Rigs to Riches EP07: Mike Stohler - "Life I Don't Need a Vacation From": European Hotel Riches

All right, welcome to Rigs to Riches, guys. Today, super exciting guest. I’m bringing on Tim Brandt. So, me and Tim have been catching up. It is incredible all the deals and experience he’s been doing in multif family for like not he’s not one of these multif family guys that got in when multif family was hot what, five, seven years ago. like he’s been in it for decades now and built a property management software and raises capital, but and we’ll also get at the end a little bit about family, right? He’s another guy who prioritizes family and I’m excited to dive into all those things. But Tim, welcome on the show, man. I’ll why don’t you why don’t you kind of start like where did it where did it all start for you? Yeah, man. Well, thanks for having me. I appreciate you uh extending the invitation and would love to have you on mine, too. I know. I think that’s scheduled up, too. So, listen. I got started going through college. Everybody’s making money in real estate. 03 to 07. I saw how much money was being made in real estate at that time and met some people who weren’t that smart and they were making a lot of money in real estate. And I remember thinking like if this guy’s making money, I could get rich doing this stuff potentially. So I uh I I got into graduated, moved out to New York City just on a whim. My brother was living out there and said I can come live with him and I got a real estate license and that’s I thought that’s how you got involved in real estate. So, got my real estate license, parked it with a commercial brokerage instead of a residential brokerage for some reason. And that allowed me to learn about the investment side of things, investment sales, the commercial leasing. And I remember I brokered a a small 400 foot lease at Bleecker and Thompson in Greenwich Village of New York City. And it was uh on 400 square feet. It was a $10,000 a month lease. And it was a 10-year lease term, 4-year annual escala, I’m sorry, 4% annual escalations on 12-ear lease term. And I remember doing the math on this thing of being like, this landlord is going to make 2 million bucks over the course of the next 12 years for doing something at one point in time. Like I need to be owning real estate instead of brokering real estate. And so, uh, love New York more to visit. Didn’t love living there. So, I moved down to Charleston, South Carolina. Somebody told me good things about lifestyle and that’s more my vibe. And I moved down to Charleston, which is where I live today. and uh decided I want to invest in real estate. So I started out house hacking my own home, bought some things. When was that, Tim? Back in 2008. 2008. Okay, there we go. Yeah. So the market, Dude, I showed up ready to invest and the whole market collapses. So it’s like, oh man, showed up to the party and everybody’s running out the back door. But it was really good though because there were deals everywhere. But it was very different than what you see today. There were deals everywhere and everybody looking back like, oh my god, I would have bought everything. Yeah, if you would have had access to money and nobody had access to money back then because real estate was the reason for the market collapsing for the greatest financial crisis since the Great Depression. It was real estate being the reason and nobody was giving money to a 22-year-old kid who’d never done a deal before, right, in this specific market. And so that’s it was a very difficult you had to you had to start sharpening the axe and sharpening your tool belt on creative financing, seller financing, raising private money, creative deal structuring, be willing to start out like scraping the bottom of the barrel. I literally bought the cheapest house on the entire MLS. It was listed for 25 grand and I bought it for $14,000, right? I bought it with my credit card cuz nobody else would give me money. And then I physically did the work, paid my buddies in pizza and beer, and we flipped it in about 110 days from when I bought it. I made like $13,000 on it net. And I’m like, dude, I I don’t even know what I’m doing. And everybody’s saying run from real estate, but this is the biggest check I’d ever made up to that point in my life. I was like, I need to do this again. And so I did it again. Did it again. And then I started meeting people at the real estate investors associations and just through conversation of uh people who had access to some money, right? And they’d say, “Hey man, I got a $100,000 line of credit on my house or $100,000 on my credit card or on like a 0% financing or whatever. ” And I remember this one guy gave me a hundred h 100 grand and I bought five houses with it on the same street. And then I brought like 25 grand in order to just put lipstick on a few pigs and uh and then we rented each of the houses for north of $700 a month, right? Right? I’m into over 20 25,000 a house. And so it was cash flowing and I had this great cash flow coming in to the point where it exceeded what my monthly expenses were. Now remember, I’m 24. I didn’t have any kids. I didn’t have a wife. I was house hacking my own home with two of my buddies living with me. So like my personal expenses were not that high. And I was definitely not rich. But by the definition of does your residual income exceed your residual expenses? It it did. And so I was essentially financially free at 25 years old. Thought I had some things figured out. And then I chased some shiny objects, lost a bunch of money, got my butt handed to me, and had to kind of press the reset button again in like 2012 where when I was like 27 years old. Got