Earning 20 Years of Freedom “One Rental at a Time” with Michael Zuber

Sean: [00:00:55] Go ahead and introduce yourself and let us know who you are and kind of walk us through what are you doing now?

Michael: [00:01:01] Thank you for this Sean. My name is Michael Zuber. I am a real estate investor. I’ve been a real estate investor for the better part of 16 years now. I live in the Silicon Valley which means I work in technology or at least I used to work in technology. I am lucky enough to have built a rental portfolio over the last 16 years or so that allowed me to leave the workforce last February. So I’ve been out 14 or 15 months now and will never go back. So now I spend my time managing my portfolio, occasionally picking up a flip or two, but ultimately I spend the majority of my time giving back, trying to help busy professionals see that yes, they can invest in real estate as a side hustle and really change their financial future. Even if they don’t want to retire or they don’t think they can, I believe if everybody just got to four rental properties their financial future would be vastly improved. So I spend my time trying to get people thinking about, “You know what, let’s just get the four and after that we’ll see what’s next.”

Sean: [00:02:11] Awesome, where are you usually investing in?

Michael: [00:02:14] That’s a great question. So I live in Mountain View, California, again the Silicon Valley, but I’ve only ever invested in Fresno, California, which is the Central Valley. It’s about two and a half hours one way. So it’s a five-hour round trip if I want to go look at properties or anything which means I’ve had a property manager since day one, which is obviously a key element for busy professionals because we may have money, we may be able to find deals, but we don’t have time. So, finding and securing good property management is a key part of this business. So that’s what I do. I have looked out of state, but I’m a control freak and I like to be able to drive and go see my property. So I invest in Fresno, California.

Sean: [00:02:59] And how many do you have at the moment?

Michael: [00:03:02] I have just about a hundred seventy five units or rental doors, which is a mix of houses and apartment buildings. I have about a hundred and ten doors inside apartments. The largest we own are 18. We have an 18-unit building, some 13s, lots of 10s, a couple of 7s, 5s. 18s big for us. We’re not a part of any syndication. So this is all just in my wife and I’s name or LLCs and entities that we have. So it’s all ours. We don’t have to split it with any partners or anything.

Sean: [00:03:36] That’s very impressive, getting to 175,000 without syndicating. It must have taken some time. Do you want to talk about your story and how you got started? Why Fresno and how you got to where you are today?

Michael: [00:03:48] Yeah. So that’s funny. I wrote a book called “One Rental At A Time”, which was the first thing I did after I retired, that documents this story. I actually pulled out four different phases that we can just highlight quickly. The first was when we started which was actually a seller’s market, much like we’ve been in the last couple of years. We went from zero units to seven or eight at the peak of the market, which would have been right around 2007-2008. At that time we were looking for the ninth purchase, but we couldn’t find anything that made financial sense. So it was at a local real estate meetup that somebody brought up the idea of small apartment buildings which turned out to be a godsend for us because it allowed us to 1031 exchange out of houses in the small apartments. For example, the very first unit we ever bought was on Norris drive. We bought it for 107. We sold it for 263 about three years later. So more than doubled in three years to tell you how hot the market was when we started. And then we moved it into a five unit apartment building which actually rented for 3x. Rent was about 3,000 where rent on the house was a thousand or $1100. But it cost 223 instead of 265. So the numbers were just much better because everybody in 2007 and 2008 wanted a house. Lending was super easy countrywide. all these people were giving liar loans and just toxic stuff. So what we did during the end of the first phase is we got out of houses and went into small apartments. So we went from eight units to 80 via 1031 exchange. So no new capital, just regular commercial financing and then the crash happened. And we were safe because we were in apartments that were cash flowing very well. Our net worth probably went down because everything went down but we were Investing for cash flow. So we were fine. During the crash that’s kind of the second phase. Then we come in and realize that there’s all kinds of deals everywhere. But no banks would lend to us. So we went to hard money first, which is really expensive, 9%, 40% down, couple of points. So it wasn’t very long before, that was too expensive for us. So we then went private money, we found a lot of people that had money in our network that wanted to invest with us. We pay them frankly 10% interest only, for the purchase price. So we got into a bunch of real estate with nothing down. We just agreed to pay 10% interest. So all we had to do is fund repairs which we did out of closing or out of our cash flow and our W-2 two jobs. So during the crash we went from 80 to about 150 units. So we added 70 units,lots of houses lots of duplexes, even more commercial stuff. We bought another 18, we bought some 10s because when it crashed everything crashed. Then the third phase we took a pause because it was weird. The hedge funds came in like in 2012 or 13 and everything changed overnight and it was just weird. We didn’t really know what was going on and then the seller market began again and everything went up and stuff doubled and tripled and quadrupled. And eventually the wife retired and then I retired right about 175 units. Now we’re just repositioning. We’re laddering up some small apartments like fourplexes and paying off houses. So we’re just moving dead around at this point, but cash flow funds our existence. We don’t live flashy or anything, but our monthly expenses, living expenses, going out to eat, all that stuff’s paid for, so it allows us the ultimate freedom and it’s kind of a nice feeling.

