WS1856 Exploring The Future of Real Estate: Innovation and Insights | Mike Strodtman

Discover the captivating world of real estate investing with Mike Strodtman, the visionary behind Blue Sky's Equity. From his early days in city planning to his current triumphs in the real estate industry, Strodtman shares his inspiring journey and reveals the transformative potential of financial literacy and property investment.

Join us as we delve into the intricacies of raising capital in today's market, equipping you with the tools to overcome these challenges. Strodtman imparts invaluable wisdom and strategies for investor education, leaving you motivated and enlightened. Our discussions also explore market selection, tax advantages, and risk management in real estate, with convenient webinars condensing these complex topics into concise 45-minute sessions to keep you ahead of the game.

Strodtman's dedication to community and education is contagious. Whether he's optimizing his health and performance through personal and professional metrics or prioritizing financial literacy, his enthusiasm is palpable. We also uncover his recent venture into a different asset class and gain priceless insights on how you can follow suit. Remember, real estate is a thrilling journey, and we're here to be your trusted guide every step of the way. Embrace the adventure!
 


Don't miss out on the opportunity to connect with Mike  Strodtman! Give him a call at 218-255-5651  to start your real estate journey today. For more information and resources, visit his website at https://blueskiesequity.com/

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Transcript

00:00 - Mike Strodtman (Guest)
And again, I love educating. You know people coming in fresh into this industry, being able to work with them. You know we are time is time is something we only have, we all only have so much of and that can be difficult. But I think you know financial literacy is so important and you know you don't you don't have to have a lot of units. You know if you can get a few and start at that step, you're going to get the bug and want to do more but to but to educate them on taking that first step with financial freedom through real estate, even if it's on their own with one or two rentals, is is important and can be life changing for them. 

00:40 - Whitney Sewell (Host)
This is your daily real estate syndication show. I'm your host, whitney Sewell. Today, our guest is Mike Strodemann. He's the founder and president of Blue Sky's Equity. Been investing in real estate since 2009. 

00:51
Passion for real estate developed during graduate school and masters in urban and regional studies, and he started his career as a city planner and he's going to talk about that today and really how that's that's helped them. I think in a number of ways, but he figured out he's on the wrong side of the table and he's going to tell you about you know why that is. He's going to share some tips about working with a city planner that I know. If you are looking at developing anything a piece of land or building or changing anything about it, that's going to be helpful for you and he's even before that. He's going to talk about some ways that they are connecting with investors and educating their investors to be able to raise more money but also just have a more educated investor base and that's going to help you whether you're active or passive. 

01:44
Mike, welcome to the show. Honored to have you on I know you and I connected years ago, I think and honored to connect here again and talk about some of your skillsets that I know are going to help the listeners Today and maybe even some ways you all are pivoting in the in your real estate business that I think are maybe wise and maybe a way to man do some deals. So looking forward to the conversation. Mike, what were you doing before real estate and why? Why transition into into commercial real estate? 

02:14 - Mike Strodtman (Guest)
Yeah, thank you, Whitney. Like you said, it has been a five or six years since we saw each other at the last real estate conference, but I look forward to seeing you at some here in the near future. But yeah, you know, prior to real estate, I was a city planner, so I always enjoyed city planning. I ended up going to grad school and wanted to be a city planner so I could be involved in, you know, in all aspects of development. But you know, you quickly realized that you are on the wrong side of the table at that point. It's great working with developers, seeing what they're working on, but but when you actually want to, you know, be in, in and around it and doing it, you realize that you are on the wrong side of that table. 

02:58
So 2009 began buying real estate, you know, did a lot of people started doing that? Single family, small multis and it was great, you know, set a goal, you know, as you hear a lot really on you buy 10 and get them paid off. You can be financially free. But you know it didn't take long to blow through that goal a couple of times. So pivoted to multifamily real estate and also looking at industrial properties now too. So, with everything that's kind of going on in the market, we've been starting to look at industrial properties. Yeah, yeah, no doubt. 

