Are you looking to achieve financial freedom? Michael Blank is a leader in the multifamily industry and knows what it takes to achieve financial freedom. In this episode, he talks about the importance of consistency, the typical objections, and how to talk with brokers.
Listen to this episode now so you can learn from Michael Blank himself and get started on your own journey to financial freedom. You won’t regret it!
Table of Contents:
- Where To Listen To The Podcast
- Join a Live Event With Michael Blank
- Michael Blank’s Lesson #1
- How Michael Blank Find His Partners
- You Need to Have a Certain Amount of Belief
- How to Reach Michael Blank
Join a Live Event With Michael Blank (10% Discount Included In Below Link Or Use Code BATCHELDERDML)
Darin: Michael Blank is a well-known name in the multifamily industry. He is the author of Financial Freedom with Real Estate Investing. He's also the host of a podcast with the same name, Financial Freedom with Real Estate Investing. In addition, he's also the host of a conference called Deal Maker Live. There is just so much to learn from this guy.
So just a little bit on how we know each other. I have not actually spoken with Michael prior to today. He is a leader in the multifamily space. He is out there, he's got a podcast, he's got a YouTube channel, he has a book called Financial Freedom with Real Estate Investing. And he's got a live event coming up in Dallas on June 2nd through the 4th. He also is just always out there doing podcasts with other people and trying to give back. So I'm very interested in this conversation. With that, just to start out, we typically ask how many properties and how many units are you currently invested in?
Michael: We have about 2000 and we're closing on another 173. We sold three or four of them and we're about to sell another one. So something around that. Yes, it's fun.
Darin: It's fantastic. The name of your book is called Financial Freedom with Real Estate Investing. A lot of the stuff that I've seen, whether it be on YouTube or whatnot, focuses in on financial freedom. So can you share with the listeners, what would you define as financial freedom? How would you define it?
Michael Blank’s Definition of Financial Freedom
Michael: Yes, it allows you to control your time and still pay your bills, right? So it gives you options. My audience, we don't necessarily want to become millionaires, but we want to control our time and still provide for our families. And for that you need passive income and there's nothing better than real estate. A lot of people read the purple book and they immediately think they want to flip a house or use a BRRRR method or invest some kind of single family house. The truth is that 99% of those people can never quit their job. They realize this sometimes only after years.
So our mission is to really educate people that you can literally quit your job in one to two years if you learn to raise money and get into apartment buildings.
Darin: That's a short time period, one to two years.
Michael: It is. That's pretty amazing.
Darin: That's it is fantastic. So I've seen it, the impact of real estate investing and especially large-scale multifamily, large-scale properties. Why, in your opinion, is there so much wealth-building impact by investing in apartment buildings?
Michael: I think there's multiple reasons for that. I think one is that it's a matter of scale. So when single family house, you buy a house, you buy another house. You do it five times, you have five houses. Well in the apartment world, when you buy one apartment, the second one is going to be larger. And the third one is going to be larger still. They're never the same. That's because after you've start doing a deal, the law of the first deal kicks in and it gives you track record.
The Wealth-Building Impact of Investing in Apartment Buildings
Michael: You have an established team, you become a bit of a deal magnet and a money magnet and your comfort zone grows at the same time. So even though you're only doing a second deal or third deal or fourth deal, the deals become progressively larger. Even with two or three deals, this allows you to easily cover your living expenses. So I don't need to do ten apartment deals. I need to do two or three. And now I can quit my job if I want to, and then focus full time. And then it accelerates that even further.
Darin: Yes. That's huge. Scale is something that a lot of people see when they move from single family to multifamily. And that comes in a number of different ways, right? It comes from, instead of you managing those single families, you have a property management company that's managing it.
So there's a full-time leasing person, full-time maintenance person on site. And so you're leveraging somebody else's time and effort. Also you have more units so the cashflow is different. So I started with a duplex and then all of a sudden one tenant moved out and I was 50% occupied. But with these larger apartment deals, you're not going to have 30, 40, 50 units all vacant at the same time. So you end up benefiting from having that scale in that regard as well.
Michael: And also you asked why is it so good for financial or freedom? Second component is, and you alluded to it, is it has a passive nature to it. It's not just scale. Because I was in restaurants and you can achieve scale in restaurants, but there's nothing passive about it.
The Passive Component Built Into Apartment Buildings
Michael: I can achieve scale in single family house portfolio, but there's nothing passive about it. And so it has a passive component built-in, unlike really any other business. That's because what you mentioned is the professional management is built into the business model.
So if I'm building a single family house portfolio, for example, most people self-manage until they reach a certain scale, maybe 10 houses. Then they go, my gosh this is too much maybe I should get some help. When they do that they're still paying 10% of income and the quality of the property manager is very mixed. Because you're not going to attract a professional high-quality manager to manage 10 houses with 10 different roofs.
But with apartments, it's built into the business model. It is well understood that a professional management company manages an apartment building. So there already is a passive component built into it that no other business really has.