Sean: [00:07:43] That’s amazing. Like I said, I think you’re the only person I know that has this many properties or this many doors in their own name versus like other people who say they have a thousand units but that’s all part of a syndication.

Michael: [00:07:56] Yeah. It’s in entities, but it’s our entities. No partners. No JVS. Just all us.

Sean: [00:08:03] So it seems like people will say when the down market happens, there’s people who are able to take advantage of that and like just go all in. Seems like you guys definitely saw that and you definitely went all in. But now that we’re in kind of like a seller’s market things are more expensive. Even in Fresno things are pretty expensive. So what would someone do to emulate that and replicate your success?

Michael: [00:08:23] Well, I’ve been buying in lots of markets and I’m still buying today. In fact in the last ten business days I’ve closed 20 units in Fresno, the only Market I know. 15 of those units are long-term buy-and-hold. I basically picked up a landlord who wanted out so we did owner financing. The short story is he sold me a portfolio worth 1.3M for 900K. All he asked for was 100K down and 5% interest for 20 years fully amortized. No points. No appraisals. No inspections. Nothing. We put that deal together inside of 14 or 15 days. So that works. We’ll add probably conservatively another thousand dollars in cash flow from that deal once we kind of manage the tenants because I’m sure some of them will have to go. But we also added about 400K net worth to our balance sheet. So you can still do deals today. And then another one was I just closed yesterday was three houses on one street, actually even the same side of the street, but not next door to each other. It’s kind of weird. It’s like a house here and then a house here. Then a house over here. That one was from a wholesaler, actually a friend of mine who I usually compete with didn’t have any cash when this deal came up and he said hey if you want it, it’s yours. So I picked it up and I will look to fully remodel them and then likely flip those. I’ll probably sell those to other investors when I’m done.

Sean: [00:09:55] How are you typically finding deals if you’re up here in Mountain View?

Michael: [00:09:58] So the first 15 years all MLS. I bought two deals before I retired not out of the multiple listing service or MLS or Realtor.com or whatever that is for you. One of them was during the peak of the crash. I bought a property off Auction.com. and the other one I bought directly from a bank because the bank president saw that I was remodeling a unit next door and they had just foreclosed. So he knocked on the door where my general contractor was and said, “Who’s the owner? I want to sell them the property next door.” So other than two deals, I bought every single one of my properties out of the MLS in a screaming hot market in a crash. It doesn’t matter. There are deals there. You just have to be creative and look. I still say when I talk to students today 99% of the MLS is not for us. It’s our job to go find the one percent that is and of the deals I’ve done this year my first three which we’re all in January we’re all out of the MLS. So it’s still possible.

Sean: [00:10:58] And like are you looking at MLS yourself? Or do you have an agent down there looking for you?

Michael: [00:10:58] I consider my job to be twofold one is finding deals and the other is securing capital so I still look every day. I do have a decent network now that does bring me deals and that’s something I tell my students is you got to network and go to meetups and all of that because the more people that look, the more deals that will cross your plate. But I think it’s arrogant to sit back and just wait for the phone to ring so I look all the time. I look at least daily and I probably write a dozen offers a week via different agents .

Sean: [00:10:59] Okay, very cool. And when you secure capital, you mentioned that you guys, it’s just basically you and your wife. So what kind of capital are you looking for?

