Michael Zuber: Why the Multifamily Reset Is Only in the Third Inning

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0:00 All right, guys. I am excited for this one. One of my favorite channel guests. He's only been on once or twice, but I
0:05 have spoken on stage with this guy multiple times before. One of my good friends, Michael Zuber. I watch this guy
0:12 for all of my economic news can come from him and Ken Maroy. Michael is plugged in, ready to go. I have agreed
0:19 with everything he has ever said about economic takes. In fact, I set all of my
0:24 debt timelines based on everything he said about multif family. We're going to talk economy. We're going to be talking
0:29 uh community building. Some of the stuff that Michael has done is just phenomenal. And I think that you scaled
0:35 your portfolio in arguably one of the most sustainable repeatable ways to end
0:42 up with a truly massive portfolio. It's not a just I'll let you talk about it,
0:49 but my highlight from this is it's it's so simple and repeatable. Anyone could do
0:57 this and build beyond significant wealth. I mean, people can build multi-generational wealth doing exactly
1:03 what you tell them to. And it it is simpler than what I do. And I think what I do is freaking simple. So, Michael, I
1:10 am so excited to have you on the channel. What is What is new with you? I think last time last time you were on, you were living in California. You're
1:17 still the king of Fresno. You're in Vegas now, right? Yeah, we we did buy a primary residence in Vegas. Uh, I got
1:24 tired of all the taxes in California and Gavin Newsome is an evil human being and
1:29 I decided that I was done giving him 12% of my money. Yeah, we've been in Vegas
1:34 or technically Henderson just about almost two years to the day, right? I think July 20th or whatnot will be two
1:42 years to the day. So, yeah, we we now reside in Nevada. I have so many friends
1:48 and investors and actually one of my companies in Henderson, Nevada. Henderson is awesome. I am there all the
1:54 time. If there was anywhere that I lived that was not Dallas, I'd probably move to Henderson. Awesome market, awesome
2:01 place, perfect weather. Yeah. I mean, it's gets a little hot in August. So, we still got our spot in California. We'll
2:07 still spend 6, 8, 10 weeks here when it's 120 degrees. So, we are lucky in that respect. But, yeah. I mean, 10
2:13 months out of the year, Henderson's amazing. The scene in Vegas is awesome. We're foodies and there's literally
2:19 fivestar restaurants everywhere. Not on the strip, right? The the thing about Vegas or Henderson is if you live there,
2:25 you never go to the strip. Never. You avoid it like a plague. I've I'm I'm in
2:30 Vegas maybe once a quarter. You get done with the strip after like trip two. Yeah. Exact Exactly. Exactly. Unless
2:37 there's some big performer. Yeah. Right. Unless there's a huge performer like Jerry Seinfeld or something, we're not
2:42 on the strip. So, no. No. Uh that that makes Well, that is that is really fun. For for those who haven't seen your last
2:49 few episodes, let's let's go back in time just a little bit. What was uh what was your original starting point and the
2:56 why that got you to where you are today? Give us the give us the 30,000 foot view of the Michael Zuber we have. Yeah. So,
3:02 the Michael Zub you have now is somebody who believed in in probably what Gen X and millennials were told, which was go
3:08 to school, get a good job, make a lot of money, climb the corporate ladder, retire at 65. Right? That's who I am. I'm not an entrepreneur like Christian.
3:14 I'm an I'm a wired employee. Beaten. I'm a beaten employee. And you know, I I
3:20 originally thought my wealth was going to come via the stock market. I successfully turned seven grand into
3:25 nearly 200 grand during the dot craze. That's a cool vision. And I remember saying I'm smarter than Warren Buffett.
3:32 And almost to the day of saying that, I got spanked and lost 80% of that. Warren
3:38 heard you. Yeah, Warren heard me. And the mark the market heard me for sure. And I I lost it all and lost it all very
3:43 quickly. That was led to a depression, you know, failure, right? I $200,000 in
3:49 my family is more money than we'd ever seen ever combined, right? I don't come from money. I I you know, I was housing
3:55 insecure. I got a job at 12 under the table to put food in the fridge. So, you know, 200 grand may not be a lot for
4:01 some of you, but it was everything to me at at 30 years old. And to lose that or lose 80% of it was a a huge wakeup call.
4:08 And then I found that purple book that a lot of, you know, my generation found, Rich Dad Poor Dad, and it was eye
4:14 openening. And and again, that that is shocking to say because I have a four-year degree in economics. I went
4:20 back and got an MBA in the evenings. I was an accountant as my first job. And
4:25 this freaking purple book changed my life. I'm like, whoa, whoa. There's like
4:33 what? You can get build wealth this way? But nobody told me. And you know that
4:38 started a journey and and you know some folks come to this like yourself Christian you wanted to build a big portfolio. You know my big audacious
4:46 goal was four single family homes. That's all I wanted four. I thought if I
4:51 had four homes because again my mindset didn't change. My mindset was work till I'm 65 have these four homes that will
4:59 then be paid off and my retirement will be better than anybody I know. That was
5:04 my big audacious goal. Now, by the way, still put you ahead of most people by a
5:09 lot. Oh, by a lot. And again, goal. I would have had the best retirement of anybody I knew at that time just with
5:17 that simple goal. But the thing happens is once you get in and you start learning your market, you
5:22 get a buy box, you start understanding that that that this game we play is nothing more complicated than Monopoly.
5:28 Monopoly is a real game. That that's that's what I played for 20 years. And
5:33 we went very quickly got past 4 and then we got to 10. And then because you kept learning, I went to a Bruce Norris event
5:40 and Bruce Norris said California crash. And I'm like, well, you know what? I got
5:46 a lot of eggs in California. What What is this guy talking about? And oh, by the way, I've already lost I was already
5:51 a millionaire once and I lost it all. What What, you know, what's this all about? And sure enough, he made me
5:58 believe that California is going to have a crash in single family. and I went on a selling spree. So, we sold all of our
6:05 houses, which was eight, not 10, eight houses, and we went to 80 units. Why?
