, like the way you train your tenants too, like if you, just if you kind of say, hey, just like you go to work from nine to five, my business hours are, you know, nine to five.
Speaker 2:If it's an emergency, then obviously you know you can get a hold of me. Um, but then another thing I've done and I've I've kept it like this this is probably been going on about five years is, uh, keeping my phone on do not disturb, and only like answering when I need to. Um, because obviously you got group chats with your buddies, you got your wife texting you. Now all of a sudden the tenant's texting you and I just felt like I was constantly on my phone and I can say, even with that advice, I've never missed out on a deal, I've never had some catastrophic issue that's happened. I think people want your attention and nowadays, you know I think people want your attention and nowadays everyone's so in tune to like, oh, if I send him a text he's going to respond right away, but at the end of the day, like you really don't need to, you know.
Speaker 1:So now I would say, pro tip, set up a different phone number for your tenants to have. Don't give them your personal cell phone number. One of my tenants granted, they've been with me like 10 years. At this point they still have it, but that was the last person, except for when we bought a storage facility the previous owner because I had been communicating with him for so long. Whenever it was time to transition, he gave all of the you know 100 plus people my personal cell phone number. So that was awesome.
Speaker 1:So I would just encourage you to, like you know, be accessible during, like you said, business hours and exactly, set up that. Do not disturb, and I can't say anything better than yep, it's how you train them, that's with late fees, that's with everything, and I don't care how you want to sell it to them. Just say like listen, I know you, you deal with me, but like I have a boss, you could use the guy in Vegas, whatever you be. Like hey, my boss, he, I really wanted to waive your late fee Cause I I think you're awesome, but like I'm sorry, like it's not my call, like you, make him that guy Right, if you want to, or you can just be like, listen, no like no and that and that's like.
Speaker 2:Whenever people reached out to me, I was the property manager and I always told them I had to talk to the owner even though I knew in my mind the decision was already made.
Speaker 2:But cause I was the owner, but then I just I said, well, no, sorry, this is what the owners wanted and I'm just the property manager. So it was kind of like don't shoot the messenger type thing, but at the same time I was also the one that was getting the stuff done that they wanted to get done. So they respected me for that and I think I used what is it? Google phone or Google call or whatever? Yeah, google voice.
Speaker 1:I don't even know if they still have that anymore, but there's a bunch of different providers out there for that kind of stuff. How, how were you evaluating what made a quality application? Cause I presume you were doing the the applications and the underwriting of the tenant and there's so many different platforms out there now that, to be fair, like I couldn't even speak to them. That great, because I've been using a property management company which we could also talk about how you have to manage them for the last several years. But, like when I first got started everything, like I was still doing paper applications and like I'm doing open house and you could apply there. Now it's like I send you the link and you can actually tell a lot, I think, about how good of a tenant they're going to be to some extent with if you send them.
Speaker 1:When somebody reaches out, I immediately would send them like almost like an assignment. Like here go here, fill this out Once I have your information, I your application. Go here, fill this out Once I have your information, ie your application, we'll get it started. So then it puts the workload back on them right away and it weeds out people right from the get-go about who can follow instructions, so on and so forth, and if they can do that, they follow the steps that you lay out for them.
Speaker 1:They pay online, you know. So we've established their response of they can follow directions, oh, and they know how to use some sort of technology, which, again, paying online now is a lot more common than it was even just 10 years ago, right? So if they can't even figure that out, I don't want to mess with it, because I'm not meeting up to collect a check. I don't even mail it, all this crap. I just want you to set it up at the beginning of the lease, like we use apartmentscom still. Like boom, I get a notification, it's coming in. If you can't figure that out, I already know you're probably going to be a headache when it comes to rent collection, you know yeah.