Michael: [00:10:59] When we started it was just bank accounts then we started doing cash out refinances. Then it was hard money, then it was private money. Today we’re lucky enough to have cash flow every month and some assets behind us so we could go get capital, equity lines and things like that if we need them. But we still use private money occasionally for flips and things of that nature. So we’re lucky enough to be in a position where we can finance all the deals ourselves If we have, to be it cash or equity lines. We still use private money for probably half our deals just because we want to be in and out in six months and get a good return.

Sean: [00:12:23] Got it. So using your private money only on your flips; not necessarily for your buy-and-hold projects.

Michael: [00:12:28] In today’s market, we are only using private money for flips. Yes, buy-and-hold would likely be owner financing and I’ve done owner financing with zero down upwards of the deal. I just did which was 100K down

Sean: [00:12:40] Nice. And you said that you found everything on the market. So for your apartments you were probably looking at Loopnet for that?

Michael: [00:12:47] Actually no, I mean I eventually got there but at first, I didn’t look at Loopnet until we had over a hundred doors. But remember that was always 2008-2009. Loopnet was just beginning. It was there for sure, but it wasn’t the source for commercial properties that it is today. If I was doing what I did back then today, Loopnet would be a better source but back then agents were just putting stuff in the MLS. Yeah, you can put commercial properties in the MLS and you got to remember, my biggest is 18 right? I didn’t buy a 132 units or 580 units. That stuff is never been in the MLS. But Mom and Pop investors still use local brokers majority so you can you can find 10 units and below pretty easily in your local MLS.

Sean: [00:13:38] And when you’re looking at the MLS, what are you kind of looking for and saying “Okay, this is something that I want to pursue. This looks like a good deal to me”?

Michael: [00:13:45] Usually it depends on where you are. Right? If you’re answering that question today, I’m looking for bad listings actually. It could be horrible pictures. It could be square footage that doesn’t match bedroom count. One of the favorite things I do in markets like this is I look for listings that say something like they’re 1,300 square feet or bigger but they’re only two bedrooms for example. And I go, ”Well I have two bedrooms as small as 750 feet, right in my apartments. So if this is a 1,350 square foot house, I wonder if the layout is such a way where I can create a third bedroom. Now, why do I want to do that? Simple, because I’m a landlord and I know there are three things that drive rents: one is bedroom count, one is bathroom count, and the other is parking. So if I can buy a two-bedroom and with $2000 or $3000 create a three-bedroom or heaven forbid a 4-bedroom, I will do that all day long because two bedrooms sell for less than three bedrooms and sell for less than four bedrooms. And it’s really not that expensive if you find somebody with a huge family living room connected. So just add a wall and a closet assuming it’s a hundred square feet. It has egress meaning a window in and out in a closet. It’s not that difficult. So those are things I look for today. The other ones I look for is stress, meaning if it says probate or if it says out of town owner or it had a price reduction, because again, we’re still in a pretty good seller’s market today so lots of the clean pretty smelling stuff will sell. So I want to find the stuff that needs some work, some value add. That’s what I look for today.

Sean: [00:15:37] And then you just buy with cash, do your stuff, and then refinance out later.

Michael: [00:15:41] I can do that for sure. Right, BRRR method – buy, rehab, refi, rent it out. Yeah it depends on the deal right? I try owner financing first, if that doesn’t work and if I want to keep it, if I’m going to keep it then yes, I will likely pay cash. I will invest the dollars or sweat equity and then refi out for sure which is interesting because I’ve only been able to get bank loans again the last year or so. There was a eight-year period where even if you had a W-2 of six figures, a net worth of seven figures, if you owned a lot of real estate the banks don’t want to lend to you. So I was stuck for a decade almost but now the banks are lending to us. So we refi’d 60% LTV on some four-plexes, paid off a bunch of houses. So it is nice to have bank lending back in our favor.

Sean: [00:16:28] Yeah, it’s weird. Right? Like you guys know what you’re doing and you’re making more money than most people but they won’t give you the loan.

Michael: [00:16:33] Yeah, it was really odd the first time I went to a bank and they almost laughed me out. I felt like I was a criminal or something. It was terrible like you we don’t invest to you. They actually said you’re part of the problem. I’m like, what do you mean I’m part of the problem?

Sean: [00:16:46] Yeah, because you know what you’re doing. So in terms of your actual buying criteria, do you have any set numbers that you want, like some type of return, IRR or rent counter or rent dollar value?