6:10 Because multif family at that time was underpriced by a lot. So, we sold
6:15 overpriced single family homes, moved all of the equity into 80 units, and then the housing crash happened. And
6:21 guess what? Housing prices collapsed. That first house, which I tell people to go look up on Zillow. It's 1818 Norris
6:28 Drive East, 9373, we bought for 107. Less than 3 years
6:33 later, we sold for 264. Quite a bit of appreciation. And we moved all of that
6:38 equity into units that we still own today. And then, oh, by the way, rents went up because everybody was losing
6:44 their homes. So, you know, again, this is just plain monopoly. It was four green houses, one red hotel. We just we
6:49 just went from eight houses to 80 units. And then oh by the way because we were doc at the time we were documenting all
6:55 of this in a blog that was called wealthb buildinging pro. I no longer own the website. People have found the
7:01 copies or whatever out there but you can go find it wealthbuildingpro.com. And then I started raising money. I
7:08 didn't even know that was a thing. Christian I raised like four or five million bucks from friends and family to
7:14 go out and buy foreclosed homes. So we were doing burr and at the time I was
7:19 actually writing on Bigger Pockets. I was a a featured blog post on Bigger Pockets before Brandon and I would write
7:26 about doing what's now called a burr. We would buy a house for 50. I would borrow all the money. Uh I would then repair it
7:33 with our money. Then we flip the financing and we would you could pay the investor back. And you know we we bought
7:41 I don't know I never bothered counting but it's got to be 40 to 50 different properties, houses, duplexes, quads,
7:46 small apartment buildings. During that time, the the portfolio went from, I don't know, 80 to 150, 160. And then out
7:54 of nowhere, the market changed because I was there when Wall Street showed up, right? I remember the day because it
7:59 became a process. On Monday, there was a batch, right? They would load a batch of foreclosers. And then I learned that I
8:05 think banks would would accept 11% off. They wouldn't take 12% off, but they'd take 11. So, I would just write a bunch
8:12 of, you know, I'd see the list Monday. I'd have my offers Tuesday, I'd buy something Friday. That's just the process for years because I had all this
8:19 private money. And then one day the batch didn't show up. I'm like, "What?
8:25 What happened?" Sure enough, next week, nothing. So then I start calling around and I I learn because again, you you buy
8:33 a house every week or every other week for years. You get known. And the guys are telling me that this fund from Wall
8:39 Street is buying all of the properties sight unseen for list price. I'm like,
8:46 they don't know you could buy for 11% off. What are they doing? But they changed the market overnight. They
8:51 bought everything. Like everything. I was like, well, that game's over. Yeah, we were we were building and then we
8:57 went off and did some distress multif family and ultimately got up to 200 units. So, that that's the story. Isn't
9:03 that funny, too? How bigger pockets and Brandon Turner was a big piece of this of just branding the daylights out of
9:09 the Burr method. Even when I started researching real estate, it was like that's just real estate. Like that's
9:15 what you do. Values go up and if you raise money arguably you should probably pay those people a return. So where's
9:21 the return come from? It's from increasing the value of the property, right? The real estate has to buy the real estate. And
9:27 it just become like everyone and their sister's like, "Oh, it's the burr method." I'm like, "No, he But it's also
9:33 just like, you know." Yeah. Just I had beef I had beef with Brandon for years.
9:39 Really? Oh, yeah. And it was a one-sided beef. I He didn't even know who I was. But again, I was a featured blog writer
9:46 for Bigger Pockets. He comes in as an intern, right? His story is I was there. His story is legit. He comes as an
9:52 intern for Jos Dorin and the first project he's given is the blogs, which I'm a member of. And you know, and
9:59 actually I interviewed him on my channel. I think the video is called I Hate Brandon Turner. So we actually went through the beef, him and I live on the
10:05 show. It was kind of fun. And basically what happened is he came in and instituted all of these new rules and
10:11 standards which was his right and he probably should have done. But I didn't like the way it was communicated because
10:17 again what was happening I had a full-time job. I was building a portfolio. I was raising my daughter. I
10:23 was trying to keep my wife happy. And this freaking intern is making my life difficult. And I felt like he was
10:29 picking on me. And I'm like I'm out. I've been writing for Bigger Pockets for two years now. this new freaking intern
10:34 is and it's no fun anymore. I'm out. So, I held that grudge for a decade. It was
10:41 Ryan Paneda that finally stepped in and said, "Zubber, you're being a child. Let me introduce you to him." And uh yeah,
10:46 we had it out. So, I I no longer have an issue, but yeah, I held that grief for a
10:52 long time. That's funny. I didn't know that. Yeah. Yeah. Yeah. But back to the point of Brandon Turner, his unique giftness is branding, right? You know,
10:59 you think about Burr or any of the things that he did at Bigger Pockets, he just makes it he makes a story and it's
11:05 sexy and it's easy. That's the magic of Brandon Turner, right? It takes
11:10 something that has lots of steps. He gets a he gets a little hook like Burr
11:15 and then he just repeats it and it becomes like a verb like you know Xerox or Google or you know something like
11:21 that. So you know he's he is truly gifted at at that. Yeah. Great great storytellers are if you're just
11:28 organically good at telling story that is a a beautiful gift brand. Yep.
11:33 Creative finance space. Pace Morbby is like a no doubt if you look at all the things that he does because he's a huge
11:39 name in the industry. Paces in my opinion by far his best
11:44 gifting. He he does a lot of stuff pretty cool, but his best thing is he can tell a story about anything with a
11:50 relatable analogy and it is unbelievably applicable and palatable. Like I don't
11:56 know if it just flows from him or if he spends a bunch of time just writing and thinking about these things cuz he'll
12:02 he'll pull stuff out. I'm like I'm like that was a better analogy than I could have come up with and it feels like it's always just a tip of his tongue. No, he
12:08 he is he's a unique gift. I I'm lucky enough to know him pretty well and that's just who he is. He has that's a
12:14 god-given talent. Some sometimes you are gifted some things and and that is his and it's so relatable and it's real and
12:22 it doesn't feel it's just Pace has got a unique gift and and lucky enough that he's agreed to come out and talk at our
12:29 Vegas event next year. So, he's going to be a feature. Oh, that'll be a fun one. That'll be a fun one. Yeah. Great
12:35 speaker. Great speaker. Very I remember I had I saw he just spoke at a uh I saw he just spoke at like a um Airbnb event.