serious again about real estate and found my first apartment building at that time. It was an 8-unit apartment complex and just the idea of going to one location and talking with one seller and looking at one foundation, one roof, paying one property tax bill. The efficiencies of that really resonated with me and that’s what like this is what I need to be doing. And so I got really really excited about multifamily and I sold off all the single family stuff and really just focused on multif family over the course of the next couple years. I got built up a portfolio about 140 units in multifamily by 2015. Had some partners that partnership they brought money and then stopped bringing money. I was doing all the work and then they wanted me to raise more money and they had 67% of the ownership and it was like the value proposition wasn’t there. So we decided to liquidate those 140 doors and I started again in 2015ish. had a flipping business, had a big turnkey like operation. We’re flipping 100 houses a year for a few years. Opened up a management company in Cleveland, Ohio. Became one of the largest residential rental management companies and got back into apartments and grew the portfolio pretty sizably. By 2021, had just shy of 5,000 doors in my portfolio. Today, I’m sitting at around 3,000 doors in the portfolio. Done pretty much every asset class you can think of. office, retail, short-term rentals, new development, new construction, land type stuff. Yeah, you name it, I’ve I’ve done it. Wow. All right. So much to dive in there. And I’d love to get into like kind of Yeah. where you’re going these days and even some of the hurdles you guys saw, even what you’re seeing today. But back to just that growth from 2015 to 2021, getting up to 5,000 units. Sounds like you got really good at raising money. Sounds like you’ve went through some partnerships where you’re like no longer aligned. So, so yes, actually when you kind of reset and sold that 2015. Yeah. What what did you learn and how did you go reapply that to have that growth in 2021? Yeah. I you know I think I think uh people start really paying attention to you when you’re already at the top or on on the way to the top of the mountain, right? Like I remember doing a post a couple years ago of like someone reached out saying, “Hey man, how did you have such exponential growth and how did you grow so quickly? ” And I was like, “Let me show you my unit count. ” My unit count in 2008 was zero, right? In 2009 was one, in 2010 was four, right? In 2011 was 10. In 2012 it was 10. In 2013 it was 10. Or no, in 2012 it jumped up to like, I don’t know, 30 or something. 2013 it jumped up to 80 units. 2015 it jumped up to 140 units. Uh, and then it went back down to zero, right? And then I bought a 60-unit building. And then you see this like crazy hyperbolic curve, the hockey stick growth that you hear about. And I was like, I’ve been in the real estate industry since ‘ 05, investing since 2009, buying apartments since 2012, and I got that message in 2024 about how I grew so fast. I was like, dude, this is 20 years of uh overnight success, right? So, I think that’s a really important key lesson here is the growth and the learning compounds over time. The relationships compound over time. When I joined a mastermind in 2015, there were a lot of people saying, “Hey, new kid on the block. I liked him. He’s a nice guy. You know, we’ll we’ll chat with him, but I’m not giving him any money yet. I want to see if he’s got staying power. Is he here year two? Is he here year three? Is he here year four? ” And that’s when people saw that I wasn’t in it for the transactional side. They saw that I was in it for the relationship aspect of things. Investors started investing with me, right? And that’s I think a really, really important lesson is this. I call it like the three-year principle. If anything I do, I’m going to dedicate at least three years to it before I give up on it. Here’s why. If you ever read any of Malcolm Gladwell books, he talks about the 10,000 hour rule. In order to become an expert at anything, you need to dedicate 10,000 hours to that craft. And if you spend 10,000 hours at that craft, you are now an expert. 10,000 hours, 40 hours a week, 50 weeks a year is only two 2,000 hours. So, it takes you five years of a full-time effort to become an expert at anything, right? How many times have you seen people trying to dip their toe in real estate? Well, I drove by a rental property. I watched HGTV for the past two years. That doesn’t make you an expert, though, right? And so, you have to be in the trenches doing the work for 5 years on a full-time basis. We’re entrepreneurs. We’re a little bit psycho. We think about things probably more than 40 hours a week in in our businesses. And so, that’s why I’ve condensed it to like three years. And really, the the thought process is that whole first year, man, you’re just planting seeds, right? And some of those seeds get blown away. Some of those seeds get fried up in the sun and some of those seeds are just bad seeds. Some of them never landed in the soil and you’re planting seeds. You don’t know how many of these are actually going to germinate, right? Yeah. Year two, planting those seeds is figuring out who the good title company is versus the bad title companies. It’s figuring out who the good contractors are versus the bad contractors. Figuring out who’s a tire kicker versus somebody who actually does deals at the local RIA events, right? It’s like you’re planting those seeds. You’re telling people that you’re buying real estate, but they’re not actually investing with you yet, right? You’re trying to meet the wholesalers. You’re trying to