Speaker 2:Yeah, the. So the one thing open house that was my first kind of mistake when I had my first unit that I needed to rent out, because you would get 15 people that would hit you up right away. And then you'd show up for these times and out of those 15 people, maybe two showed up if you were lucky. 15 people, maybe two showed up if you were lucky. And so now you're just running back and forth to this property thinking that you've got people lined up and then you just realize, okay, you know they were full of crap. So I started using I believe it was Yahoo and Cozy. I think I've used both of those before and, like you said, you say, okay, if you're interested, please fill out the application here in wisconsin. Uh, I think the max you can charge is like 25 bucks, um, so I think yahoo charged 40.
Speaker 2:So if they filled out the application and they paid their 25, then I would cover the rest to run um the background check and then their credit report, stuff like that, and then what I would do is to not discriminate equal housing, all that stuff is. Let's say, the first tenant came in and they had, or the first applicant came in, they did all their homework but they had an eviction, so basically any negative things on their credit. I would increase the security deposit. So most of the time security deposit is one month's rent. So let's just say rent's a thousand bucks but you have an eviction, so then I'm going to charge you 2000 for your security deposit plus a thousand for that first month's rent. So you have to come up with three grand if you want to rent my unit.
Speaker 1:So you do allow if they've had an eviction.
Speaker 2:Yep. So I mean, and realistically, so what do you look at? Evictions, credit score, income, stuff like that? But what I found is when you do that, the people are just like no, and so it's like okay, well, then you move on to the next one and then usually you know you would get someone. So I've never actually rented to someone that had an eviction, because a lot of the times, let's face it, that that, but that was also a way to to to make it fair across the board.
Speaker 2:Um yeah, Was it discriminating? But then you're almost setting yourself up to get the tenants. You know what I mean.
Speaker 1:Yeah, no, I, I totally hear you. That's I saw. If it's an evict, if you have an eviction, I say in the last 10 years I won't rent, um, but what you're saying makes total sense because you're right and a lot of times they're not going to be truthful. But when you do the I think it's my smart movecom they run the, the background check, the credit check and all that stuff and where it usually shows up, people are always like, oh, my credit's not that good. Like, okay, I get it um, um.
Speaker 1:But when I look at the credit, if it's like you were late on a car payment, you know your victoria's secret credit card is, you know, 90 days, whatever, I take all that into account. But what I'm mainly looking for is judgments from property management companies. Like, if I see a judgment from you know something, something property management, that's where it's. See a judgment from you know something, something property management, that's where it's like, oh, you told me you didn't have an eviction, here's a judgment, that's a problem. Yeah, valities, kiddie peddlers and evictions are like my three that I'm not a big fan of.
Speaker 2:Yeah. So when my wife and I moved into our current residence, where I'm sitting right now, we still rent out our uh old residence in a in the Northwestern part of the city. Uh, we live in the Southeastern part of the city now, but, um, we actually did, uh rent our personal residence to a woman, um who, uh, she actually like lost her home in foreclosure and, um, she had a sister who was also a real estate investor. Um, they both loved the house. Uh, they came, they came with their mom, and so I said, okay, well, it's going to be two times security deposit plus first month's rent and your sister will co-sign. That's, that's the only way I'm going to lease to you. And, uh, she actually, uh, we came to agreement with that. Her sister was cool with co-signing and I told her I mean, I told her sister straight up like, hey, you're in the game too. If your sister's not paying, I'm coming after you, you know? And uh, she's like no, I totally understand. And she lived there for five years, no issues. Um, so that's that's.
Speaker 2:The other thing, too is I think we see in our field, people, most people can I shouldn't say most people, but people can be successful after making a mistake. You know what I mean. Like giving people second chances necessarily isn't, you know, the worst thing. At the same token, right now I'm dealing with two properties that I sold about five years ago on land contract and that guy was like we sold it to him 0% down, we were aggressive with the interest rate, he was paying all the way up until this past November and then come to find out, you know, now he's not paying and so we're kind of dealing with that, and then he hasn't kept up the properties and so on and so forth. So while one story is good, the other story might be bad, but that's just part of the game too, you know.