12:42 I'm like, "How desperate are you guys if you He's pretty outspoken on hating Airbnb." Yeah. Didn't he just leave the
12:48 business or something? Yeah. Have shortterm anymore. Shows the anti anti-airbn thing as your keynote. That's
12:55 That's when you know you've made it. Yeah. Or when that's when you know as an event you're struggling to get attendees. Like we're going to bring our
13:01 we're going to bring our rivals in. There you go. Very funny. Very funny. One of the things that I have always
13:06 appreciated about you is that you just post crazy consistently. Yeah. And you
13:15 always have a strong opinion what's going on. When I think Michael Zuber's channel, I'm like, this is where I'm
13:22 going to get great real estate news all the time. There's always going to be a
13:27 thought on the economy and what is happening now, which is really helpful. So that that is that is my my use case
13:33 for your channels. I'm like I'm like what is going on? For the last couple years, you've been
13:40 talking about a significant blood bath in multif family. Mhm. I think a lot of
13:47 it's already arrived. I'm seeing it in some of my deals where I'm getting the first few like,
13:53 wow, these feel heavily discounted and people are in a position where they have held off and extended with the bank as
14:01 long as they can. When you see interest rates double or triple like they did, there's this few years of play where you
14:08 really can limp along and negotiate and trade pieces. So, you think it's a lot of people go like, "Oh, it's about to
14:14 hit." And it's like there's a lag from when the pain happens from when it really
14:21 I'm starting to see it today. Is it going to keep getting worse? What What have you been seeing? I I want your
14:26 economic take on multif family. What is happening and what is going to happen? Yeah. So let's be very clear. Let's what
14:33 you and I care about is commercial multif family, right? So this is not office industrial storage, just
14:39 commercial multif family. And I think there's two answers. The first answer is class A. This is where Ken Maroy, Grant
14:46 Cardone, and Jonathan Gray, the real estate guy at Blackstone. I put Jonathan Gray as one of my top four real estate
14:52 guys in the country. Jonathan Gray correctly called about nine months ago now that it's time to get active. Now,
15:00 of course, unless you know who he is, you don't know what that means. That means class A stuff, right? And then if
15:06 you talk to Ken Maroy, which I've lucky enough to do a bunch, and we'll talk to him again on Monday, class A is already
15:11 trading at roughly a 20 to 25% discount. So, if you're playing in that space, if you have the systems, that stuff is
15:19 already discounted and there's not much left, right? 25% in most markets will be
15:24 the the max discount. It's amazing how fast that moves, too. when it's time the
15:29 guys in that space it is a sub one-year all trades and again that stuff trades
15:35 not that stuff never makes it to the MLS never makes it to correlatement class A is the brokers have their rolodex and
15:42 they just call down the list and it typically doesn't go past person five somebody will say yes so that that's why
15:48 that stuff's already trading and the discounts are already in there I believe where most people play and I think you
15:53 and I play class B and class C has just started so if you If you use a baseball
15:58 analogy and let's just assume it's a nine inning game, we might be out of the
16:03 second inning starting the third. So what does that mean? Yeah. So you're starting to see some pain. There are
16:11 some transactions going, but in most markets, in most assets, there's no price discovery. All right. What does
16:17 that mean? In commercial speak, at least in my market, so my market of Fresno, California should be trading at an eight
16:24 or an eight and a half cap. It got down to something in the high fours, which is
16:30 absurd. Today, they're they're being listed at like a five and a half.
16:35 They're not going to sell at a five and a half. This is just some owner who's upside down, who's in a world of pain,
16:41 telling their lender, "I've listed the property. That's all they're doing is they're buying time. There's no chance
16:47 these sell." And again, I say this as a guy who did this before, right? There was a building back in the day uh that
16:54 was listed for 1.44 million. It was 18 units. Why was it listed at 14? Because
16:59 that's what the owner paid for it 5 years ago. And then the bank just gave him another
17:05 year. Gave him another year. But guess what happened? That building got zero love because the owner at the time knew
17:11 he was going to lose it. So he was bleeding it and he became a slum lord. Ultimately the bank went and
17:17 investigated their asset, realized what they had after two years and then foreclosed. They called me because they
17:24 knew I was interested in it. owned other stuff around it and I ended up buying it for 700 grand.
17:31 That stuff's coming. It's coming. And oh, by the way, I got it 100% financed from the lender. I'll
17:38 say that again. I got it for 50% off. 100% financed with the lender. The only
17:45 thing I had to do, Chris, was put $50,000 in their bank, which I would have had to do anyway. And in escrow,
17:52 they just want the deposit. They want the deposits because they wanted to make sure I had skin in the game because I
17:57 was going to use that for repairs. And again, I was taking over a building that I we had probably spend 8 to 12 grand a
18:04 unit just to turn them because they were disgusting. I'm not going to own a slum lord building. So, I would have had that
18:10 money anyway. But that's the stuff that's coming. I know there are be deals being done today. You've done a couple. I would tell you better deals are
18:17 coming. More hair on them are coming. Absolutely believe that. The the fun thing that I have found is the deals
18:23 that we have chose to purchase are all they're they're class B and I
18:29 put them in the B+ range. They're very nice, but they're built in the 2000s. They're Yeah, that's not that's probably
18:34 if you look at a class A builder, you look a lot I think a lot of investors look at this and be like, "That's class A." I'm like, "It's not." No. If you
18:39 look at class A, class A is different. Look at the amenities and Yeah, it's not. But but you know, stuff that has pools, club houses, on-site gyms, like
18:46 solid solid assets. Sure. very significant discount from from where it was trading years ago in a different
18:54 rate environment, it's worth a heck of a lot more. Right now is an awesome time to load up, I think, over the next few
19:01 years. As long as long as you can put in long-term debt, that's the wrinkled. Why are all these people in pain? Is because
19:07 the idiots got one, two, and threeear bridge debt. It's always that people don't real. I've been doing this 30
19:12 years now. It's always the debt that gets you. I'm doing seven and 10year
19:17 fixed rate loans with four to five year yield maintenance. So we can refi these
19:25 around year four or five. So if rates do end up dropping, which I think they will in a 5year period, awesome. We can refi.