Darin: Yes. When you're building that model, you actually have the P&L set up where you have the payroll for the leasing manager and the maintenance person built into the P&L. Where most people that do single family don't do that, they're doing it themselves. So hey talk syndication. For people new to the industry, just that word alone can be intimidating. And then two, talk about the power of leveraging other people's money in that regard.
Michael: Yes. Syndication is a complicated, scary word. It's actually legal.
Michael Blank Serves Investors Through Syndication
Michael: When I first understood the power of other people's money, is when I was house flipping because I didn't have my own capital at the time. So I just essentially borrowed it. Six months, no 12% interest, boom. And it was surprisingly easy to get people to loan me money. But that was the first time I was like, man I'm not limited by my own limited resources. I'm limited by my ability to raise capital and find deals.
Darin: And what's in your head, right?
Michael: Yes, and what's in your head. And so applying that to apartment buildings, once you understand that you can raise money from a single person and they invest whatever, $50,000 and you do it five times. Now you can buy a million-dollar building. You do it 10 times and you can buy a $2 million building. It's amazing.
The cool thing about it is you're also serving those investors. It's not like you're begging them for money or you're manipulating, and no, you're actually serving them. You're giving them an investment vehicle that is substantially better than the stock market. And you're giving them access to something they would never get access to if it weren't for you. So the cool thing up about it is you're actually serving investors who have the problem of the stock market.
A lot of people are scratching heads and have been for years. There's a volatility, there's uncertainty, timing is very important. If there's a correction or a recession, and I need the money for retirement or to pay to a college now I'm just kind of screwed.
Syndicators Are Inflation Hedge
Michael: Number two, it typically doesn't pay cash flow so I can't exit my medical practice or my law practice. So unless I invest till I'm 65 years old and maybe lived off the principal. Then number three, I pay taxes every time my financial advisor, my broker sells something I got to pay not only commissions, but tax on it. So all this churns. Now for good measure you add inflation to it.
So an 8% return in the market with 8% inflation means that you're not getting any return at all. Even that, 8% is a little bit uncertain.
So investors, they're struggling right now, they're trying to figure out what to do with their money. We, as syndicators can help them because we are an inflation hedge, we generate cashflow, we generate wealth, and we have extraordinary tax benefits.
Darin: Yes. You said so many great things there. I love that you bring up serving because you turned it into a positive where so many people that are getting into the industry, that's the piece that scares the heck out of them. Asking people for money. But you didn't position it that way. You positioned it as you're serving others. And it's so true. It's just an opportunity. And you're providing an opportunity that they wouldn't otherwise have. They can always say no. But once you start learning that you present it to people and they're like, wow I can do this. And you open the eyes to other people and then you help grow their wealth.
Michael Blanks’ Lesson #1
Darin: Then it goes away from trying to get other people's money and actually service. So I think that that's fantastic that you position it that way. Look, you've been an investor, you are an investor, but in addition to that, you teach other people. So along your journey, what are some of the lessons learned and somebody coming in, how do they do it faster?
Michael: Yes, how do they do it faster? I think one of my lesson learned over the years was to make better use of mentors or advisors. I'm a pretty smart guy, and I always felt like I could figure things out and I have. But the problem is, if you look at my own journey, it's taken years and I've lost millions of dollars in the process of trying to figure it out. Why not maybe, just an idea not a sermon but just a thought, align yourself with mentors who have done what you want to do. And maybe you have to pay them, possibly a substantial amount of money and they shortcut your experimentation.
Probably over the last five years I've paid mentors way more than I ever have in the past. And it's just mind-blowing what these guys have done and their ideas and their confidence in your ability to do the same thing. So I think that's probably lesson number one, is really align yourself with mentors and advisors. And that's probably a big lesson there.
Darin: Well it's interesting to hear you say that because you are a mentor. So you're not just saying, hey look I should be the mentor and other people come pay me and I'll teach you. But you're also continually reinvesting in yourself to level up again.
The Power of Hiring a Mentor
Darin: And so the idea of having a mentor, you may have a mentor for a year or two, and then you end up getting a different mentor to get to a different place that you're trying to get to.
Michael: That's right. And you could even have multiple mentors depending on what you're trying to do. So you might try maybe lose weight or exercise more. So you're going to have a trainer. Or I want to do spiritual development or something. So you might have more than one mentor. These people really help you grow and get to the next level. And that's what's so powerful.
Again, you can figure things out yourself, I get that. But you know if you can shave off two or three years off your development and you pay a mentor, whatever $20, $30,000, is it worth it? Because I have always found without exception, that the return on investment with mentors always exceeds 10X. It's really powerful.
So that's one of the mistakes I made early on, which would've probably prevented me from failing in the restaurant business, for example. And frankly, it would've allowed me to scale in the apartment building as well. Again, there's things that we did in the beginning that were pretty cool, we figured things out. But now we're finding that we're trying to help people scale to a thousand units. So our mission really is, help you do your first deal, because that will lead to financial freedom within another one or two deals. But then what? But then people kind of try to figure things out.