Michael: [00:16:57] Yeah. I’ll give you both answers. What did I start with? This is again 2003. I didn’t know any better. All the books I read it was the 1% rule which meant that if the house costs a hundred grand it had to rent for a thousand. That’s what I use for probably the first eight years of our investing. I realize that that’s a little short-sighted. It doesn’t account for any or all the variables. So now what I look for is an 8% return on any cash invested and what I mean by cash invested, it’s down payment, repair cost, closing costs. I want to make sure that the money that I put out is coming back to me plus 8%. So 8% basically the other…the numerator is expected cash flow per month times 12 and hence per year. So I look for 8% in today’s hot market net cash flow.

Sean: [00:17:50] So I was wondering since you’re investing in Fresno. There are some parts that are really good and there’s some parts that are pretty hood.

Michael: Yeah. Well said.

Sean: [00:17:58] Yeah, I mean I heard it’s like a checkerboard right? Like this part. It’s really bad. This parts pretty good. It’s kind of like you have to know the market very very well. So what did you do to gain that experience? To understand those parts that are good and hood.

Michael: [00:18:13] So I’ve been there. I mean there was a time we were going up there seemingly every other week, but also part of this process I tell my students is you got to build a virtual team, right? You got to get boots on the ground. I was never going to live in Fresno. We have considered it now that we’re retired we may. But that’s not part of our journey. You just got to build a team and you have to ask everyone that you talk to. Because where one person thinks it’s great, another person thinks it’s terrible. I ended up creating a rule that said, “Am I willing to have my wife drive up to this area part of Fresno by herself during the day, get out of the car, go into a vacant home? Is it secure enough to let her do that safely?“ If the answer is yes, I’m willing to put my money there. If the answer is no then I’m not going to put my money there. So that became the criteria all of my team members used and it probably held off some good deals, but I just I didn’t need to be in that part of the hood to use your phrase. So I had to be comfortable.

Sean: [00:19:20] It’s interesting that you said that you wanted her to be able to be safe during the day but not necessarily at night, huh?

Michael: [00:19:27] It’s actually a different story (laughs)

Sean: [00:19:29] It’s too much, right. It will wipe off half the city.

Michael: [00:19:35] Definitely daytime. I pay people man. I pay property managers to manage my stuff.

Sean: [00:19:40] So talking about boots on the ground and having a very trusted team. So how are you finding these team members?

Michael: [00:19:45] Oh gosh that took that took more longer than it should have. I wish I had a good answer. The first answer is we fired the first five teams we had. My job, because I ran teams managed people all over the world for my day job, I knew how to set expectations, track performance give them a chance, and if they don’t Improve let them go. So I did that and I should say we did that and it took a while to find a team that if you tell them what you want, gave him feedback, managed expectations, had weekly meetings and phone calls and all of this stuff, once you get that team and you’re in a rhythm life gets so much easier, but it does take work. The first five years were rough, even though we didn’t have a lot of units right? We probably had I don’t know eight or nine units by the end of five years and firing a property manager, getting a new one, doing new leases. It’s just a pain in the ass. So you just got to test people, ask for referrals, go to local meetups. But again your job if you’re going to use a property manager is to set expectations and track performance. And you need to treat that like a job, after a couple of years of good performance, you can let off the reins a little bit but they are the most vital aspect of your team because they’re going to be the ones interacting with your tenants. They’re going to be the ones calling out jobs they’re basically the face for your business. So it’s your job to manage them and you should take it seriously.

Sean: [00:21:19] Yeah, I mean you mentioned also that you spent the first couple years going to Fresno pretty often kind of like get your own boots on the ground. And you said you went to local meetup groups. Did you actually go to meet up groups in Fresno as well?

Michael: [00:21:30] I have yeah. They were I think Mondays at 5:30 or something.

Sean: [00:21:36] Yep. So you would take like days off to go there?

Michael: [00:21:40] Well, I worked in sales so I wouldn’t necessarily call them days off, but I did some of my work from the phone. If you could do work from your phone and your computer, I could be working anywhere. I may have taken a day off here and there, but no, I often just did my job from Fresno.