03:33 - Whitney Sewell (Host)
I want to talk about that a little bit and maybe you know about the pivot there and that decision. But I know right now is a difficult time to raise capital right and are more difficult I keep hearing it from a number of operators right Especially if they have deals or funds right now. It's like man, it's slower, you know, than ever and you know it's a way that you all have you know or you've done recently done well at or in growing, and so let's dive into that a little bit and speak of you know, maybe about how you all have been successful with that recently and some tactics right that the listeners could put in place as well. Yeah, I know your spot on. 

04:13 - Mike Strodtman (Guest)
It has been difficult. There's a number of people raising money right now and and what they thought they could raise and or had been raising in the past is definitely changed to what they're able to do today. You see a lot more teams coming together to raise capital for us. You know it's amazing. A number of people you talk to and they ask what you do and you explain it to them and they haven't heard of that. And you know they also wonder why they haven't been educated and brought up to speed as to the ability to invest in real estate and and utilizing a self directed IRA. 

04:50
So we have really been working hard at being able to put out content and information about educating them on what is it? How can we do this, how do you do this? What is a GP, lp? And then accredited and sophisticated and what does that mean? And I don't know. 

05:10
So just continually providing information to them about the various aspects of syndication and how it all works and their ability to look outside of a traditional investments that we've all been educated on, but to educate them on other opportunities that are out there that we really don't see. You're not going to read in the newspaper. So we've been putting together a lot of content emailing out. We've also been doing some webinars and having people join us and watch them and we record them. So even if people aren't able to be there for that live webinar and ask questions right there, we do have the ability to record it and put that out for them so they can get that series. And it's just going to be breaking down the various aspects so that they can go back and watch and rewatch and then do some additional looking on their own, but to give them the basics and the high level 30,000 foot view of syndications and what is possible. 

06:13 - Whitney Sewell (Host)
Yeah, I love that, because if people are confused, their answer is going to be no, yes, they're not going to invest if they're not pretty confident in what they're investing or at least have some basic understanding and are more times than not. Could you elaborate maybe on what some of the topics are that you all are doing webinars on, and I think even the listeners as they are trying to raise money. Sometimes it can feel difficult to think of these things, or even we think well, everybody knows what this is and it's not really the case right often. So maybe just elaborate on some of the topics you all are focusing on to educate your investors around. 

06:56 - Mike Strodtman (Guest)
Yeah, we're going to start off with 101 basics of breaking down a syndication. And started off with what is a syndication? We're talking about the pooling of resources, both the funds and the team, to be able to look at the different markets. Talk about asset management, the financing, just all the pieces that go into putting together a good syndication, and that it is a team effort. And how can they invest? Are there tax advantages? Obviously that's going to vary person to person, situation to situation. But to have them look and think of it that way, and even talking to the people that are doing real estate on their own maybe they're doing smaller items and things on their own, but the ways for them to be able to reframe it and look at tax advantages for example, cost of irrigation, if they're doing something large enough that qualifies for cost segregation how powerful that can be for them too and then breaking down the returns. 

08:05
Sometimes they want to know when? What is your business plan? Is this a five-year hold? I mean, a lot of times I think, well, if I'm investing in this, this is forever correct and not always the case. Some syndicators will structure it and it'll be a long-term hold and there are investors that want that they're not worried about every five years having to find a new deal or sponsor to invest in, but the next ones want to be able to turn that money over. So just kind of talking about all those aspects of it and then, you know, obviously talking about the risks that are in real estate. There's obviously a risk in anything and real estate is not a void of that. But the track record and explaining the track record of real estate and how it's been successful for years. 

08:58 - Whitney Sewell (Host)
Yeah, no, those are some great topics. Or just to think through there, I think you know any of us that are working with investors. It can be so beneficial to create a library, like you're talking about, and so are these. You know these webinars. Would you say it's like a five minute conversation or it's like a 35 or an hour you know long conversation. How do you all normally structure that? 