Mentors Can Speed Up Your Process
Michael: They now realize that they're building a multimillion-dollar syndication business. Now they're no longer in real estate investing per se, but they're actually in business, they're business people. Therefore they have to worry about sales and marketing and investing properly and hiring people. Most people just don't have experience for that. So again mentors can help. There are many mentors out there that can help grow businesses. So again, that would be a different kind of mentor yet.
Darin: Yes, absolutely. And I think that some people have a misconception too, of mentors. Like they're just going to give you a 10-step or a 20-step process, a cookie-cutter process. But, my experience, it's much more than that. It's the network that they've built too, that you get to leverage. It's the reputation that they've built over the years that you get to leverage.
With that comes the shortening of time of how long it'll take you to go from point a to point B. So brokers, people are afraid when they first get started talking to brokers. What's your advice to somebody new in the business and they're told that they have to develop these relationships with brokers. How do they go about it?
Michael: Yes, it's a scary thing to talk to a broker about a multimillion-dollar deal. And so I think that the key is twofold. One, before you talk to a broker, first of all you have to develop some amount of knowledge and confidence. You also have to have a team behind you. So before you talk to a broker, there are at least two things you got to do.
The Things You Need to Do Before Hiring a Broker According to Michael Blank
Michael: One is you have to build a team. And the most important member of your team is your property manager. The second most probably is a lender. The reason for that is because you are leveraging their track record, that you don't have. These people also help you in the underwriting when you actually make offers. Then they help you, of course, during the due diligence process. Then they of course manage the property itself.
Darin: After you close.
Michael: So you want to have a team because, especially in the beginning, when you don't have a track record and you get the question, well how many apartment buildings have you done? And of course the answer is none. Well, instead of spending time awkwardly on yourself and the lack of your track record, you're talking about the team you built around you. It kind of takes the attention away from you. So that gives you a lot of added credibility.
Number two though, you got to use the right language too. It's like anything, if you get scuba certified or you start to play golf. You got to use the right language. If you don't use the right language or you don't pay attention to the proper etiquette in golf, people will still respect you and like you, but they know you're a newbie. Therefore you're probably pigeonholed as a newbie. And it's the same thing when you call brokers. You don't call brokers and you ask them for listing, for example. They're like, okay I know who you are. Here's what I'm going to do, why don't you send me your proof of funds and I'll say, send you my listings.
Use the Right Language
Michael: And so if you use the right language, which requires some amount of education, then the broker's not sure if you're a newbie or not. Because you're using the right language and you have a team around you. You could be a multimillionaire or whatever. So therefore they're going to take you a lot more seriously. And that's really how you want to approach brokers, it’s using the right language and a team around you.
When you do that, you don't need a gigantic track record because you're delivering your script with confidence. Then from that point on, you build a relationship with those brokers and that then leads to off-market deals and semi-off-market deals. And you don't need a whole bunch of brokers. You need two or three, and they'll feed you for the rest of your life.
Darin: What you said, there can be applied to how somebody new can talk to potential investors too. I talked to young people and they're like, well I'm young and my network doesn't have a lot of money. My parents do and their neighbors and stuff, but I don't know if they'll take me seriously. Well, there you go. Talk about the team, property management company manages 20,000 units in the market that I'm looking to buy. The property manager. The lenders have done X billion dollars of apartment loans. Then the other thing you didn't talk about that I think is important is if you're new, I would recommend that you align yourself as part of the team with another investor who's already done it.
How Michael Blank Is Developing Partnerships
Darin: So you partner with somebody that has already done it, and they have a track record. They have a resume and they have an investor base and they've been through it before. So you might get a smaller piece of the deal on the first go around. But the brokers may take you more seriously because they know the other guy that you're partnering with.
Michael: Yes. That's good also.
Darin: Talking about partners, how do you go about building relationships and developing partnerships?
Michael: One thing that's significantly different in the multifamily syndication, over almost any other business, especially house flipping or anything like that is it's kind of a team sport. In other words, partnerships are actually more of the norm than not. There's several reasons for it.
One is, if you look at the roles in a syndication, there's two primary roles in the beginning. One is someone's got to find a deal and someone's got to raise the capital. The skills and strengths of those are remarkably different.
For example, finding deals, et cetera, requires that you're kind of a numbers person. So that attracts more the analytical types, the numbers types. Those people tend to be more introverted. They're also more detail-oriented. For example, when they do due diligence and things of that nature. That's a specific type of person.
But the capital raising requires you to be extroverted. These are relationship people. Those people typically don't like numbers at all. The site of a spreadsheet makes them break out in a cold sweat. So it's very rare that both of those are in the same person.
How Michael Blank Find His Partners
Michael: Those always form the most ideal joint ventures, those two kind of people, because they compliment each other. Now one person is literally accountable for finding deals. The other one is accountable for raising the capital. Now they should both, of course help each other do that. But from an accountability perspective, those partnerships work really well. Then of course, once you close a deal, you have now an operational or asset management component. So now you need a little bit more of a manager. When you get a little bit bigger, you got to worry about marketing.