Sean: [00:21:57] Okay, perfect. Sounds good. And having to go through five whole teams, I mean, I’m sure that’s a lot. I don’t think I fired that many people before so I’m sure you have some great horror stories. Would you like to share anything?

Michael: [00:22:10] Well, I mean, there’s just all kinds right? I mean, I remember one property manager. Essentially we never took him to court but he basically lied to us about how money was being spent. They got caught because they try to hit us up for a new water heater twice on the same building within a like a four-month period and that’s just not… even if it was true it would be under warranty and we wouldn’t have to pay for it again. But that was a non-starter. Another one, we always did surprise inspections, especially in the beginning. They were fired when they said our house was rented and it wasn’t, we found that when we went there it’s just a bad situation. Another one seemed to work out for a couple of years until we got bigger, then the real estate crash happened and suddenly they were giving us the level of service we had come to expect because they were doing lots of short sales and REOs. So suddenly their focus wasn’t on property management but it was on selling real estate. So there’s lots of stories like that. So that’s why I tell people if you want to find a good property manager, find a property manager who is an investor and what I mean by finding a property manager is the owner of the company has to be an investor. I found most of my pain and again, this is just my experience, from property managers who were part-time property managers, right? They were real estate brokers here and they were property managers here or they were property managers and they were lenders. Anybody with a focus that wasn’t 100% on property management, eventually the environment is going to change, something will become more important and property management will just become secondary because it’s the hardest job. Being a good property manager’s crazy hard. Dealing with people and contractors and in people’s life events it’s… you couldn’t pay me to be a property manager frankly. So it’s a hard job.

Sean: [00:24:11] Yeah, I mean my dad’s a property manager and I’ve seen the pain he’s gone through and that’s why I will not take over his business when he’s done.

Michael: [00:24:18] No chance. Sell that thing Dad

Sean: [00:24:20] Sell that thing dad. I have properties over in Jacksonville, Florida. And I mean, I followed the 1% rule so I’m still relatively new as well. But it’s worked pretty well. My property manager loves being a property manager and he is an investor himself and has that investor mindset. So you mentioned that you have some students. What kind of things are you teaching them? And what kind of tips do you give to investors?

Michael: [00:24:42] Yeah, so I guess there’s kind of three answers to that. So I have a YouTube channel called “One Rental At A Time” where I post daily videos about real estate investing. I started that right about a month after I left because I needed something to do. I frankly was bored and I almost went back and got a job. It was crazy, but I found that if I just took the time and recorded videos and gave back then I felt better. So that’s the first thing I do. That’s free and again it’s called “One Rental At A Time”. Second is I wrote that book I mentioned earlier called “One Rental At A Time”. It’s basically a full documentation of our history. It’s meant to create belief and confidence In full-time employees that yes, you can take control and learn a market and be in a better financial position. And then just recently like the last 10 days, I released an online course on Teachable called “How to start one rental at a time”. It’s like eight hours of content, five steps. It’s how to learn a market, how to understand the numbers, how to build a team, how to set goals and manage expectations. It’s basically everything we did in the first five years right in an online course and I’m giving it away for almost nothing. It’s $99 and it’s worth thousands of dollars. I’m doing it because I want to help a thousand people get started. For the rest of my life I want to do two things. I have two big goals. The first one is I want to create stuff that outlives me by a hundred years. So I think the book and I think the YouTube channels and podcast like yours have every chance of outliving me by a hundred years. So I’ll be doing these as long as I can. And the other is I want to help a thousand people start or take their next step. So for a year, it was hard for me to understand how to do that. Right? How do I track a thousand people right? My YouTube channel has nearly 2,000 people now, the book’s been sold over a thousand times, but it’s still like I can’t really count that. So I spent 90 days creating a course that I’d be proud of and then I put it up on teachable with over 8 hours of content that I’m still adding to and now I’m just counting those students. So every student that signs up and spends 99 bucks I’m counting that on my goal of a thousand and it’s just started. It took 90 days to create and it’s been out there 10 days or so. I’m finding lots of ways to give back like just three days ago. I created a private Facebook group for people who are students so we can all be in a safe place and ask questions and learn together. So giving back and helping people’s a lot of fun and I hope to be doing that for a long time to come.