connect with direct to seller, and you’re going through the motions of figuring out what works and doesn’t work when you’re planting seeds in year one. In year two, you’re cultivating those seeds. You’re cultivating those relationships. You’re putting sun on them. You’re putting water on them. You’re fertilizing them. and you’re deepening the relationships with the potential private money lenders or people who maybe invested 50 grand with you before they ever invest $500,000 with you, right? Or you know the broker who brings you some deals but not all the deals because they don’t want all their all their eggs in one basket, right? All the different relationships I get cultivated in year two. Year three is when you start to see the harvest, right? year three. After three years in business, you really start to see these relationships and the seeds that you planted and you cultivated and you worked on for many, many years, all of a sudden they start to really come out of the earth. They start to start blossoming and now they’re writing you bigger checks. Now they’re bringing in every deal first because you execute, you execute on time, you don’t retrade them at the at the closing table or anything along those lines, right? You’re now recruiting better quality members to your team because they see that you’ve got staying power, right? The people that you met in the different masterminds see that you’re relationship based instead of transactional. So now they’re wanting to invest or joint venture or partner or make introductions to other resources of private money lenders or deal flow or whatever that looks like. And then it’s year four and beyond where the consumption really comes, right? Like that’s when the business gets almost boring that you’re just doing it on repeat. You can do it in your sleep because you’ve become an expert at it. You know how many times have you seen people or I’ve seen people start a job and they jump every two to three years and they never became an expert and they stay stagnant in life because they do that. And I’ve seen it with businesses. I’ve seen it with careers. I’ve seen it with pretty much anything. And and I’ve seen it in the in the mastermind business. Like the longest standing mastermind that I’m in, I’ve been in for this is my 12th year being in it. And you’ll see that the longer you’re in these things, just the more success happens and the more it compounds, the more you’re you’re in these environments, it just compounds. And the people who jump from one to another, they never get ahead, right? The transactional mindset. So I think that’s a really really critical understanding for anybody who’s getting into anything new. Like I won’t do any new business unless I’m going to dedicate minimum three years to it. That’s a great perspective. Yeah. From like I look at it from trying out a mastermind. You’re right. Sometimes you’re like always challenging your time, always challenging the best ROI. But yeah, I love that too. So I was Tim I was also going to say like a lot of our audience are W2 earners still, right? They’re still hustling doing that, but they have dreams of building something bigger. So yeah, how would you tie that to them, right? because I’m not a big like I know I left my W2 and and I super happy and and I talk about that story but I tell a lot of people that your W2 might be your superpower and you can still build this wealth still do this still have this life you dreamed of with that W2 but what how would you apply that three-year process to them? Yeah. Well, I mean here’s what I’ve learned like I I got really heavy in real estate and buying apartment buildings for the long-term wealth building, right? Like I’ve always been my all my brands legacy whatever legacy family legacy wealth holdings legacy cash flow fund like everything’s legacy in what I do. So I’m always long-term mindset but and I built a massive balance sheet with a huge net worth over the course of the past 20 years that I’ve been in business. The limitation that I found about seven or eight years ago was I never focused on immediate money and I was always cashstrapped. I was always cash poor and I was always stressed about paying the bills because I sacrificed now money for long-term wealth potential. And what I’ve learned is you need both. You need active income to pay the bills, keep the lights on, and have a great lifestyle today. And then you also need to be working on long-term wealth. And I’ve seen very good friends of mine, great business guys, focus on only the immediate cash flow. And they never focus on enterprise value or long-term wealth. They always were cash, but they never had a balance sheet. and they always had to go and transact in order to go make more money and they made millions of dollars a year, but it was never a sellable business that they were pursuing. It was always like a flash in the pan and something that that they made quick money with. So, it’s like everybody needs both, right? And if you got a W2 job right now, maybe that is your superpower. Maybe that’s your active income keeping it, you know, on the books right now. I would look at ways to increase your earning potential with that company that you’re already with. what else can I do to either get a promotion, get a raise. Maybe you want the same amount of money but less responsibility so that way you can spend a little bit more time working on your fortune as opposed to just your job, right? So, there’s different ways to look at it. Another thing is going from a W2 to maybe a 1099, staying in the same role, but now you’ve got a company, they can increase your pay a little bit because now they don’t have all the employer costs and