19:32 If I'm wrong, which is also fine, I have more time on a loan where the deals work just fine. They cash flow just fine.
19:38 We're getting paid to wait. Michael, is seven years long enough? Is seven years long enough for fixed rate debt or do we
19:43 have to do we have to push longer? You know, I I don't accept anything less than 10. Honestly, I would So, let me
19:49 say this. I will never do a fiveyear. I prefer 10. Seven probably is long
19:54 enough. Okay. Yeah. Is that considered in commercial? Is that long term or is that the lengthy side of midterm? Well,
20:02 again, most people don't get 30-year debt unless you're doing some Fanny Freddy stuff. 10 years is considered
20:07 long term in in commercial speed because that's typically I I would estimate that
20:12 probably Certainly more than 50% of cult you know
20:18 multif family loans are are 10 years and I would say that 80% maybe even 85%
20:24 are 10 years or less. See that if you're doing fiveyear debt
20:29 fixed rate fixed rate is is fantastic and you need it but five years I don't
20:35 think a lot of investors especially newer investors realize how fast five years actually goes. If you have a
20:41 50unit building, you probably don't even turn all of those in 5 years.
20:48 That's I mean, that's what you just got to realize. Unless you're taking over a vacant building, which is a whole different bag of worms. Those are those
20:54 are hard. Yeah, those are hard. I I'll do those not on 50 units and only one at
20:59 a time in my portfolio. I will not Yeah, I love doing those. They're fun, but I'll do that on like a nine unit
21:05 building downtown. Yeah, we did we did it on a 10-unit building and it was that was a heavy lift and it is a passion
21:12 project. The risk profile on that unbelievably different than buying stabilized or near stabilized multif
21:19 family. Just unbelievably different project. Amen. Totally. I I go as far to say it's a different business. There's
21:25 almost completely unrelated skill sets, metrics. Yeah. Get ready to
21:31 crawl in glass for a couple of years, but then then it gets really good. Yeah.
21:37 Whatever you think you need to raise to get through your project, double it. Multiply it by three. Yeah. Or three. Yeah. Been my uh two or three. Yeah. My
21:44 learning. And then and then realize that the first two contractors you get, even if you've worked with them successfully before, you're still probably going to
21:50 fire halfway through the project. It is just Yeah. You are signing up for pain. If you love the projects, I will never
21:57 This is one business I'll never get into. I'll never do groundup. No, it's not my thing. Developers are the richest people on planet Earth until they are
22:03 not. Yeah. They they only have one avenue to generate money. And this real estate's cyclical. And you know, I've
22:10 I've seen plenty of people worth 10 to 20 million bucks. When the cycle turns, they their their one their one trick
22:17 doesn't work and they're busted. Yeah. It that's scary. Now, redevelopment's fun because a little different time
22:22 time, you know, I have a building. I have some history on what it has done. I have a vision for what it can be. That's
22:29 fun as a creative person where you come into a little building, you're like, I have a vision for what it can be. But
22:35 even that, if you deliver what it can be and you bought it when rates were 4% and
22:40 now rates are 8 and a half, you're in the same place as the developer. You're like, "Oh, wait a
22:46 second. Whoops." Who would have anticipated that big of a swing that
22:52 quickly? Yeah. I think it was the quickly that got most people. Yeah, because rates had
22:58 to go up. I don't think you or I thought they would stay low as long as they did. That was I actually was on record. You
23:04 can go back and find these videos saying the Fed broke the housing market, right? And again, it's still broken and it will
23:10 be broken for another five years, right? Everybody wants a spectacular crash, which isn't coming in single family. The
23:17 only way out of this, unfortunately, is uh a slow increase in wages. We have
23:22 been here before. That's the beauty of studying real estate back to the 70s. From 1978 to 81, we saw transactions
23:29 crash by 50%. So what happened when Fed rose rates in 2022? I said, "Whoop, we're starting our four-year cycle and
23:36 get ready for a transaction crash." Boy, the world did not like that. I got on by all the crash bros and price this
23:42 and price that. And Meat Kevin is saying every 1% rise in housing means housing
23:47 has to fall 10%. I'm like, dude, you're a That's not how it works. I forgot about Meat Kevin, man. He was everywhere for a little while. Yeah.
23:54 Yeah. He said that and uh of course it didn't work out, right? Rates went up, you know, 500 basis points and prices
24:00 went up and it just blew everybody out of the water. So another another right call uh I made. But here's the beauty of
24:06 this call is I'm now telling people that August, which is two months, we got July and August to get through August will be
24:13 the low and then we slowly build out of this. But people don't understand how slow, right? from 1981 to 1994. It took
24:22 13 years, almost 14 years to get back to 1978 numbers.