So now, because you want to attract more and more capital, you have to get good at marketing. Again, that could be a different type entirely. So in the beginning, you partner with people because equity is the only thing you have to play with. As you get a little bigger though, you can start hiring people. So that's how you scale from a partnership perspective.
Then you ask, how do you find those people? Well, number one, you have to leave the house every once in a while. You have to network with people. You have to be clear about the roles I just talked about and be aware of your own strengths and weaknesses. So you know what your role could be and who you're looking to fill. Then the last component is being clear about your values. What's important to you, what you value, what you maybe don't like in people at all. You want to find people that you see eye to eye on. That's the biggest thing.
Divorce Is Built Into Every Single Deal
Michael: If you see partnerships fail, they typically don't see eye to eye on important things. It could be a variety of different things. So really getting aligned on the values basis makes those partnerships last a little longer. But if not, it's not the end of the world because the divorce is already built into every single deal. If you don't like it, you're selling in five years anyway. So you already have the prenup pre-negotiated, so it's not like you partner for the rest of your life. You're just partnering for one deal.
If it worked out great, then you do another deal. If it didn't, you just don't partner with that person anymore. So it allows you to experiment a little bit more safely with different partnerships until you find that partner where you really gel and now it really allows you to scale the business.
Darin: Yes. That's huge. You mentioned being clear on your values. I've had two or three conversations with people that have had bad breakups in partnerships and they hit on that exact point. They said, I wish I spent more time really getting to know the person and their character and their values. Because once we were in the deal together, we just approached things differently from that perspective. So I think you hit it on the head.
The other is being clear about your strengths and weaknesses. I've found in this business, that it's incredible how collaborative people are. People are very open to partnering with people. It is very much a team sport. But the experienced people are very quick to get down to whether you're a fit or not.
Do Something Small or Go Big Right Away
Darin: They're willing to say, hey look my financial situation is this. What's yours? What role are you playing in this and what role am I playing? You know what, yes that works or no it doesn't. And then on to the next. You have to be willing to have that conversation. Tell people where you're looking to play and then see if it's a fit. Look, you got to have thick skin because it's not personal. Somebody just maybe like, no I got that of covered, man. I got that side covered. I'm looking for somebody else.
But if you take it personal, it could prevent you from going and finding the next guy. So first deal, here's one for you know, there's two schools of thought. Just do something small and take action and get something done, or look you can go big right away. So where do you fall in that camp?
Michael: Yes, when I get this question, what I'm looking for is I'm looking for a mix of achievable and meaningful. Meaning that I want to quit my job. So therefore, a large deal will be more meaningful, but maybe less achievable. On the other hand, if I make $10,000 a month, then buying a duplex is very achievable. I can probably go out tomorrow, pay for it. It's not very meaningful because I would need a whole bunch of duplexes. Therefore you want the intersection.
Typically we give people a year to do their first deal. In that time they have the ability to get some training, do a little practicing and push their comfort zone a little bit, maybe raise some capital.
Michael Blank’s Advice: Do Something Meaningful and Achievable
Michael: So if your comfort zone ends at a duplex. For example, you might push yourself to do a 10-unit through this process in the first year. So that's really my guidance.
Do something that's both meaningful and achievable. If that doesn't work, for some reason, you can't wrap your head around anything bigger than a duplex, even despite all that, then do a duplex. The real big thing is that you do something in that first year. It doesn't have to be tomorrow, but it should happen sometime in the first year.
Darin: Yes. I think that's great advice. I love that achievable and meaningful. For me, I bought a duplex first, my wife and I, and it really wasn't meaningful. In terms of, I didn't really push the envelope. But I was in the camp of being scared. I've always invested in stocks and mutual funds and that sort of thing. Even a duplex was still 50 grand. And am I doing it right? Am I buying it right? Am I going to manage it right? All those questions. But then once I was done, I was like, all right, now I understand it. But buying another duplex is not going to push the needle. So I have to go bigger and went and searched how to go bigger. But people say, are you bummed out that you did the duplex?
I'm like, well I don't know that I would've gone and searched out a way to go bigger if I hadn't done it. So, I'm glad I did something. So I think my advice to people is you got to get out there and do something.
How a Couple Found Their Partners Through Video Conferences
Darin: You even said before, you have to leave the house. You could buy stocks on your computer, and you don't have to leave the house. But in real estate, you got to leave the house. You got to go to some conferences and you got to go to some Meetup groups. You got to meet other people that are doing it, and then find out where you fit in.
Michael: Exactly. Now you can do this online too, by the way. There's some genius networkers that go to all these virtual conferences, these zoom calls. Then they private message everybody on the call and they set up other zoom calls one on one. We had a couple that did that, Americans that lived in the UK. They did three deals in the US this way.
Darin: Did they really from the UK?
Michael: Oh yes. They recruit everybody. They had every partner, money partner, boots on the ground. It was insane. That's exactly how they did it. So leaving the virtual house is necessary, but that's how they did it. And it was awesome.