expenses that that are associated with that. You can now create an LLC to get paid into. Now everything’s deductible for you and your business. You can work from home. You got a little bit more time freedom. Those kinds of things. And so you make a little bit more. You have less tax liability because you own your own business now. And you still have the predictability of that income. So it’s like and and now you probably have your 401k that you can take from that employer because you’re not an employee anymore. Self-direct it and go and invest in some real estate or or businesses or whatever. So like there’s a lot of different paths I guess to doing that. always keeping it frame of mind of you got to be focused on you got to have some sort of way to pay the bills today, some immediate cash generator, and you want to be looking at the long-term wealth perspective as well. And maybe that long term is buying your own deals. Maybe it’s investing in a syndication with uh somebody you trust. Some of those can go really, really well. Some of them can be really, really bad. And uh it depends on who you’re investing with and their track record. And I wouldn’t go wide, right? I’ve seen I I got I got a friend cashed out on a business, made 40 million bucks, and they put about 20 million of it across 150 different deals. Now they got to babysit 150 different deals now across probably 40 different investors, right? And now they got have conversations with all these different people across all these different deals. I’d rather see somebody write a bigger check in fewer deals and be able then if you can do that, you can kind of be the tail that wags the dog, right? like you can negotiate better terms, get a little bit higher of a preferred return or get a little bit more equity or get a little bit more depreciation and then it’s le fewer conversations, fewer calls that you have to be on on a weekly basis for asset management and babysitting your your investments. So, you know, there’s a lot of things that you can weigh out all the different variables, but I think just keeping it frame of mind to maintain some sort of active income while you’re building something passive. And then once that passive or or long-term wealth generates enough income for you and it exceeds your active income, then you have the opportunity to make the jump to go all all in on the long-term wealth side of things. Yeah, perfect. So, well said, Tim. Like, I love it’s it’s not one or the other, it’s both a lot. Yeah. You hear a lot of people talking about just one or just the other. I I’ve had the same conversations, right? This is what I learned through from Jason Medley, right? Being in in CG was like too many people just want to go buy just like what you’ve did and I did. I’ve made the same mistake is you just go buy a bunch of rentals, buy rentals, buy as many you can, not worrying about cash flow and that is not fun. That’s stressful. But also that same group of people, there’s just as many on the other side that didn’t build wealth, didn’t buy rentals. So, I love that from an entrepreneur standpoint and from the W2 standpoint of like they probably got it locked down and then they can keep keep doing that, start building, start playing the wealth, the long-term game. And then I love the last thing you said, if once that outgrows it, then you get to be in charge, right? Like what I like to say is like I want to help more people be able to choose their family over work, right? And at that point, you can easily make that choice, right? You don’t have to you don’t have to look back or think any differently or you keep it and keep snowballing it, right? Yep. Yep. I love it, man. That’s good. So, Tim, let’s segue a little bit on just some of your perspective. You’ve seen so many different asset classes. You’ve jumped from zero back up to 5,000 units bound down to three. So, I’d be curious maybe first question is what kind of what kind of moves and what led you to do that? And then now moving forward, yeah, what asset classes do you like? What do you Yeah. What are you seeing in the markets? Yeah, man. Great great question. So, let’s talk about why I scaled back. So, first off, the way that I built my business was I had a coaching business. No longer have that coaching business, but by choice, I I closed that down. But, I had a business that trained people on how to go out and find real estate, find apartment buildings, and uh underwrite those apartment buildings, operate those apartment buildings. And a lot of people came to that and said, “Hey, man. I love this. I found a deal. would you sponsor the loan for me because I don’t have the balance sheet to qualify for this loan or can you bring some capital or can you hold my hand in the operations and so we got involved in a lot of different deals and had anywhere from 15% equity to 100% equity in certain buildings in our portfolio some things we bought ourselves some things we joint ventured with had a big chunk on average I I typically maintain somewhere around a third of the equity in all these different deals was mine personally and that was awesome the the not awesome part is it was spread across 12 different states. And every time you get into a new market, it’s like starting another business, man. And you got to figure out who the contractors are, who the housing court judges are and who the local attorneys are that are going to represent you in housing court. Like all the different pieces and parts and like you buy stuff in Louisiana, Louisiana has like some goofy French laws in some capacity, in some areas, right? There’s certain different things that you have to be aware of that if you were just deep in a single market