24:28 So, we're going to be on a slow transaction increase going forward and
24:33 it's going to blow away. Thing that I love as an investor and I think all high
24:39 volatility in the markets is generally not fantastic. Slow growth is the best possible thing
24:48 as an investor that you can possibly have and it stays relatively predictable
24:53 tends to move forward. Yeah, sure you'll have your ups and downs and cycles within that. Well, I I actually love a
24:59 buyer market. I'll be I'll be very clear. I think we I called a buyer market earlier this year, which is now everybody's calling, but why? Very
25:06 simple. I want less competition. I want more supply. And I want my odds
25:13 of finding a motivated seller to go up because they're always out there. They're just hard to find. And we're in
25:18 a buyer market. I'm particularly, again, I live by what I'm doing. I'm writing lots of disrespectful offers July and
25:24 August in Henderson because I'm trying to find that motivated seller. And by disrespectful, just to put some words on
25:30 it, I don't think I'll write an offer any less than 25% below list. And most of them will be worse than that because
25:38 I don't need every deal, Christian. I just want one. And if it takes a 100 offers, it takes 100 offers. It's I
25:43 don't mind. It's okay. I love buyer markets, which is what we're in. I feel the exact same way, especially because
25:48 I'm a creative finance guy. The ability to spin the Rubik's cube when someone has a little extra motivation. You just
25:54 got to map what do they want? What do I need? You call it the buy box. I love that. My box is long-term cash flowing
26:01 fixed rate debt in a market that I have systems and people in. That's that's what I need.
26:07 All I have to do is just figure out what they want. Is it a certain price? Do we have a path to get there on long-term
26:13 fix rate debt? No. And you know what? I'm glad you brought this up because most people hear me say this and they don't understand what I'm trying to do.
26:20 I'm not expecting any of my offers to get a yes answer. If it if they get a
26:26 yes answer the first time, I didn't it wasn't it wasn't disrespectful enough. What I'm doing with all of these offers
26:32 is testing for motivation because my answer coming out of this in most cases, I hope Christian is not a cash offer.
26:39 Now, I'm willing to pay cash. Every offer I write will start as cash. But my answer is, you know, like there's a
26:45 house I'm tracking right now. We'll just do use a real example. 399. I'm going to write it at 300. Once days on market hit
26:52 75, which is next week. My hope is they say no to 300, but they
26:58 go, you know what? This seller's got motivation. They'll come back at I don't know, let's call it 380.
27:03 But then I'm going to start saying because now we have we have a counter. I'm gonna go, you know what? I might be
27:09 able to do 350. However, Mr. or Mrs. Seller, you got to carry back a 100K
27:14 second. And oh, by the way, that 100K second's got to be at 2%. And oh, by the way, I want no payments for the first
27:21 year, right? I'm just going to get cra because what I've seen over the time is is a lot of people get fixated on the
27:27 number. I give a about the number, Christian. I care about the payment and cash flow.
27:33 I am just coming into this with a really low number to test for motivation. So that's how I play this game. If you guys
27:40 are wondering why I'm such a big fan of Zuber, we are so aligned on so much of
27:45 the strategy. It is about increasing your income and keeping the income
27:50 increased forever. Yes, underwriting is it we do buy and hold. Underwriting can
27:57 be summarized as this. How do you own it and how do you never lose it? that is now buying it and holding it if it cash
28:03 flows and every time you close a deal without exception your income goes up and stays up. You will not real estate.
28:12 Amen. Money is not everything but it is the lifeblood of your business. If you want your business to grow, you need
28:18 more blood. You have a bigger body now. Yep. Add blood with the acquisition. That is it. That is all of real estate.
28:25 Yep. It is not about the price. It is not about I mean price is obviously a huge factor in what those terms are
28:32 going to look like but it's about getting long-term cash flowing fixed rate debt that is what the game is about
28:37 and stacking it indefinitely which is why Michael has hundreds of units and you've been able to do this you you
28:43 write your off how how much time do you realistically spend per day on acquisition but it's not a day I would call it a
28:50 month I might spend and this includes looking and buy box search and learning markets I might spend 10 hours a month
28:57 Maybe maybe eight. Eight to 10. I would say that's probably about where I I settle my whole thing. I buy about three
29:04 maybe four deals a year. Exactly. You don't need a lot as long as you know I what I tell people to do is get a buy
29:10 box which is just a set of criteria you look at every day so you don't get confused and you learn you get scale
29:16 repeatability. Then you figure out what an average deal is like. Okay, an average deal is a 7% yield or cap,
29:21 whatever you call it, right? Rate of return. And then all I want to do is good or great deals. I will never do an
29:27 average deal, Christian. If my buy box spits out seven, why would I be interested in seven? I want to do nines,
29:32 elesvens, 13s. And usually that's done via creativity. Sometimes with cash. I mean, I'll be
29:39 clear, sometimes I pay cash. If somebody's that desperate enough or the deal makes that sense, I'll pay cash because I can go get my money back. I'm
29:45 not confused. But yeah, dude, it's all about doing great deals. And I'm telling
29:50 people in this buyer market, go do a deal of a decade or even a deal of a lifetime. That's what I want people to
29:56 think about because you don't do every deal. These people that are doing 50 deals a month, that's not most people.
30:02 Most people are one deal a year if they're lucky. So, you might as well make it an amazing deal. I don't want
30:08 the pain of doing the two deals a day. Do you know what that sounds like to me? A lot of paperwork. You know what I You
30:15 know what I for? I don't want to do that much paperwork that there's been I I
30:20 would opt to just not scale my business before I did a deal. I don't want to do that either to excellently manage. So, I
30:27 bought a 44. I'm buying a 76 right now. It's just the biggest deal I've done. Uh, but I buy a lot of things in the 25 unit range. I just happen to have found
30:33 a couple that are a little bigger than I usually do. If you do four times a year, you get a 100 units a year. That is more
30:40 than most people ever buy in their lifetime. And you can do it once a year for I break it down to the daily. I
30:45 spend like five to 10 minutes a day on acquisition. That is my my acquire things job is a that's what I tell
30:51 people to give it 20 minutes a day. That's what I tell them. 20 minutes a day, every day. And again, I I preach
30:58 what I talk about. I I had a buy box in 2001 that I looked at for three years before I changed it. So half of half of
31:05 one Netflix show. Yeah. Per day. That's it. To buy very significant amounts of
31:11 real estate. Yeah. That's it's such a simple model. There there's one thing you said on creativity I need to hit on
31:17 and then I I want to close on the way that you are doing community is one of the coolest things I've ever seen. I I
31:22 want to talk about what you were doing there and how people can get plugged in. This is not just an ad for Michael's
31:27 awesome. I I actually legitimately love the model and so I want to share that
31:33 you said something that I learned in my one of my mentees came up with this clause for me. So I call it the hommel
31:38 hack in my group. My buddy Caleb Hmel did this on five deals. I was buying a bunch of deals where I needed more cash
31:45 flow day one and there was a ton of upside. So we're doing the burr strategy. There's future upside. I was
31:50 doing a stairstep method of it starts on low interest and then the next year it goes up a point, the next year it goes up. So we start like two, three, four,
31:56 five. They wanted 6% interest. I said yes. I just gave them a path to get there.