Darin: Well, that should tell the listeners that if somebody from the UK, without being even able to go and meet physically can figure out a way to network, build relationships, build credibility, and get a deal done, there's no excuse for you. You need to get out there and do it. Hey, talk to us a little bit about the book. One, why'd you write it? Two what's the benefit for somebody reading it? And go from there.
Michael: Well, I wanted to write it to get my message out. Which is, hey you can become financially free with real estate because most real estate investors are frustrated.
Read Financial Freedom with Real Estate Investing by Michael Blank
Michael: They think they're on the right path when they're actually not. I can tell them, hey you're actually not going to quit your job. And in five years you'll realize it. Then some people are like, gosh, I'm five years in. I can't get there. I need something else.
So that's why the title of the book is Financial Freedom with Real Estate Investing. I don't put anything about apartment buildings in there because I already know that generates at least two objections. One is, oh Michael this is an advanced strategy, I don't have the experience. Or it's an advanced strategy, I don't have the money. So they wouldn't even read the book if I put apartment buildings on the cover.
So I want to dispel some myths around there. Hey, myth by the way, your single family house strategy is not going to get you there. And by the way, apartment buildings, not only is it not scary, it's the most direct way to get there. Then the other reason I wrote the book is so to dispel the myth.
But number two is to help someone see what the syndication process is like. I kind of go through the steps of finding a deal, analyzing a deal, putting it under a contract, and just giving visibility into the entire process. Because I found that one of the things that is scary in life is that if you don't know what's in the box. It's a black box and the box looks super scary. But if you look in the box and there's nothing that's biting you, you're like, oh my gosh that's not so bad.
Michael Blank Said There’s Nothing Scary Inside the Black Box
Michael: So if I opened up the box a little bit, and let someone look in there like, oh it's not so bad. Then they start developing a belief that maybe they could possibly do that. That's really what I do. I want to knock against single family house investing. Someone's got to own single family houses. But you know, really what I want to do is when someone reads that purple book I want to give them the yellow book right afterwards.
Okay, you did this, now you got the passive income bug. But unfortunately, the purple book doesn't tell you how to do it. It just mentions real estate and cashflow businesses. The reader is left to wonder how exactly you do that. So they go on HGTV and watch Flip This House and it must be house flipping.
I'm going to hand them the yellow book. So they go, wait a minute. Because it's not a bad thought. But let me just redirect you just a little bit to the right and maybe allow them to skip the single family house investing in ride into apartment buildings. Because it's not a sequential event.
Darin: I like how you phrased that in terms of looking in the box and seeing that there's nothing that's too scary in there. So my advice to people is look, if you think about all the things you have to do in a multifamily syndication, buying an apartment deal, it can seem overwhelming. So my advice is just focus on the next step. But there's some people that may not even go into that first step because they're afraid that there's something in that box that's going to bite them.
You Need to Have a Certain Amount of Belief
Darin: So I think that maybe a combination of the both is a good approach. First, you need to let people know that it's all achievable. You can do it all. Then don't get overwhelmed by all the different steps. Focus on the next one and move on.
Michael: That's a good point. The first step is they have to have a certain amount of belief. Because if you don't believe something, why would you take a step in that direction?
If you don't believe that you can do it then taking a step is a meaningless, pointless thing. Therefore you have to have some kind of belief. A belief in yourself, maybe in a higher power, maybe in a system or another person. You got to have some kind of belief.
Then the other thing too though is the overwhelm. Because you're like, okay I think I can do this, but oh my gosh, there's 169,000 steps. Or so it seems. So what I would tell people is I’m also going to do the next three things. Not necessarily the next one. I like to think in three’s. Like The ONE Thing by Gary Keller is super. The idea is super, but there's no way I can narrow it down to one thing. But again, I can almost always narrow it down to three and maybe I can even rank them, which would give me the one thing. But the next three, because you always know what the next three steps are. You always do. You might not know what the 54th step is. To some degree you shouldn't really care.
Build Habits and Carry Them Forward
Michael: So what I tell people to do is just write down the next three things, whatever they are right now in your reality, what those are. I got to read this book, go to that meet up, and call that broker. Write it down, do those three things. Do them, cross them off, write down the next three things you got to do now. Then do that for two months. And people would be amazed to see how much progress they've actually done. Now they've built some momentum and some habits and new skills and that will carry them forward.
Darin: Yes, that's huge. And the other thing with doing these apartment deals, once you go through the process, a lot of it can become repetitive. People have asked me when I went through my first syndication, what part was the scariest part? I'm like, almost every one was because I hadn't done it before.
But then when I look back on it, I'm like there's nothing earth-shattering about that, that's an easy step. There's a lot of different steps that can feel overwhelming. But once you get through it and you do, it's just like anything. Once you do it, you look back and you're like that wasn't that bad. Hey, talk about why you started a conference and how long have you been doing it?