Speaker 1:Yeah, and, to be fair, like I say no to that stuff. But I look at the totality of the applicant because even though I have a property management company, I still review the application before we'll sign the lease and they know what we like and don't like. But it you said a foreclosure, so you don't know. Like you mentioned, your sister had a health problem. Stuff happens in life. If they lose their house due to some, we'll call it extenuating circumstance.
Speaker 1:I'm looking for the person that's like they got the 480 credit score. They're late on this. They were evicted there. They need to move right now. Don't worry, I got the money, I can move in next week. I'm looking for the red flags. I guess I should say the big takeaway is make sure you have a system, you're following it and you just take the emotion out of it. Um, I'm not saying at times you shouldn't, as tyler just said, have your essay, not that kind of, say, my situational awareness, I say, but, um, like the, you need to have a system to evaluate everything so that you can remove emotion. And if you just solely go based on your gut, I mean a lot of times that's right, but at times you can, you know, get blinded by some of it too.
Speaker 2:So anyways, I think, not to cut you off, but just for your listeners too, I mean. So taking emotions out of it is huge. You want to manage a property on emotion, and then the thing too that I think is good for a newer investor to understand is to manage that first property Because, like you said, you're now with a property management company, but how do you know what they're supposed to be doing? You've never managed your property yourself, so I've never had a property management company. But if I did have a property management company and they weren't meeting all the criteria that I was meeting, then I would, you know, be able to fire them essentially and and find someone else.
Speaker 2:If you don't even know what systems you need to have in place, then how are you going to know if your property management isn't taking advantage of you? So that would just be one thing that I would advise you know, treat it like a business, operate it. You know, even for six months you'll be able to figure out how it should be done and then find someone that's going to do it 85% as well as you are, cause, let's face it, no property management company is going to do it as good as you are, because they're just not, they don't have the investment in it, so, but I do believe that that's that everyone that's getting involved should at least have a good grasp of that, because that can definitely take a chunk of your cashflow away.
Speaker 3:So yeah, and I think so. You've mentioned a little bit too that you divested a lot of your portfolio recently, and I'm guessing, with partnerships and things that change, it's if you're not equally yoked, things are going to start to crack and the partnership no longer works. So for me, I owned properties in the early 2000s with two of my best friends. We divested. Luckily it wasn't a big deal, just our lives had changed. We went from single three of us as single guys to we were all married. One of them started having kids, the other two were trying to have kids, and it doesn't have to be that, but anything. When things start to change and then the relationship becomes unequally yoked, then it no longer makes sense. I'm curious did life just happen? Did things become unequally yoked towards like, hey, let's go ahead and divest so we can all kind of do what we need to do? Um, what, in your opinion? What necessitated that change?
Speaker 2:Yeah, so it was a. It was a good uh, I would say it was a good mix of a lot of different things. So we so we had COVID and we had uh so coming so dealing with c neighborhood properties. Um, we had tenants who weren't able to go to work because of colvin and then, and then we would wind up getting, like six months from, from the neighborhood services or whoever sent, like the COVID check because they were able to verify like hey, we, we couldn't go to work for this time. So so there was that and obviously, like for me and my family, like our lives didn't change, my, my wife is also on the Milwaukee fire department Um, so we were going to work, we were going to the grocery store, we were around sick people, um, so it was very tough to wrap my head around, like what is exactly going on?
Speaker 2:Like we're literally stuff shut down, my tenants can't go, like how long is this going to go on, right? So so there was that, coupled with the rising home prices, I mean every property so purchased for 88, sold for 160, purchased for 35, sold for 60, purchased for 35, sold for 100. I mean that's kind of the margins we were looking at, and so it was kind of, it was those two things. And then, like you said, it was I'm the boots on the ground. I'm quote unquote 100% of the operating for which was we kept. If we kept, uh, increasing our portfolio, you know, if we kept buying properties, I was fine doing that.