and you were like the biggest fish in that market, you can kind of control which way the the market moves. We went very wide across many different markets. And I wouldn’t suggest that. It wasn’t fun. If something goes wrong, I can’t borrow resources from another property of mine and send my property manager over there without buying a flight, booking a hotel, renting a car, taking multiple days to travel. like it’s just not not fun. So, what we’ve been doing is we’ve been consolidating our portfolio. I think once you get to a certain size, like we bought a lot of C-class heavy value ad stuff early on because we thought we needed to get to a certain size in order to then be able to play in the sandbox with the big boys, right? And so, I bought a lot of heavy value ad stuff and I probably stayed in C-class longer than I should have. I didn’t need to. I could have qualified for B-class and Aclass stuff way sooner, but C-class was easy for me to get into because it was too hairy for like the smaller investors or too big for the smaller investors, too hairy for the the big investors, right? And so it was like this sweet spot where I could just go and and I was the most capable and and able and willing to be able to buy some of those deals. And we did. It’s just it’s an older vintage. And I and I think as you grow through your your real estate career, maybe you start out brokering as a real estate broker and then you start wholesaling and then you start flipping and then you start buying and holding single family and then you get into small multi and then bigger multi and then you get into triple net or you know other asset classes and there’s this this gradual growth. And one of those that you should be doing on to your portfolio is trimming the bottom 20% of the the the biggest headache deals, the biggest pain in the neck deals, maybe the smaller deals that don’t have the leverage and the scale that some of the bigger ones have. And that’s what we’ve been doing. We’ve been selling off smaller properties of ours. We’ve been selling off outofstate properties of ours and consolidating just to Ohio and the Carolinas, which is where I’m from and where my team is located. And so that way we’re just going deeper in those markets. We still we’re still in eight different states. And so I still have I actually have building in Houston. I have some stuff in Louisiana. I got some stuff in Illinois. A lot in Georgia and uh and a handful of other different states. But it hasn’t been a good time to sell, right? The market’s been a little bit tough for multif family over the past three or four years. And so it hasn’t been a great time to sell. So we’ve just kind of been sitting steady and doing that. But kind of kind of another impetus of that was I have two kids, an eight-year-old and a 10-year-old. and I have a another one that was just born three years ago. And so that was kind of like, hey, I had 5,000 doors. And I realized I wasn’t happier with 5,000 doors than I was at a,000 doors. I didn’t have a better lifestyle or I couldn’t afford more stuff at 5,000 than at a,000 doors. But I had more phone calls. I had more investors. I had more asset management meetings. I had more lenders breathing down my neck. I had more headaches. I had more travel. I had like I had all the negative aspects of having a bigger portfolio without any of the posit like I could afford pretty much anything at a thousand doors where my business was and having another child at that time with the the older two just starting you know in whatever it was third grade first grade and I don’t know second grade and kindergarten call it and then having a new baby realizing those they’ve kind of like they’re at school and I don’t see them for seven or eight hours a day it was like oh man I need to really like rep priority poritize and refocus on where am I spending my time. And so about 3 years ago, that’s that between that and just being spread out uh with my portfolio, I wanted to consolidate. So, we’re at about just shy of 3,000 doors right now. And the goal is, you know, to still trim it a little bit further, maybe get it down to about 1500 doors before we start buying again. Wow. Okay. Super fascinating. All right. Well, and that’s that’s good. Several takeaways. The biggest one I’m going to take is as an investor just trimming down like he said 20%. It’s funny I think about the days when I worked for Shell. I always heard that like Exon Mobile they would do that with their staff like they cut I mean that was GE dude that’s what that’s what Jack Welch did. Yeah. He trimmed the bottom 10% of his staff or whatever. It’s like why don’t we do that with our portfolio right? Get rid of the worst 10%. Like those 10% create 90% of the headaches. Now you get rid of those, you’re left with 90% and you’re going to realize the bottom 10% of those create 90% of the headaches. So it’s not something that you try to work against. It’s something you work within in that you back fill it with good properties. And guess what? You got rid of the all the one out of tens in your portfolio. Chances are that the that the new units that you bring in are going to be a three out of 10 or an eight out of 10 or a six out of 10, but it’s going to be better than a one out of 10, right? And you can go through the process every 24 months. And dude, wait until you pick up your head in 5 to 10 years of how awesome your portfolio is going to look. Uh because you got rid of all the headache stuff and now you have just this rock solid A and B-class properties that are 98% occupied all the time. No headaches with management or any of those things. That’s where we all want to be and that’s that should be part of this growth