32:03 Well, we call the hommel hack. You just casually mentioned he's like, "Oh, of course I do this. No payments for a
32:08 year." Yeah. His solution was, I have a value ad project. I'm giving you a down payment. So, while I'm doing the pro,
32:15 that's where I find that uh that offer gets accepted the most often is when you're like, "Hey, I'm investing money back into this project." Exactly. Why am
32:22 I paying you and paying the project? It's a pitch that makes sense. And what are you doing? You're improving their
32:27 collateral. So, exactly. I give you a big big old chunk of money and while I
32:33 do the value ad here, I don't pay you. And here's my business plan. They're so
32:38 easy to get accepted for sure. And what does it let you do? And it allows you to cash flow a deal that otherwise wasn't
32:43 going to cash flow for that first year. Yeah. The longest I've gotten is two years. I had two years no payments on a
32:48 second. Imagine buying a deal, especially if you go super low down. You got creative on the down payment. You
32:56 put a little bit of money in the in the kitty and then you don't pay anything but your taxes and insurance
33:03 and utilities. You just have your opex for two years. That is an unbelievable.
33:09 And it took a mentee of mine to actually come through and be like, "So, you do low interest day one. What if you just
33:15 didn't pay them?" I'm like, "Well, you can't not pay your mortgage." And then, as Michael shares with his with decades
33:21 of experience, he just dropped a huge bomb in passing of like he alluded to a
33:27 whole bunch of things that are simple and repeatable. Oh, yeah. You carry a low interest in second. That means
33:33 there's a bank in first. you're doing somewhere between zero and 10% down on
33:38 that transaction. Yeah, there's there's rarely banks let you do 100%. But yeah, there's a lender I have, Velocity
33:44 Mortgage, that has that that will loan what's called 90% CLTV. It's called combined loan to value. So, you know, I
33:52 routinely offer what's called 50410. So, 50% to velocity in this case,
33:58 40% seller carry and 10% down. I'm convinced there will be people that
34:04 buy 100 unit apartment buildings with that structure. And you know why that structure is awesome? Because if you do
34:09 the math and you do it right, you can get a below market interest rate. So
34:14 let's just say velocity is 8% first and then you go get a 2% interest on a
34:20 second, but you got the first eight at 50% and you got the second 40% at 2%.
34:28 that debt, you know, com, it's called combined loan to value is probably an interest rate of something like four and
34:35 a half or 4.8. Where can you borrow 90% leverage and
34:41 get sub 5% debt? And oh, by the way, beautiful thing. Yeah. And oh, by the way, you could make that a 10-year
34:47 balloon. I even did one where they were 30-year fully am second. And again, the
34:52 8% is fixed. So, I have 30-year money sub 5% in an 8% world. Who wins? I win.
35:00 Some of these are just amaz because the one thing the bank doesn't care about the the look of the combined loan to
35:05 value. They don't care what interest rate you negotiated as long as below the debt service coverage. Yeah. They don't
35:11 care if you got a 1% interest. They they they don't care. You can make your own debt product even with bank financing.
35:18 Correct. I've seen some banks let you go 100% loan to value as long as you do like a couple hundred thousand of
35:24 deposits with them. There there's other ways to Sure. Other banks will do other things, but you can get into deals, load
35:29 them no money down. I just love that that was like just a casual thing that you just glossed over. And here's the
35:35 beauty. The reason that Michael's able to gloss over these things is because you need to know how to play the game.
35:41 You if you don't know what the plays are, you can't use them. But the simplicity of it, how simple is it to be
35:48 like, "Oh, I don't have payments for a few years because I just gave you a down payment. I'm reinvesting in the property." Simple, dumb. Two or three
35:55 sentences in a clause on a contract. Easy, easy, easy. Combined loan to
36:00 value. Everyone who passed third grade can wrap their head around, well, there's two loans, and when you add them together,
36:07 that's the loan to value. And now we can push from 75 or 80 to 90% leverage on a
36:14 lower interest rate than the There is not rocket science here. Michael's not a genius. He may be, but not the way he's
36:20 writing his deals. They're simple. Simple. I can tell you for a fact I'm not a genius. I'm relatively dumb. I'm a
36:27 sales and marketing guy who was like, I got out of selling for CoStar. I just got just smart enough to be sitting across the table being like, the guy I'm
36:34 selling to is richer than me. I What is he doing? That's that's that's the that's my level of intelligence be like
36:40 he has more money should do that this anyone can do this game these things are
36:45 so simple Michael you're you're doing a community that is actually scaled to be quite large interestingly unlike 99% of
36:53 the people online and by 99 I mean 99.999% of people online unbelievably
36:59 affordably creating a huge community that is all about building wealth tell me a little bit about what you're doing
37:04 because I think the strategy Honestly, I think this is the future of education
37:10 moving forward. I think Michael's way on the front end of this. Yeah. So, one of the things that I'm particularly proud
37:16 of, and I did not get a lot right, but one thing I did get right was the brand, one rental at a time. That's what we
37:22 did. I wrote a book, course, YouTube, Instagram. Everything I do is one rental at a time. So, it's very easy to find.
