[0:01:34] Mike’s Passion
There’s more to life than just money. Money is worth nothing if you’re dissatisfied with your quality of life, your health, or your mental state. Mike made his first quarter of a million when he was 19. He’s been in many different businesses but real estate is his core. Commercial real estate is a little-talked-about niche, yet it has a great deal of opportunity.
[0:05:07] How He Got Started
When his dad went bankrupt, Mike went from living a nice life to worrying about food and struggling to fend for himself. He got his real estate license at 18 and worked for a one-man genius in downtown LA where he learned trade secrets. Ownership information for commercial real estate was hard to come by and it wasn’t easy for a Middle-Eastern-looking guy to go door to door looking for deals. Using telemarketing, he closed several deals before striking out on his own.
[0:11:11] Career Journey
Mike lost money trying to create his dream technology company. He joined a friend’s family business where he made good money selling patio heaters. Seven years later, another opportunity came up in real estate. Unlike the naïve 20-year-old of before, this time he was wiser and more knowledgeable about entrepreneurship–logistics, manufacturing, design, customer service, litigation, financing, accounting, you name it. To run a company, you need the right education and that’s what Mike is trying to provide.
[0:16:07] Business Goals
While working as a partner at a real estate brokerage, Mike was introduced to a new marketing concept which he combined with his prospecting technology. Today, his marketing company solicits off-market property owners to generate and pre-qualify deals. MTIP (Make the Impossible Possible) has offices in LA, New York and Miami. BroadBridge is a commercial real estate acquisitions fund, founded in 2014. Mike is passionate about helping others to build generational wealth.
[0:21:10] MTIP University
The whole purpose of making money is to share it. Mike created a course on the LightSpeed platform to teach the ins and outs of commercial real estate–how to get started, what you need to get started, etc. The course includes content for beginner and advanced levels. Mike describes different types of players in the industry–brokers, flippers, developers and syndicators/ arbiters. Arbitrage can be low maintenance and very lucrative.
[0:26:13] Know the Basics
Mike teaches how to manage credit. He reveals credit card tips that can help improve your credit score, but be careful–credit card debt requires discipline. He was 18 when he learned his first lesson on how to bump up his credit score. Unlike credit cards, charge cards hold you accountable by making you pay the full amount. If you have bad credit, you can still make money doing arbitrage with minimal risk. Becoming a real estate agent is probably the easiest way to get into the industry but there is no guidance after you get your license.
[0:34:53] Mike’s Method
With his amazing marketing platform, Mike finds deals all over the country and generates leads. Depending on various factors, they could: broker a deal, acquire the property outright, or syndicate the acquisition. Another option is to become co-owner of the property. Finding sellers or assets is more important for the business than finding buyers. Mike avoids distressed sellers, so he has more flexibility to structure deals to his advantage. He doesn’t argue over price–he argues over deal terms.
[0:40:49] You Don’t Need Money to Get Started
You can buy and own real estate with no money–the key is to find good deals. Mike talks about three methods of valuing property. One of the steps in his process is called CUE: comping, underwriting and evaluating. A broker opinion is akin to a basic report, where you consider recent transactions in the market. The comp approach is used for residential while an income approach is more favorable for commercial property. Most sellers try to avoid capital gains tax by buying another property and taking advantage of the 1031 tax-deferred exchange.
The first step is getting leads, the second step is structuring a deal, the third step is selling, and Mike discusses creative financing and various methods of selling. Did you know you can depreciate a building, enjoy the cashflow but paying zero taxes on it? Real estate appreciation happens when you raise rents or decrease your expenses, or if the market value goes up. Brad shares what he experienced before and after the last financial market collapse. Asset appreciation should not be your sole reason for taking out a mortgage.
[0:52:28] Market Outlook
Mike believes there is saturation in the residential market and prices will slow down. There is a huge demand for commercial and industrial real estate. E-commerce businesses are looking for warehousing space, so you can make money erecting warehouse space to rent or doing third party logistics.
[0:56:23] Cash on Cash
Banks could refuse to underwrite a deal if they think the building’s vacancy rate is too high. Mike explains how to calculate cash on cash. People should evaluate a deal based on the cash on cash return. Making a higher down payment translates to a lower return on investment. If you’re an investor who knows nothing about real estate, a five-year return is a fantastic deal. Mike will bend over backwards to help anyone who’s motivated and hungry to learn how to grow in the business.
[1:02:46] Invest for Generational Wealth
The reason people go broke when they win lotteries is they use the lump sum to make lifestyle changes. Brad illustrates how someone would be better off investing their lump sum to earn a lifelong return. If you make the right investment, your rate of return will increase over time. Investing in houses is okay but Mike gives six reasons why commercial property is better. You can begin doing things differently today–you’re never too old or too young to start investing wisely.