Sean: [00:27:34] Yeah, it’s amazing. It’s funny like some people would think $99 is way too much money. But in reality that’s like one nice dinner here in the bay, right? Just a nice dinner with you and your wife. It’s already $99 and this will save you five years of headache.

Michael: [00:27:50] Yeah. I actually had coaches tell me I should charge $495 or $497 or whatever silly numbers like that and I’m like “Guys you’re not listening. I don’t need the money. I want to recoup my costs because it does cost to host and all this other stuff. So I don’t want it. I don’t want to lose money. So that’s why I chose $99 and really why I chose it was because it’s going to be less than one month cash flow. That’s why I chose it. I’m trying to help you buy your first cash flow rental, and I wanted it to be less than the cash flow, one month of cash flow. So that’s why $99.”

Sean: [00:28:23] So are you trying to have them also buy in Fresno too or just saying here’s a concept you can buy anywhere in the country?

Michael: [00:28:30] I created it under the guise of lots of people I talk to wanted to invest out of state or out of area. So I created the course about how do you learn a market you’ve never been to. Like when I chose Fresno, I drove through Fresno, to Yosemite when I was 30, so I knew no one. I didn’t have a team. I had never been there. I still have never spent the night in Fresno. So I created a course where if you take my course you should be able to learn Dallas, Texas Cleveland, Miami, Florida or Fresno. It doesn’t matter. I wanted to serve the need of busy professional 30 minutes to 60 Minutes a week any city in the US. So that’s what I did.

Sean: [00:29:21] That’s amazing. I think most of my listeners actually fall into this exact category. Most of them are Bay Area professionals who are trying to get into real estate investing and like this podcast gives them many different options, whether it be flipping homes, buying rentals or investing passively and syndications.

Michael: [00:29:38] Yeah, it’s a need that’s out there and if you want to change your life, if you want to pick up one new skill of buy-and-hold landlording, buy-and-hold rentals, this course is going to save you years and tens of thousands of dollars and headaches and again, it can be used for any market any time. if you learn how to do it the skill’s going to be valuable in 10 years, the skill’s transferable to any city. It’s not like you have to learn new things to invest in Dallas versus Cleveland. It’s the same skill. I’m just giving you the control over your own future.

Sean: [00:30:14] Yeah, I mean learning how to manage people remotely is a huge challenge and I was wondering how did you choose Fresno in the first place?

Michael: [00:30:23] There’s a good question. So like everybody when they start out, every real estate book I see, again this is 2003, said invest in your backyard, which most often is translated to within 30 minutes of your home. So I believed that for a year. However, there’s never been a property that I found after a year every Sunday looking around our house in Mountain View. So we had a meeting around the kitchen table after a year for 52 weekends and basically said “What are we going to do? We could either overpay and get one rental or we could look out of area.” And what we ended up doing was pulling out a California map and drawing circles, 30 minutes, 60 Minutes, 90 minutes, 2 hours, and Fresno is the first city of size that made sense, basically hit the 1% rule. Now sizes are important. I didn’t feel comfortable investing in a city with 20,000 people that had no real employment other than it was a bedroom community to somewhere. Fresno when I started had half a million people. Today it’s almost a million people. So I wanted a big city. So that’s why Fresno; 1% Rule and it was a big city and I could drive there.

Sean: [00:31:42] What kind of Industries are in Fresno? I actually don’t know that much.

Michael: [00:31:45] Yeah, it’s mainly agriculture. the average income’s just below $60,000. However, the average house is $200,000 ,so you can live there fairly well on $50,000 a year, it’s mainly ags,some government work, some light technology, lots of truck. Now today lot of trucking and warehousing because Fresno can get to LA and the Bay Area inside a day. It’s a lot of next-day shipping kind of stuff.

Sean: [00:32:11] So what kind of rents are people looking for or what kind of rents do you typically get for a home that’s worth $200,000?

Michael: [00:32:18] Yeah, so I’m just flipping a house , it’ll be done next Friday. It’s a 3-bedroom 1-bath. Call it 1,250 square feet, renting it for $1,100 and selling it for 155. There’s a two-house combo meaning two houses side by side. I’m selling for 250 that rents for 2100. Or 2150 I think. And then there’s a triplex that I’m selling for 225 that rents for 2100 or 2150 again, not quite the one percent rule but pretty close especially given they’re fully remodeled. Right? No headaches, new roof, new windows, new paint, new floors, new kitchen, new baths.