Michael: Since 2017. It's a way to get everybody together in person. I've always been online. Frankly, for a long period of time, I hid behind my camera and my microphone. It was nice. I'm an extrovert. It's efficient, it's comfortable. I don't really love traveling a lot. But people really do want to get together in person.
Someone Who’s Taking Action vs. Someone Who’s Not
Michael: When you have these annual conferences over and over again, do I hear people saying I met my partner there. Or I found a deal there, or I found this capitalist money partner there, or some speaker blew my mind with an idea. So during COVID we had virtual conferences and yes, we try to do breakout rooms things of that nature. That was pretty cool, but there's nothing hanging out at the bar over dinner and building relationships. So this is really why we do it. But they're a lot of effort, they cost a lot of money. So I would do it every month if I could. But we do it once a year to kind of again, bring everybody together.
Darin: Well it's interesting what you just said. I think it's so true, I don't know the finances on the event but I'm assuming that you make money on the event.
Michael: Don't assume that.
Darin: Well, I would assume it. You outlay the money, you get enough people there, they pay a fee. But what's interesting when you think about that ROI, somebody pays a ticket to go to this event. Then not only are they hearing the content and the speakers that you bring on and they're learning from that. But to say that they found their partner or talked to a broker that gave them a deal or something along those lines, had they not gotten on the plane and flown to that event, they may be still without their first deal. That's the difference between somebody taking action and somebody not.
The Person Who Believed Michael Blank
Michael: Yes. The thing is you are one relationship away from another level entirely. I remember when I was first getting started and I had raised the money for the house flips. But you know, I couldn't wrap my head around raising anything more than like 200 grand. So finally I went to a meetup and I met a guy and we hit it off and turns out he just sold his business for like 20 million. So we had lunch and I found this out over lunch. He goes, yes I really like multifamily real estate. I want to deploy at least a million dollars per deal. I'm like, a million dollars per deal.
Darin: I'm your guy.
Michael: But I'm your guy. But immediately half of my brain was blown all over the wall because I had been wrapping my little brain around $250,000. This guy comes up to me with at least a million dollars. All of a sudden what I was just thinking a second ago is now gone and I'm like a million dollars. This has happened to me a lot in the past, even when you're talking to experienced people or even experienced operators. You're, hemming and hawing over a duplex. And someone's who he's got a couple of hundred units goes, Darin, you can do a little more than two, it's actually pretty easy. I can? All of a sudden, because of this person who has unbelievable confidence in you see's something and you don't. All of a sudden now you start believing that. Yes, I can do a 10-unit.
You’re One Relationship Away From the Next Level
Michael: You abandon the two-unit because of this person you just met. So therefore actually literally meeting people like that, getting out, and building relationships. This is why I do believe that you're sometimes one relationship away from the next level.
Darin: Yes. That's huge. I was thinking about partners and deals, but just even meeting the one person that can take you, give you advice, be an unpaid mentor to take you to the next level. That's one of the other advantages I saw from joining a mentorship group was not only the learning from the mentor. But just being surrounded with like-minded people and seeing this guy did 150 unit. This guy's on his fourth deal. Look, they're smart people. But it's not like they're rocket scientists. If they can do it, I can do it. But until you get out there and see that you could just hide behind the skepticism and then think that's for somebody else.
Michael: But it's also kind of a lonely sport because, in your friends and family, you're kind of crazy, clearly. Because your friends and family think you're crazy.
Raising money to buy a multimillion investment, you're crazy. So after a while, you're like, man I think maybe I'm crazy. You go to these conferences or these communities, and there's a whole bunch of crazy people. All of a sudden you're like, maybe I'm not so crazy. It does encourage you. Because before, you doubt yourself. Then you see a bunch of other people on the similar journey as you are. It does provide encouragement. So this is why these communities are very important.
The Miracle Equation
Darin: Yes. I remember the first time I came home one day from a purely multifamily networking event and everybody was in the group. I came home and I said to my wife, that was the craziest thing I've ever been to. She's like, what do you mean? I'm like, there were like 200 and some odd people. Everybody in that room, either was a syndicator or had capital and they wanted to invest in multifamily. It was all put in the same room.
Everybody had paid a fee to do this. So it wasn't a bunch of people that were looking to get rich quick on a hundred-dollar weekend event. So that was crazy to me. Hey, talk about perseverance and determination. You did say earlier that you tell people, we want them to have it within a year. But it's not something like, single family, you can go out and buy something in next two weeks, right? But multifamily, it takes a little while longer.
Michael: Yes. I love the book by Hal Elrod called The Miracle Equation because he redefines goal setting. Typically we're taught to have very specific, measurable goals by a certain deadline. That may be good for shorter-term goals, but for something like, I'm going to do my first deal in the next year. Well, how do you know it's going to be a first in one year? It could be nine months and it could be 18 months. So what I'm saying, there's variables in that goal that you don't control. You don't control the timeline of the goal, but you do control the activity that could lead to that goal.