Speaker 2:My brother and I we had exhausted our capital in these properties, so I was relying on, you know, um, our investor, uh, john from ve, and you know he was just not in the same, he didn't have the same idea. He was, he was starting to get more into other investments and and so on and so forth. And so it was just one of those things where, collectively, I was kind of like hey, guys, we should go this route and keep moving forward. And you know, we had an LLC, maybe we could get some lending because we've just done everything on cash. You know, maybe we could take some of these properties and get a line of credit and then use that line of credit for down, you know, start to get a little creative with it, and it just I just wasn't getting the enthusiasm, in a sense, that I would have liked to, um, from my partners.
Speaker 2:So then it was kind of like, okay, well, I'm not, I just don't want to sit stagnant and then keep managing this stuff in an uncertain time, you know, and and not really know, like, what the next step is. So, um, you know, we just decided like, hey, maybe we could, we should sell these. And, um, you know, we just decided like, hey, maybe we should sell these. And you know, we obviously, you know, did very well with the partnership, as a matter of fact, and I still have a relationship with my brother, I still have a relationship with so both of their names are John too, so I have a relationship with both Johns, john too, so I have a relationship with both Johns. But, yeah, so it's not. You know, maybe something would happen down the road where you know Vegas, john and I, you know, partner up again. But as of right now, it's just kind of like I'm trying to really find the focus on myself, the focus on myself.
Speaker 2:Like I said, I still have the property that my wife purchased. So she got on the job when she was 18 years old, basically bought a house when she was like 20. So that house we have rented out right now, and then we actually also went in, her and I with her parents on a property up in Northern Wisconsin that we actually run as Airbnb up in Monaco, so that's kind of our latest thing. So, while I divested in one area, I kind of, you know, relocated to, you know stuff that's a little bit more personal and stuff that, like the property up north. You know we don't ever plan on selling that. That's just going to be something that the kids will be able to have and something somewhere for us to go to as well, um, but that's a whole you know different animal, which is also exciting to be a host versus being a landlord, um, to different animals.
Speaker 1:There too 100% agree on that one. Okay, well, so you basically just shifted gears and it's one of those things like you learned the skill sets of underwriting deals, managing deals. So, whether it is a rental property that you had with other investors or it's a portfolio, you're looking to now go out and build more for yourself and your wife, or whatnot like you you know the metaphor like you learn how to fish type thing.
Speaker 1:So like, now you have that skill set, you can go out there and, depending on what your goals are, um, you can kind of utilize those. Because I look at it this way, there's times I'm like man, I wish I wouldn't have sold this or this. But you know like, if I think about if I would have held a couple of the properties I sold before COVID, if I would have held them until after COVID dude, game changer, right, but you don't know that, and I try to not sit there and just look in the rear view mirror type thing. But they always say that's clearer than the windshield, which is super true.
Speaker 1:And at the time they were doing rent moratoriums, like there was a lot of unknown, and you know like, anyways, you don't know what you don't know at the time. So I wish I would have held on, but I sold them, rolled the cash into some other stuff and it's just different. You know like, so now I'm lending, so now we're doing this, like it's just other stuff, but I try not to get too hung up on it. So, is your goal moving forward? Do you think to move more towards the hospitality space? Basically Do the Airbnb model, or was that just like a one and done? Or is your goal to build up um, uh, you know, c class property cashflow portfolio in Milwaukee?
Speaker 2:Yeah, so that's kind of it's. It's funny because I I say that if you have limited funds, you could make basically anything work, Like you could buy anything and make it work. I truly feel that the skills that you gain just from operating real estate can go a long way. So right now, northern Wisconsin, there's a need for rental properties. I actually had a 23 unit under contract, um, and I could not find financing. I I tried locally up in northern wisconsin, tried local milwaukee, um, and no one, because it was a. It was a town of 2500 people, um, but this, but this apartment complex was 100% rented, with like a list of 15 people that were looking. I had all the projections, everything presented to 15 different people. I had to get private funding all of this stuff and no one wanted to touch it.