37:28 But, as I was building out this community, like probably like a lot of people, I went to Facebook first, right?
37:34 I went to Facebook. I created a private community. You can only be in the community if you bought my, you know, $400 course. And, you know, that scaled
37:42 to well over 2,000 people. However, as Facebook was evolving and changing it as
37:48 a creator, it made it hard for me to communicate with people. Like, when I had a message that I wanted everybody to
37:54 see, it didn't work on Facebook and I got frankly pissed off. And then Alex 50
38:01 views on a critical post to your own community that has 2,000 people in it.
38:06 Yeah. I could it just it was it just didn't work. And then Alex Mosie by school. I check out what he's doing and
38:12 I'm like, "Aha, that's what I want to do." Because again, I with one checkbox, I can make
38:18 sure everybody gets a communication. So now I have a school community called One Rental at a Time. Shocking. But unlike a
38:24 lot and I've paid for mentorship, right? I've paid for mentorship with big guys, guys that you would know. Sean Canel and
38:30 Pace Morbby and I've talked and all these other folks, Ryan Beneda, and all of them tell me I need to create, you
38:36 know, a value stack and, you know, a 10,000 this and blah blah blah. And I'm like, guys, you don't you don't
38:42 understand. My mission from video number one, and let's not get it twisted. I've done 16,000 videos. So, video number one
38:50 was a long time ago, has been to create something that outlived me by 50 years,
38:55 right? I'm already money good. My my real estate portfolio is five or 6x
39:02 my monthly expenses. So it does it just doesn't matter. And so I was lucky enough to have that coming here. So I
39:09 put out a school community for only 20 bucks a month. And like you said earlier, most people are 99 or some are
39:15 199. And the reason I did that is at least in my world, I've tried free
39:21 before. I tried a free book. I my bestselling book, One Rental at a Time, was free. It was supposed to be free,
39:27 but nobody read it, right? I sent it to a hundred people and two people read it. One of them happened to be Millennial Mike. So that's why a book. And then I
39:33 had a course. It was $99 and then $1.99 and now 3.99 because if you pay, you pay
39:39 attention. And so that's why school's 20 bucks. And um and that's that's I think
39:44 that's going to be what I'm known for. And the beauty of school is I'm now getting comfortable because I'm not an
39:50 entrepreneur, right, Christian? As much as I want to be you, I'm just not wired to be an entrepreneur who who sees
39:56 opportunity and creates business and creates systems and funnels. Just like dude, not me, right? This is not where I
40:03 live. But, you know, it's now over 420 people. And um we're just wealth
40:09 builders. That's the thing I've figured out about school is it's the community.
40:14 We have 420 people going the same direction. And there's magic in that. And the the biggest thing about a school
40:20 community, for me anyway, is I am not the most active person. I was the most
40:26 active person until we got over a hundred and then my time in the in the school community is way down. So, you
40:32 know, we have seven seven accountability groups. I attend zero of them.
40:39 I'll say that again. We have seven people have picked up talk bits like out of state investing, ladies, ladies of
40:45 orat, which is really cool, different accountability groups, real estate agents, brokers, and I don't attend any
40:51 of them. It's so awesome to see other good people, other go-givers want to
40:56 help and move people forward. So, I think I'm going to be known even above a YouTube channel, even above a
41:02 best-selling book. I think by next year, maybe the year after, most people know me because of the school community. It's
41:08 67 pennies a day. 67 pennies a day to get in a room with 400 now 420 people
41:15 going the same direction. I have thousands of dollars in free education. For example, I did a $1,000 10-week boot
41:22 camp once. I'll never do it again, but I give it away in the community if you get to level three, which means you're
41:28 active. Mhm. Other people have given stuff like Ty, a
41:33 guy I talked to on Friday, Tyl Ty, uh, he did a thousand creative financing
41:38 course. He gave it to me for free so I can give to the community. So, it's it
41:43 is fun to create something that is just a good community with people going the
41:49 right direction and it's so active. You put a post, it's it's crazy. There's
41:54 three directions that a good educator can go and and all the best, 100% of the
42:02 best specialize in one of these three lanes. You have coursework, so you can be really, really, really good at
42:09 putting out good educational content in an organized manner. You have direct
42:15 mentorship, which is the most expensive on time. They also tend to cost the most. Sure, that is where I focus the
42:21 most as an entrepreneur. I am in the field hands-on operators. For me, it's like instead of pawning you off on some
42:28 other past student, I will actually give my literal time and mentorship. It's right. It's the most personally
42:34 expensive way to do it. And it's a and it's a unique finite number and that's where we focus. And then you have
42:40 community and community done right is open to the massive and you know it works. And you just said it. I love that
42:46 you did this cuz I was going to make this point. You know a community works when the community carries beyond its
42:52 creator. Absolutely. And it's funny you brought that up. Is not the main driver. You have seven accountability groups.