Michael: So what Hal says in the book is commit to set goals when you have a goal like that, where you don't control the outcome. Then set activity-based goals that lead to an outcome and then commit to those activity essentially for as long as it takes. There's no timeline. That's very encouraging. Because if the one year comes and goes and you don't have a first deal, well what are you going to do give up because you didn't get your first deal in a year.
Darin: A lot of people do. I think.
Michael: We've had people not do their first deal in the first year. We just say, look you got to keep going. Sure enough, within a month, two, or three, they do their first deal. It's just to have to commit to the activity of analyzing deals and talking to investors. It's kind of boring, a little tedious at times. It is discouraging. But if you can commit to these activities, then you will become successful. It may not be exactly in your timeline.
I remember interviewing Grant Cardone a little bit and ask him what his superpower is. I thought it'd be his jet or his Rolls Royce or something. He said, consistency. I was like, and it's so true. It's consistency. It's not even massive action. Who the heck takes massive action? It's tiny action every single day. It's consistency that leads to the result. And so that's really the secret.
The Most Valuable System if You’re Just Starting in Multifamily
Darin: Liken it to working out. I mean, you can go in the gym and one day go all out. It's most likely not going to change your physique. But you go consistently day in and day out and over time, you're going to see those changes. That happens here too. There's people that get frustrated because they want that first deal. Then all of a sudden they get it. Then number 2, 3, 4, come like that. Hey, talk about systems. Because we're within this apartment investing game, a lot of people that are successful start to build systems in different areas to make it more efficient.
Michael: Are you talking about systems to get into your first deal or scaling your portfolio?
Darin: So it could be systems in a lot of different ways, it could be systems in terms of leveraging VA's to do tasks that you don't normally have to do. Or it could be systems by having repetitive tasks handled by hiring somebody to do a piece of the underwriting. Then you end up looking at the high level, but what kind of systems have you implemented over time that have helped you?
Michael: So we're going to talk about scaling systems.
Darin: Yes, it could be underwriting. It could be how you look at deals.
Michael: In the beginning, you have less systems per se, because you don't have the revenue coming in to actually outsource stuff. So it's typically you and maybe your partner. The only system that would be valuable early on is to follow a system that gets you into a first deal.
Michael: So ours is called the deal maker certification or deal maker blueprint, for example. That shows you the steps that you should follow the first 90 days so you can actually do your first deal after that. So that's a system that you follow so you don't have to figure things out on your own.
Now, once you've actually done your first deal, and maybe your second or third, you got to start thinking about scaling. We've had numerous conversations with people who've done their first deal. When I asked them what their scaling plan is, they look at me and they don't even know how to answer the question. They go, I'm just going to do what I did last month. That was my scaling plan too. I had no idea what my scaling plan was when someone asked me a scaling plan.
So what we're trying to do now is help people create those scaling plans to address things like, do you even understand what your revenue projections are? Do you even know what your revenue sources are? Where they're coming from? Okay, well do you know how to raise more and more capital? How are you going to do that? Well, we got to talk about marketing. Did you know you have to invest in marketing? How much should you invest in what kind of marketing? What kind of return on investment should you expect? What kind of people do I need?
In syndication, we talked about four roles. There's maybe a couple of other ones. How are you going to get those? Are you going to partner your way there? Are you going to hire them there? How does that feed? And then you basically put a profit and loss projection together.
Michael: Then once you have all that stuff together, you kind of put together a plan. We put together a three-year, what's called vivid vision by the book, by the guy's name I can't remember. It's called Vivid Vision. Where you basically visualize what your company looks like in three years. And then you create a one-year plan. Okay, what do I want to do this one year? Then you create your quarterly goals or quarterly rocks. What are the three things that I want to do this quarter?
Then you do that for yourself, for the team, for every person on the team. That's how you hold the team accountable. So having done all that gives you your scaling plan and it clarifies what you need to do to get there. I just find that most syndicators have no idea where they're going. They say, oh I'm going to have a hundred million assets under management. I say, great how much capital do you need to raise? I don't know exactly. Well, how are you going to raise that much capital? I don't know. Well, you're just dreaming now, buddy, you're dreaming. You have all these hundred million but you have no idea how to get there. That's a shame.
So what we're trying to do in that one is introduce the scaling plan and then the systems within it that are very important. You need to have a plan. You need to have revenue coming in. If you don't have revenue coming in, you can't hire a VA, you can't hire a marketing person. So you got to be clear about those things.
You Need to Play Your Cards Right
Michael: The cool thing is it's not hard to do. That's a cool thing because this business is so lucrative. That if you just play your cards right, you will generate a lot of revenue and then you can hire. It doesn't take more than a handful of people to run a portfolio of a couple hundred million dollars. It's not like I need 50 employees unless I'm managing.
Darin: Look at the value of what you just said. Somebody is busting their tail for nine months or a year, a year and a half gets their first deal. Then all of a sudden, as you ask them those questions and they weren't even prepared for it. Yet first they're probably like, man I can't believe he's hitting me up like this. But then when they think about it, like now, it really makes them think, okay, where do I want to go? And how am I going to get there? All of a sudden for the ones, not everybody's going to do it.