Speaker 2:And I'm talking to people up there and I know, because I have an Airbnb 45 minutes from this town, that a guy literally stayed at my Airbnb because he was trying to find his daughter somewhere to rent, because she was living with her grandma in a 55 plus community and she could only be there for like another month, and so he had to go up there and like literally scour the newspaper, like drive around, you know, go up there and like literally scour the newspaper, like drive around trying, you know, and, and so I was just kind of floored by the fact that I couldn't get that deal done, um and that, and that really kind of kicked me down a couple of rungs, so to speak, in the in. As far as syndication, um was concerned, um, and at that I think it was, was it was about a year before, that is, when we had purchased the Airbnb, and I purchased that as an Airbnb, but ultimately, like I said, that's kind of like a family retreat. My in-laws, they go up there once in May and once in October. It was kind of. I told my wife that I really like that was probably the best investment I've ever made, just because I know that her parents always wanted a place on water and now they have a place on water, and so it's not like it's yeah, it's not like it's making a ton of money but it's paying for itself. So, and then we're bringing the family. Like, we're bringing our family uh, my wife and the kids up there at the end of August, right before school starts. So it'll be cool to uh, yeah, take, take our kids fishing and, you know, show them around. They actually haven't been up there. We've owned it for a couple years now and just just the summer. So I mean we're already getting bookings for summer of 2026, so that's so. That's just the way it goes. So we don't take away from potential income just to go out there for the family until it's paid off. So we're going to go with that. But as far as you know, moving forward, you know it's weird.
Speaker 2:I've been looking at a bunch of different things. The hospitality is interesting Right now I'm actually looking at. So we're technically purchase the lot creatively via the trailer park community, which is probably an uphill battle or move it's not really a trailer anymore, but move that property to stay on the same lake, but to a lot that's. There's a couple of lots that are for sale on the lake, like basically around the corner. Couple lots that are for sale, um, on the lake, like basically around the corner, um, but it's been updated quite a bit that I don't know if it's technically a trailer anymore that you can move. I mean it's. We got a single car garage. There's an, you know it's technically three bedrooms, not two yeah, for us if it's like tied down, like on a foundation.
Speaker 1:Then it's like financeable, gets treated like real property and not with a title. Yeah, I don't know the intricacies of it was in or whatnot yeah.
Speaker 2:So here it's just a title. So so now another property that I financed by land contract to. So and my, my in-law, found that on Facebook and I you, I actually used the the. So the price that she wanted was fair for the income that it was generating via Airbnb. So with that knowledge, and then the knowledge that I basically like it had to be an all cash deal, I explained to her like hey, we'd be crazy to come up with 185 000 in cash, but we can come up with 65 000 in cash if you can finance the rest, but the bank won't go finance it. And then she's like well, talk to the bank that financed it for me. So I called them up, I even emailed correspondent and then so I I sent that to her like hey's, like hey, they're not doing financing on on trailers anymore. So she was kind of like, okay, well, since you guys are willing to pay roughly what I'm asking for it, yeah, sure, I'll finance the rest for you.
Speaker 1:Your price, my terms.
Speaker 2:Yeah, so, yeah, so, ideally, if somehow I can get this property on land whether it's the land that it's currently on or a different lot then that increases that property significantly up there. I mean, you're talking it's probably worth 350 to 400 000 at that point, um, so it's, it's a play that would be like huge for us as far as um. I mean, we'd probably have instant equity of a hundred to 150,000, um just by owning the land, because then I could go to any bank and finance it, pay off the land contract, put a mortgage on it, um, and be done with it.
Speaker 1:So, um so what I'm hearing you say is we're going to have to have you back on here to talk about land contracts and your new Airbnb venture at the lake. But we're coming up on time and I just wanted to see if there's anything we want to chat about real quick before we have to wrap it up. Is there any books or podcasts that you recommend? They've been influential in your like your journey, if you will. Maybe for those folks just getting started or looking to get a little direction, so the podcast I listen to religiously is Real AF with Andy Frazella.
Speaker 2:He is, I mean it's. It's. It covers politics, um, it covers business, um, I know he's gonna get back to mfceo, which is where I originated that was my favorite one, okay yeah.