42:58 You have subgroups. People understand what it is that you built. You've built something that is simple, repeatable,
43:04 scalable. And it is now taken off beyond you. That is the community thing. And to
43:10 do it right, I think is harder than any of the other two. And when you get it
43:15 right, you get it right. Yeah. what you've built there is really truly something special. At events where
43:21 Michael speaks and I speak, there's always like a section of ORAT people and they are the they are the ORAT people,
43:28 the one rental at a time there. They're connected that Michael's not spending
43:34 all of his hours there. You pour time and energy in because you're passionate about it, but that is not where you
43:39 spend all of your time. No. What I do now is I do one hour on Sunday. one hour on Sunday, 8 am. I usually bring in
43:46 friends, so I'll be asking you offline to come on to one of our Sunday sessions. I'll be accepting that
43:51 offline. There you go. And it's a lot of fun, man. All I have to do is I give one hour a week, Sunday 8 a.m., usually with
43:58 a friend. Sometimes I go solo, but usually with a friend, and I monitor the network for bad actors. I I kick two
44:05 people out a month, you know, who are selling deals or being scammy or whatever, which happens, right? You have
44:11 a course at 20 bucks. Yeah. you have a course at 20 bucks, you're going to get some people that come in and try to fish. So, I kick them out. I mean, 20
44:18 bucks means nothing to me. So, I kick them out and that's all I got to do. I got to get rid of the bad actors and
44:24 give an hour a week and the community just continues to grow. But I want to go back to the three avenues because you're
44:29 absolutely right. I and I didn't know this. I'm not an entrepreneur like you. So, I created a online course on
44:34 Teachable just like you or I don't know where you did it, but you know, some people do. I'm moving I'm moving it to school because I love the community
44:41 features just like you community took off on school. I was like uh messaging more important yes platform that is
44:48 everyone will move to school I agree from teachable from mighty networks everyone will migrate to school in the next two years I agree so I did the
44:55 online thing and and was quite successful did you know over 600,000 bucks on that and and again at a price
45:01 point that was no never greater than 3.99 that that was what I did never and usually was you know I think the average
45:08 was 199 if you if you look at the history so clearly very wellreceived to do 600
45:13 But that was just paint by numbers. All I had to do was document how we did it.
45:19 And people always ask, "How how long did it take you to create a $600,000 revenue stream?" And I'm like, I think I spent
45:25 less than 40 hours because that it's just what I did. It's not like I had to get creative, right? I I talked on a
45:31 whiteboard or a Flipnote and those other videos. And then I tried to do the mentoring
45:37 thing because everybody was asking this this this. But I'm lucky enough to be at
45:42 a point where my life is my time is my time. No matter what price I put on it,
45:48 I just didn't want to do it, right? I'm just like, I don't want to be that available. I don't want to go look at
45:55 properties and do all of that. So, I did a couple of those and I'm like, this is not me. I'm out. I mean, I I don't give
46:00 a rat's ass if you pay me 10 grand or 20 grand or 30. you're not getting I don't
46:06 like anybody good enough other than Olivia and my daughter to spend that much time with you. It's like I'm an
46:11 introvert. Uh and then we found school and school is where my time and focus is now. That that is that is the thing that
46:18 that I really appreciate about you as an entrepreneur even say you're not an entrepreneur. Uh understanding who you
46:24 are as an operator is one of the most important things in all of business and slotting appropriately. I am an
46:30 introvert, but I like speaking to groups. To me, a audience of 10,000
46:36 people, very comfortable that I could be an introvert and talk to a massive people. Yeah. So comfortable. Sure.
46:42 One-on-one never going to be my thing. I don't like it. I'm a little socially awkward. I only care about real estate.
46:47 So if you're like, "Hey, let's Yeah. Like, oh yeah, let's go connect on stuff on a personal." I'm like, you
46:53 don't understand. I don't care about anything else. Yeah. Uh maybe maybe guitar a little bit. Uh, but like I
47:01 don't have hobbies other than real estate, so I'm pretty boring in a group
47:07 coaching. Super fun community. Michael has built this just ridiculous community. You've identified like I'm
47:12 passionate about this. I love this. You're someone who cares about you do care about legacy. Like that's something
47:19 that lives beyond you. I'm doing Yep. That's it. It's the only game I'm playing. And it's so funny how different people are because it's one of the
47:24 things like personally I'm like when I'm dead I'll be very dead. I don't care. I don't care about legacy. I do like
47:30 seeing I like being a part of that deal that someone does right now. Like the the next the most exciting deal in the
47:36 world to me is the next deal that someone does in my mentorship. I like it. Like that is exciting. That's what But you've understood where you're
47:43 gifted. You've understood what's important to you and you built a community with people who are like-minded and it's incredible. Other
47:51 thing, and this is the last thing I'm going to plug for Michael because it is awesome. There are zero people who are
47:56 going to buy a real estate deal who do not have a nice crisp 20 in their wallet. There you go. You have access to
48:02 $20 no matter who you are. You can do any course, any community,
48:09 any mentorship and be part of one rental at a time. It is not price exclusive. So
48:15 that means every single person who wants to build a portfolio who watched this video or listened to this podcast
48:22 wherever you listen to podcasts can be a part of this community without taking away from anything else that you are
48:29 doing which kept it at that price point on purpose. Yeah, it is. It is 100%. $20
48:35 is the same thing as free except that you spent $20 and now you're paying
48:40 attention because you want your darn $20 worth out of this thing. And what's going to happen? You're going to learn
48:46 one thing and it's going to save you $200,000 on a deal you do in five years. Well, the other the thing that will
48:51 really happen for people is you will find 400 other people going the same direction.
48:57 There's power in that. That's the thing. That's it's the community. It's not access to Zuber.
49:03 Yeah, you get Zuber one hour a week on Sunday. It's the access to the other 400 people. That's the magic. So, I I don't
49:11 endorse other things on this channel. I will endorse spending $20 with Michael Zuber. Thank you. I like him. I I said I
49:18 won't push him farther. I'm going to say I'm going to say one more thing. Michael did something that I have more respect
49:24 for than any other thing with any other person. Married up. That is a true sales person.
49:30 I like Michael a lot. My wife is more of an introvert than I am. She has no friends. She hung out with Michael's
49:38 wife for two hours and she spoke for two weeks about how awesome your wife is. Olivia is amazing. Thank you. Someone
49:44 who can be married to an amazing person, to have a family, and to and to actually have the core principles of family,
49:52 which I think is lost in a lot of society right now. I will say this about Michael that passes my good person test.
49:58 He is a good guy who understands what is important in life. So if you want to be in a community, he's grounded. He's
50:04 rational. He understands you nineto-5s. And even though I was in that world, I never fit in there. He understands you
50:10 on a level that I don't. Be a part of the community. If you have $20, spend it. You won't miss it. Yeah. But you can
50:18 get in community with people who are uh going in the same direction. Michael, thank you so much for joining me. Everyone, thank you for listening. We'll
50:24 see y'all on the next