Not everybody's going to make those plans. But the ones that do implement those plans, all of a sudden they achieve that next level. They're like thank you for hitting me on the head with that. So that's fantastic. That's another value of having a mentor and having people around you that are trying to help level you up. In this business, there's people that are below you and there's people above and everybody is out to help each other. It's a crazy industry that way. Your deal is in June, and is it two days or three days the Deal Maker Live?
Join The Deal Maker Live with Michael Blank
Michael: Yes, it's two and a half days. You have to start it with a reception, of course, a networking reception. So it's June 2nd through 4th in Dallas at the Hilton Anatole.
Darin: Who is the typical person that comes to that event? Is it the person that's never invested before? Or is it the person that's done one deal and is looking to scale? Is it a mix-match? What who's the typical person that attends that?
Michael: It's a bit of a match. There's going to be people all over the place. There's going to people who have maybe done a deal, then there's going to be heavy hitters there that have maybe a thousand plus units. Some of them may actually be speaking. Then there's people who have never done a deal and there's everybody in between.
There's also some investors that go there because they're looking for operators to invest with. KP's, co-sponsors that kind of stuff. So it's a pretty good mix. They're just attracted by the multifamily industry because there's so many different ways to get involved.
Darin: Yes. It was funny when I first got involved, I even thought to myself, which is silly, but I thought to myself, okay well I'm looking to invest passively and also learn how to be an active. Well, the experienced syndicators, they're probably not even going to want my money because they already have their investor database. But that's somebody coming from outside the industry that doesn't understand it. Well, once I got in, I started realizing, well a lot of new people that come in, they may take half-million dollars out of the stock market and then invest it in five, ten deals over the year.
Michael Blank’s Next Big Stretch Goal
Darin: But then they're tapped out. They have to wait until those deals start turning in 3, 4, 5 years. So the syndicators are always looking for new investors to get involved because the other investors, some of them have a lot of capital and they can keep reinvesting. But others, they get tapped out. So hey, what's your next big stretch goal? Where do you go from here?
Michael: So we want to become known as a company that can help people become financially free with real estate. So we're trying to become more mainstream. We're fairly well known. If someone searches for apartment buildings or multifamily syndication training or education, we want to reach people who aren't thinking apartment buildings.
So we're just ready to just reach more people. We have to change our messaging a little bit more. We have to maybe talk to people more about what they're thinking. It could be, hey how to not flip a house. So we want to try to reach more people who are thinking real estate but not necessarily apartment buildings and we want to bend their mind. So that's kind of where we are right now.
Darin: Will the solutions still be apartment buildings?
Darin: Okay. But it's trying to change the front-end messaging to bring more people into the fold where they don't have that objection, right out of the gate.
Michael: That's exactly right, yes. Kind of talking to them in terms that they're thinking now, which could be single family house or the BRRRR method or right. Even crypto or whatever, investing in the stock market.
What Michael Blank Loves to Do Outside of Work
Michael: Well maybe not investing in stock market, but stuff like that and saying, hey that's pretty cool. But you know what, here's some problems with that. Here's some of the ways you might think about solving that.
Darin: That's interesting. I like that. Hey, what do you like to do for fun and outside of work?
Michael: Oh man, I love the outdoors. So hiking and I play competitive tennis. One of the great things I love to do is to travel, particularly with my family.
Darin: US or international?
Michael: I wish it was international. We haven't made any international plans yet because a couple of years ago, right after COVID we actually had a huge around the world trip planned, 60 days. I had all my podcasts recorded. I worked my butt off, get it all in the can. Then COVID came, my daughter deferred college it was magical. It took us a year and a half to plan this thing. Then COVID came and we're like oh. So I'm still traumatized from that. So yes, international would be great. Right now we're just keeping it domestic, but man maybe next year's time to get back out there.
Darin: Fantastic. Well, hey if people want to reach out to you or get to know you better where would you point them?
Michael: Yes, a couple of places. I think maybe check out my podcast as well. It's thefreedompodcast/listen. Actually, it will open up your podcast reader. Wherever you are you can listen to an episode or two.
The Freedom Vault
Michael: Then if you want, if you're curious about multifamily, check out Darin, he's got a lot of stuff on his YouTube channel. We got a couple of cool things in our freedom vault. We have an ebook in there that talks about how you can raise capital to buy your first deal. That's in the freedom vault. That is also at thefreedompodcast.com/darin. We even have your own link for that. So that might be a couple of things that you can do if you're watching this, listening to it.
Darin: Listeners, if you don't know, most of you probably have heard of Michael. But if you don't know him, you need to start looking at some of his stuff because he's definitely a leader in the space. I love the fact that he's unique from the standpoint, in the multifamily business most of the people I talk to are just focused on multifamily. Here he is wanting to get the message out to a bigger audience. More so with financial freedom and using apartment investing to get there. So listeners, I hope you enjoyed that one. Michael, I appreciate you coming on the show. Until next week. Signing off.