Sean: And they probably hit that 8% cash-on-cash after all said and done?

Michael: [00:33:05] They will probably hit six percent for new investors. Yeah, 6-7% They won’t hit eight.

Sean: [00:33:11] It just seems that you have a 3-1. here in the Bay If you have a 3-1 that thing is going to sit for a long time. People usually don’t like having one bathroom. I guess in Fresno it’s acceptable.

Michael: [00:33:24] Well again, I don’t know that it’s ideal for sure but again if I had to, just for example, so it’s 3-1 and rents for $1100, a 3-2 would be $1250. So it’s all based on rent. Right? So again three things drive rents, bedroom count, bathroom count, and parking. Is it garage carport or street parking? So a 3-1 ,$1100, 3-2 $1250, a 3-1 no parking , $1000, right? So you get to learn all these variables. So a 3-1 is not extremely nice. But again, it’s a rental for someone. It’ll be a rental for a long time. It’s going to have new baths, new kitchens, new floors. It can be basically a brand-new house from roof to floor. So somebody’s going to. Some landlords going to love that place for the next 20 years. It’s going to be awesome.

Sean: [00:34:18] Yeah, and no headache because the new everything, new property, right? So you don’t have to worry about like bad roof and bad water heater and whatnot.

Michael: [00:34:26] Nope. Already put on a $10,000 roof. already got an $800 water heater brand new. So yeah all new stuff.

Sean: [00:34:33] Awesome. Are there any intricacies about Fresno in particular that you probably know since you’ve been there for so long that we wouldn’t know since we have no idea about it?

Michael: [00:34:45] Which the Bay Area don’t know about?

Sean: [00:34:48] Yeah, I mean you probably know about it unless you lived in Fresno.

Michael: [00:34:52] Yeah, so I think well first off, Fresno is not a technology hub. Right? So in the Bay Area everybody’s on their iPhones all the time, and everything’s an app and all of that. I would still say half my tenants pay with checks or cash.

Sean: [00:35:10] Oh, really? Yeah. Okay.

Michael: [00:35:14] There’s a payment online, it’s just starting there and maybe it’s a year or two behind. The other thing that’s interesting I guess when I think about it is Fresno’s really didn’t have the tech crash remember? Early 2000s the .dot-com crash, Fresno sailed through that unscathed because it didn’t have a tech industry. Just kept on keeping on. The other thing is it’s a large city. That’s what I would tell you is most people don’t respect Fresno for just the sheer size. It’s almost a million people. It’s the fifth largest city in California. It’s bigger than Sacramento. It’s the largest city not on the coast and you can still live there comfortably on 50 or 60 Grand a year. So I think the other thing is August is hot. It’s a hundred degrees in August all the time.

Sean: [00:36:09] So every house has air conditioning unit?

Michael: [00:36:11] That’s what I would say, 90% of them have AC. Some of the older ones have what’s called a swamp cooler, which is basically just condensed water that really doesn’t do much when it’s a hundred degrees because the water is already too hot.

Sean: [00:36:23] Oh my goodness. That’s just horrifying.

Michael: [00:36:25] It is bad.

Sean: [00:36:29] I have a quick question about your book. Your book was basically your autobiography about your phase through these four phases. How long did it take you to write that book?

Michael: [00:36:40] So it took about 250 hours to write but it took about five hundred hours to edit. I went through two different New York editors. Because A: I don’t write well, right. I’m not a great student, but it was also important for me to keep my voice because it was our story. So there was some back and forwards with editors trying to make sure the book stayed ours and it wasn’t completely ripped apart by some person I never met. So it took a lot longer to edit than write.

Sean: [00:37:13] Nice. I think again, you’re probably the first person that I’ve talked to that’s actually written their own book. So it’s very impressive to see that. I’ll definitely pick it up. I’m gonna get a copy. So besides your YouTube channel, what do you do full time now, you’re retired you’re giving back. How do you spend your day?