Speaker 2:So apparently he keeps hinting like he's gonna drop it, I think, sometime this summer. Um, that is like whether you want to do life. I feel is can give you direction and can kind of give you a kick in the ass too, if you need it, um to to just go out there and get it. Uh, let me, there's I. I just look, I mean there's, there's so many leaders eat last was a great one. Um, I don't know if, if, like where you are um, a lot of the times our lieutenants and captains will eat last and I always joke with them about it and uh, then you realize okay, it's just, you know that's something that comes from the military and uh, that that was a great book.
Speaker 1:Um, but uh, yeah we do that, and then the other rule on my shift is the ambo crew eats first now if they haven't been back for three hours. That's something we still stick with, so yeah but other than that that's.
Speaker 2:I mean, those are really the only, that's really the only podcast that I really listen to.
Speaker 1:Bigger podcast without saying ours Number one. Andy second Got it. No yeah, I was listening to Andy's this morning at the gym so I always like it. I personally like the MFCO project better than some of the political tirades, but hey, there's always little nuggets in there about business which I really enjoy, and I just like it that he doesn't have to answer anybody and that comes across in his messages.
Speaker 2:Yes, exactly, and that is huge to be able to just speak your mind.
Speaker 1:Tyler you have anything.
Speaker 3:No, I was. I mean, we all. I love andy too. It was funny. I was just thinking I love the one that he just did with billy gene because he doesn't have to answer anybody and they just had a real conversation, like two friends having a real conversation, and I'm like dude, this is like I think our whole country could benefit from just having authentic conversations like that, to be honest, because at the end of the they're still friends. They had differing views on a few things. Is that the AI one? It was AI. It was. That's the one.
Speaker 1:I think I started today.
Speaker 2:Yeah, the end gets pretty spicy.
Speaker 2:Yeah because Billy's African-American, as am I, but I I feel like I was standing more with andy at the end of that one, um, but but his buddy wasn't, and I didn't get to this part yet. Yeah, so it's, it's, it's spicy and not like they were arguing, but just it was good and at the end of the day, the crazy thing which, again, maybe you don't like the political stuff but you can take from that is like hey, there was two people that had differing opinions and they both acknowledge each other's opinions without calling them names or you know all the time yeah, it was respectful.
Speaker 3:You could tell they were on the opposite side and like dj was kind of in the middle I feel like. But like I was, like, oh, we can actually talk about her yeah, no, no to your point.
Speaker 1:Man like you can have differing opinions and still be friends, which I think sometimes people need reminded of. It's not a all or nothing approach, but that's a whole nother podcast. So, mike, if somebody wants to connect with you, they're in milwaukee, wisconsin, up in that neck of the woods. Uh, where should they reach out to you, um, or follow you?
Speaker 2:uh. So I'm on facebook. Uh, bretna capital is uh like kind of my business page. Otherwise, mike Lowry, you can look me up on Facebook too. It's global, so we're open to the world, to the public. I'm on Instagram a little bit.
Speaker 2:I'll throw I try to throw like little nuggets and reels whenever there's something on my mind, a lot of the times real estate investing related, I'll throw something out there and then, yeah, if anyone's looking to buy or sell in the Milwaukee markets I'm also a licensed realtor I don't won't take advantage of you. I'm in a unique situation where some realtors that hear this will probably get a little like some full time realtors will probably get a little irritated that I'm saying this. But real estate in that form doesn't put money on or doesn't put food on the table for my kids. That's what the fire department does. So I will be patient and listen to what you want to get done in real estate and truly assist you in in helping that. Sometimes I feel like, uh, consumers can be a little bit swayed um, and and stuff can be kind of withheld um from the consumer in in that regard. So, um, I just like to do everything with You're a transparent, investor friendly agent.
Speaker 1:Correct Out there for you.
Speaker 2:There you go, you said it better than I did.
Speaker 1:All right, Mike. Well, it's been good having you on and look forward to having you back. Talk about land contracts and mobile homes at the lake.
Speaker 3:Yeah, for sure. Thanks, Mike.
Speaker 1:Yeah.