09:20 - Mike Strodtman (Guest)
Yeah, they're typically about 45 minutes. We want to keep them, provide enough content within them, but then keep them short enough too. So, yeah, like the breaking down, the first one we're going to do you know that's actually going to be this week and then we'll do a few more after that, but there'll be about 45 minutes but also talking about like another one will be market selection. You know why do you choose a market, or you know a neighborhood over another neighborhood, and the importance of you know the boots on the ground and knowing that neighborhood, knowing the market, job growth, crime, et cetera, and the importance of all that before you know just buying something in any location. 

10:01 - Whitney Sewell (Host)
How do you or what kind of response have you received? You know, maybe already, I know your first one's this week, or maybe how do you plan to track responses, or what does that look like? Or maybe a system you all use? 

10:13 - Mike Strodtman (Guest)
Yeah, so the response has been good and the reason they all came out or we thought about this was because of conversations that I've had with investors that have contacted me. They said hey, mike, I know what you do in real estate and we want to be involved, but we don't know anything about this. So are you and the one on one phone calls, which are great. I love it. I love taking the time and explaining it with them, not wanting to make a larger reach and, like you said, having that library so someone can always go back definitely take the time to meet with them and talk with them, but also to be able to give them the recordings for that. And yeah, we definitely track through our CRM the number of interested people in there. 

11:01
We try to get it posted on Facebook and LinkedIn of these upcoming webinars, but with everybody's having a busy life, the ability to choose 6 am or 6 pm at a certain day doesn't always work. So we just felt that having that webinar and if they sign up for that webinar, we'll definitely be able to send them all the recordings for it what CRM are you all using? We use Active Campaign and it's been. I've enjoyed that for the ability to tag them, where we can see, when they come in, that they are interested in learning more about syndications and to make sure that we're able to provide them a lot of content, both webinar and just written material that's created. We also have on our website the ultimate guide to investing in syndication, where they can begin If I see that they're interested in real estate and wanting to get educated on it, just that we can continue to foster that relationship and give them the knowledge and to know how to look at that as an alternative investment. 

12:09 - Whitney Sewell (Host)
Would you think that these webinars would be better for lead generations, gaining new contacts or maybe converting? Maybe both, I'm sure, but I don't know. Is there a specific focus or a way you all are using it? 

12:26 - Mike Strodtman (Guest)
Yeah, and it's interesting, it's almost like a 50-50 for us. A lot of us, or a lot of the people that I know in our CRM, are still wanting to learn and know about what a syndication is, but also lead generation. Obviously I always wanted to bring more people into the funnel to learn more about it. See what we're up to. But again, education I love educating. Yeah. 

12:53 - Whitney Sewell (Host)
Yeah, a lot of that, I think, comes back to knowing your investors, knowing your investor avatar too. What do you know about your investor base and tracking that? In a way and we try to encourage our team, it's a growing thing all the time what can we be asking investors on all those calls that we can learn more so we can know how to better target marketing materials or just add more value to them, to educate them, like you're talking about, but also to be able to gain more investors? Right? Another new lead gen stuff that we can use this information to know how to focus on finding more investors, because often you may not have another call with that investor for a long time? Right, and so it's helpful to be thinking about that even up front. Have you all done any kind of survey or anything to say to learn more about your investors or anything like that? 

13:46 - Mike Strodtman (Guest)
Yeah, a lot of the surveys that we have done is talking to them to see what their investment wants and needs are how long they would like for a product for a hold period, to see if they're in that five to seven long-term hold. Also wanting to see, obviously, if they're accredited or non-accredited, and definitely wanting to know if there's a specific, if they have a comfort zone with multifamily or if it's an industrial, if they have an idea of where they want to invest their money. Maybe it's because of the education they already have and the knowledge they already have on that. So those are kind of the keys that we look at for surveying. 