Michael: [00:37:34] So I’m a morning person and my wife is not, so I’m up by 6:30 every day without an alarm clock. I spend probably the first two hours of my day responding to students via the Facebook page creating my daily video. I do create one video a day at least. And I walk my dogs in the morning. Then my wife gets up. We typically either go for our walk or go to the gym. Come home, shower, clean up, whatever that’s like. Go to lunch together every day. Then the afternoon’s ours to do what we want with. That’s the beauty of doing what we want. We can go walk around the malls, we go to a movie, we can watch the Warriors play basketball. It is ours. But I do all of my coaching and helping, I try to get all of that done by 9:00 in the morning so it’s out of the way. It doesn’t interfere with our day.

Sean: [00:38:33] It’s awesome that you have so much quality time that you can do whatever you want with. I mean, that’s the beauty of real estate, it gives you that freedom to do whatever you want.

Michael: [00:38:42] Yeah, and again, I think it’s imperative. Right? The reason I wrote the book, do this YouTube channel, and now this course is I believe real estate investing tests people. I believe it tests you for the first 10 years. By test meaning bad things: eviction, stuff breaking, just all of that nonsense. But if you survive 10 years the rewards are huge. I left the workforce at 45 so conservatively speaking I bought 20 years of freedom. What’s 20 years worth? And I didn’t even start till I was 30. Just imagine what would happen if I started if I was 20? Oh, I could only imagine so that’s why I want to help people start the younger you are. These skills I teach in my ridiculously priced course will change your life forever. If you’re going to do the homework, right and I smack you with it, right the very first course the first section is let’s do some homework. Let’s learn the market together. Get online. Let’s start looking for criteria. And I hope there’s lots of people in their 20s that pick this up and go because real estate investing can buy freedom right. Conservatively speaking I got 20 years to do whatever I want. I’m blessed, lucky, whatever you want to call it.

Sean: [00:40:01] The earlier you start the better off you are for sure. No question. So that’s all the questions I have for you today. Do you have any final thoughts or final comments you’d like to say to everybody now.

Michael: [00:40:11] I would just like to say real estate investing works. It will test you as we’ve just shared. I believe flipping and wholesaling while sexy leads to great chunk money, but is just another job. right? If you spend a lot of time talking to folks like Sean and I do, the people that are good at flipping and wholesaling – it’s a job, maybe a CEO, but it’s still a job. If you want freedom that we’ve talked about on this show the only way to do that is with mailbox money, hiring a property manager, having a couple of phone calls a month, because it’s not truly truly a hundred percent passive. But it provides the best freedom, buy-and-hold real estate, especially if you’re a Silicon Valley busy professional, you’ve got no freakin’ time. The last thing you want to do is have another job of flipping or wholesaling. So figure out a market. Do the homework, make some good Investments and take the control of your future. Even if you only get four, your life’s going to be so much better off in 10 or 20 years. And if if I can help be a spark or great inspiration via free stuff on YouTube or the book so be it. I’m just trying to give back every day.

Sean: [00:41:28] Perfect. So hear that everybody. If you want to have that financial freedom and get extra years towards your life, start investing in rentals as soon as you can. so Michael, thank you so much for being on the show today. How can people get in contact with you?

Michael: [00:41:41] The best way to get a hold of me is to go to my YouTube page. It’s just one rental at a time. It’s actually www.youtube.com/onerentalatatime. That’s the best way. Just leave comments. I actually do subscriber questions on my channel. So if you ever have a question just go to any of my videos, go to comments, leave your question. I’m a one-man show. So I answer the questions usually within 48 hours. So that’s the best way.

Sean: [00:42:10] Perfect. Thank you so so much. I think everyone has learned so much about putting your money where you can get that passive mailbox money. My friend calls it pajama money because you don’t have to do anything and then you can do whatever you want. You can spend the time the way you want it and I don’t have to be on someone else’s beck and call. All right, so thank you so much. Take care. Bye!

Here are some of the key takeaways from today’s episode. Cash flowing rentals are the way to go. Other types of investing are great, but they’re still a job. Once you figure out a system for creating a trusted boots on the ground team in one area you can replicate that in another area. It only takes four rentals to achieve financial freedom. So start as early as you can. The first ten years are the trial years where you’re going to make mistakes and you might lose money, but after that you’ll achieve a lifestyle that most people can only dream about so get started early. Michael will actually be guest speaking at our meetup event on May 28, you can register for the event at meetup.com/SVREIM and go ahead and check out his YouTube channel “One Rental At A Time”. Thanks, and have a great day!