14:34 - Whitney Sewell (Host)
Nice. No, it's awesome. A lot of people have never surveyed their investors and I would encourage people to be thoughtful about it, because you may only get one chance for a while. Right, you don't want to do it too often or expect some kind of response, but it can be very helpful, no doubt about it. What about let's? Let's pivot a little bit and talk about how you all pivoted. I want to have a few minutes for you to talk about. You know you're all we're very focused on multifamily of it. Now You're, you have a focus on flex use industrial, you know as well, and so talk to that transition of thinking right a little bit, and maybe why that asset class. 

15:13 - Mike Strodtman (Guest)
Yeah, yeah, as we've all seen, you know the the multifamily is facing some challenges, not everywhere, but looking at the, the cost of the product, for interest rates, it's been a lot harder, you know, for for sellers to recognize. You know the difference in interest rates today and and you know they're what they're wanting to get for for their property at sale. So, after underwriting and underwriting and not finding too many deals, I was able to to meet with an individual that does flex space, industrial and and and we talked about it for at length. We have been for quite some time and the amount of need that's out there for that right now it's kind of underserved there's, you know the occupancy rates very high and and even some people that I know that rent in that space talking about the difficulty of finding something they need. You know in a location, the size that they need and and the niche for you know something that's 5,000, 8,000, 10,000 square feet, maybe it's 13 they need, but having you know multiple tenants, same building and fitting the box that they need for that and with that need. 

16:34
You know definitely did, definitely did a lot of research and the individuals that we've been working with have been doing it for a while and and and with that, you know, being able to buy these properties day one, as we always want to do, cash flowing, but then being able to look at the, the value add that we can do there in the need to share, if, depending on the previous owner you know, if they just had regular standard leases, trying to convert them over some time to double or triple net leases when, when available, definitely looking at that and then the ability to provide additional income. 

17:12
You know we just like for multifamily, we need to find a way to drive the NOI. But in certain situations where we can find a building on a piece, piece of land where there's opportunity to build additional space, that's been, that's been great, you know, in bringing up that NOI For that another one is like billboard, that's been another space to. Is there an opportunity With this location that there's desired billboard space and being able to put a billboard up in the corner of the property, wherever it might be, to help drive that NOI? 

17:48 - Whitney Sewell (Host)
Awesome, yeah, that's, that's getting creative for sure. Or outside of the multifamily box, right that a lot of us often get stuck in, I think. But speak to, you know educating yourself on a different asset class, or you know, did you bring skill set on the team? You know that somebody else has already been in that space or did you all Just learn somehow? And you know, dive in yourself. What did that look like? 

18:10 - Mike Strodtman (Guest)
Yeah. So the importance there is. You know, whenever you're gonna switch or look at a different asset class, that you partner with individuals that have experienced knowledge and have done it before. It definitely shortens your learning curve and it's important for all of us. So for me, the the Opportunity is to, when we're looking at building additional square feet, is that that opportunity of, with my background of being a city planner and and working with the city, looking at their ordinances, looking at all the requirements, being able to talk that same language with the city planner as to what they're gonna need and and Coordinating that, you know, with an architect or with an engineering firm to see what additional square footage we can put on that property. Um, so that's been great. 

18:58
Obviously, being able to raise some capital to help with that, but then being able to bring asset management and then the ability to work with the city when it comes time to, even even for a billboard. A lot of times you know you can apply, you want to look to do that. They may require a conditional use permit. Well, being through that a lot Again, on the other side of the table, being able to to see what the requirements are, if it can be electronic or if it needs to be just your, your regular, your regular standard billboards, I will say but yeah, all the requirements, size requirements, setback requirements and being able to, to work with and help on that side of things. 

19:40 - Whitney Sewell (Host)
Give us just a tip or two on working with a city planner or working with the city, maybe some what you know from being on the other side of the table right. Give us a couple things that, hey, you know Developers or you know real estate guys make this mistake all the time. They should never say this, or they should do this or have this prepared, or what would you say? 

19:56 - Mike Strodtman (Guest)
You know, number one is is being in their office on day one. You need to, before Before you get too far down the road, go to the city and make sure it's going to work. To go back to the planning days, I can't tell you the number of times a real into my office and say so and so just bought this property and they're going to and you have to look at them and say that is not an allowable use here. Well, I looked at the county and on their tax statement it says one to four units, so they can have four units here. No, that's a tax classification. That's not the zoning. This is a single family zoned area. 

20:42
So work with the city right up front the majority of the time. They're there to help you. They want to see the city grow, but they have an ordinance to follow. So just make sure that what you want to do is allow before where you are and then keep them along on the entire process. 

21:03
There's nothing worse than not hearing from them, for you know, say, 30 or 60 days they come into the plans to say here's my permit or here's my application ready to go to the planning commission. It's like, oh, we've got a few steps we need to work out here. So carry them along, be involved with them, let them be involved. And then, if you do need to go to the planning commission and get approval through the planning and zoning board, make sure you always ask the zoning administrator if he foresees he or she foresees any issue with this becoming approved, so that when you go into that meeting you're not going to be derailed, you know, by the zoning administrator on that project. Granted, there's there's different nuances, that can happen at any public meeting, but but at least to have the backing of the city staff. 

21:56 - Whitney Sewell (Host)
Yeah well, it's some very helpful tips there, no doubt about it. Yeah, I yeah be in the office someday. Why I think that's so wise? Don't make assumptions about what you think you can do with piece of land or building, right? Wow Well, mike, what about any predictions that you might have for the real estate market over the next six to twelve months and how that's affecting you know, the decisions you all are making? 

22:20 - Mike Strodtman (Guest)
Yeah, as I mentioned, you know, looking at multifamily, sadly, I think there's going to be some issues, some headwinds for that, for for some individuals. I hope they're all able to to get through that. So, as I mentioned, just kind of putting a pause on that, you know, with interest rates where they are, it'll be very interesting to see what happens there. I don't foresee there being any major changes, you know, in the near future. But again, it's all things will change at some point. 

22:50
But you know, in the short term, I think the interest rate market that we have is will be here to stay. I think prices, as they already have, will be coming down on these assets, as these sellers realize. You know how the interest rates really change your ability to purchase and at purchase price. But with any cycle, there will always be market, there always be opportunities and we just need to to be consistent and continue to look for opportunities that are out there, because there will be. And consider pivoting yeah, right, that's right, you know and inform those relationship and partnerships so that you can. You've got people to pivot on. Yeah, it's huge. 

23:31 - Whitney Sewell (Host)
What's your best source for meeting new investors right now. 

23:36 - Mike Strodtman (Guest)
Yeah, that is a tough one, you know, definitely being able to get out there and meet people taking in conferences as they come along and being able to do that. But you know, for me I want to find a better way to reach people, to educate them, to find those that do not know about real estate and teach them, not that they need to Investing in real estate is not for all of us but just to educate them on what the opportunity that there is. So, anytime you're in a and if I would love to hear from others too about being able to find that group of individuals that that don't know and how we can reach them, I would I'd like to get better at that myself. 

24:24 - Whitney Sewell (Host)
What's your best advice for passive investors or LPs right now? 

24:29 - Mike Strodtman (Guest)
Definitely you need to know, like and trust them. You know there's things that can happen in markets that are out of our control, but being able to know, like and trust them and to have them at a phone call you know when an issue arise and being able to talk to them is important. So it is definitely time commitment on our part to be able to do that. But you know we are stewards of their money. We have a responsibility to take care of that and I feel it's very important for them to first know you. And if you get to know, like and trust that individual, it just gives you a lot more sense of security. 

25:10 - Whitney Sewell (Host)
What's the most important metrics that you track Could be personally or professionally. 

25:15 - Mike Strodtman (Guest)
Yeah, you know, I definitely am always, you know, wanting to look at the P&L and making sure that all of our projects are doing well. But one thing that I've really gone to focus on probably going back, I think it's been about five years now is I've always wanted to make sure that I work out, and that's sometimes it's easy for that to fall off under the back burner, and so what I did is I started tracking that hard. Every time I worked out, I write it down, I put down the date, I put down what I did and at the end of the year I track all that. So it makes me more accountable for how many days a week that I actually truly do work out what I did. And I go back and I look year to year to make sure that I'm meeting my goals. And if I'm not meeting my goals, I set reminders on my calendar to make sure that I am, that I'm making time for that, because without our health. 

26:18
You know, we have nothing. 

26:19 - Whitney Sewell (Host)
Do you have somebody else that helps hold you accountable for that? 

26:23 - Mike Strodtman (Guest)
You know I don't I do it on my own. I had talked to an individual. We were going to be accountability partners on that. Sadly, that's a long story of how we started, but it kind of fell through. But no, my accountability for myself is having my log and I look at that, having it wrote down. I have no excuse to say, well, maybe I did work out that, so no, it's wrote down, it's tracked and I go back every week and if I miss that week this last week or one time, then this coming week we're going to hit it harder and I just make sure to keep myself accountable. 

27:01 - Whitney Sewell (Host)
Good for you, Mike. How do you like to give back? 

27:05 - Mike Strodtman (Guest)
You know on a couple different folds, and this is something that I'm focusing for and already looking at my goals for 2024. How to strengthen, but you know, here for our community, we have a lot of people that could, that could use some help. We have Opportunities at schools. You know where there's events going on or whatever else, and if they need a T shirt or need something special for an activity, you know, to be able to give some money. We always can send extra money and buy kids their items. 

27:40
I enjoy doing that. You know when I, when I think of our police department and the ability to give bears for them to have in their vehicles, I need to do that again here before 2023 ends, but I like that. Where they're able to go into a bad situation, provide kids with a, with a bear or stuffed animal, something that they can hold on to. Well, that situation arises. So I like doing that and, again, I love educating. 

28:07
You know, people coming in fresh into this, this industry, being able to work with them. You know we are time is. Time is something we only have, we all only have so much of, and that can be difficult. But I think you know financial literacy is so important and you know you don't. You don't have to have a lot of units, you know if you can get a few and start at that step, you're going to get the bug and want to do more. But but to educate them on taking that first step of financial freedom through real estate, even if it's on her own with one or two rentals, is is important and can be life changing for them. 

28:46 - Whitney Sewell (Host)
No doubt about it. Mike, grateful for your time today and to connect again Always a pleasure. Appreciate you sharing some of your tactics on how you all are going to raise more money by investing the time to educate right and you're really helping. You know those investors. Even if they don't invest with you, they're going to learn a lot hopefully and understand you know our business or industry a lot better and be better prepared to make better investments, for sure, and so grateful for you sharing that. Even your thought process. You know pivoting right. You know to a different asset class and diving in there as well. Mike, how can the listeners get in touch with you and learn more about you and those webinars? 

29:24 - Mike Strodtman (Guest)
Yeah, thank you, whitney. So yeah, you can find me at bluesguisequitycom or Mike Strodman on LinkedIn, facebook. Definitely reach out there and I love to get my phone number. It's my phone number is 218-255-5651 and please call. You know, I remember listening to podcasts for 10, 15 years now, whatever. As long as they've been out and and taken advantage of people left their phone number and a number of times that they said nobody called me. I left. You're the only one to call me. So I love talking real estate, I love being able to help out and please reach out throughout any of those means and I love to talk to you. 

30:10 - Speaker 3 (Host)
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