trajectory that we were talking about. Yeah, man. So good. So good. Okay. Well, give us some perspective now, Tim, on the Yeah. What you see in the markets, you’ve seen different asset classes. We talked a little bit about the headwinds multif family is seeing. Do you feel like that’s maybe a good time to buy now and it’s it will rates will drop or if things will settle out? I’m curious what you got. Yeah. Well, I mean, quick recap. We’ve never seen a rise in in interest rates the way that we have over the past four years, right? For for two and a half years, they were they were straight up. It’s never existed since the the formation of the Federal Reserve. So, it’s been a huge headwind on the interest rates. Now, interest rates are temporary, so it’s not that big of a deal, especially if you had fixed rate debt. So, let’s set that one aside for a second. Where it really got painful is in all the rising expenses, right? Taxes all got reassessed. Insurance premiums, like you’re in Houston, my insurance premiums in Houston quadrupled in a matter of 24 months. The insurance across the board was just bananas. And that’s something that stays with the property, right? Like, that’s not something that varies. Like, it it’ll vary a little bit, but not not the way that interest rates could potentially vary. and and you can wait it out. This is something that’s just going to stay once the insurance companies know they can charge you this much. Labor expenses over the past 5 years since co like we all know that labor is more expensive than it’s ever been and we’re getting less output and productivity and quality of of uh workmanship today. Supply chain still goofy and messed up. Utility expenses are going through the roof. Just really people are starting to see this in the past like six months. these data centers, man, they’re eating up a lot of energy, and it’s just the beginning of it. It’s going to crush uh energy bills over the course of the next couple of years. So, that’s something that not a lot of people are talking about, but it needs to be on the radar of are you using green energy? Are you trying to add solar to your properties? Are you doing like we should all be paying attention a little bit more of that. So, we get a lot of headwinds, right?

You know what’s evaporated more of my net worth and more asset value than any of those things combined? Crappy thirdparty management. Bad thirdparty management has decimated portfolios and you see it all the time, right? When the tide goes out, who’s swimming naked? Uh, and and who’s not really managing their portfolio? Great. And we have gone through all the third party management companies. Not all of them, right? But a lot of them until we just decided, hey, we can’t use third party anymore. We brought about 70% of our portfolio is now in-house managed because third party management just doesn’t pay attention to it. they don’t take take care of your property the way that you would. And so if you want a big portfolio, you know what I realized? All the big boys, all the biggest most successful investors that I know have a fiveprong approach to what they do. One, they buy great properties or they build the properties themselves. Usually 25 years old or newer. They buy in great areas, A and B-class areas. They don’t get into the hood. They don’t get into the war zones or or get into heavy management type areas. good good properties, good areas, they put fixed rate, good debt in place, they never intend to sell and they all in-house manage. That was the one that I was missing. And so we brought in house, we brought management in-house across our entire portfolio over the past like 24 months or so or across 70% of our portfolio over the past 24 months. And it’s made a complete gamecher, complete game changer. So controlling the controllables, I think, is is part of this conversation, right? that we’re facing headwinds and those headwinds adversely affect the property’s condition and adversely affect the property’s operations and then we’re handcuffed because we can’t sell it because of interest rates, right? Like that’s really where the handcuffing comes in from interest rates. Otherwise, we wouldn’t be able to uh weather the storm. But if you can’t control or or management’s not controlling expenses and you can’t exit the property because of interest rates, the only thing you can do is take over management and then attack the profit and loss statement line by line. How do we get more units online? Let’s start out with the lightest unit turns first. Get them online the fastest with the lowest amount of money. Get those leased up. That’s going to generate more revenue where now we can go to the medium turns and then the heavy turns last. Right? What are some other revenue streams that we can implement at the property? Maybe there’s valet trash. Maybe there’s afterchool tutoring. Maybe there’s off streetet parking or covered parking or storage in the basement area of of an apartment building that’s not being used. You can put up some lockers. Maybe there’s some space at the back that you can have like pods dropped and have storage facilities and storage units. Like there’s a lot of different ideas and strategies to do that to generate more income. Now, how do we attack the expenses? So, like you got to be appealing your property taxes. One of the things that we did was we’re in the process of putting a a master insurance policy in place. That’ll save us somewhere between 20 to 30% across the board on all of our policies. Same or better insurance, huge savings. We took management in-house. So, now we’re making a management fee instead of paying it out somewhere else. And we were already on the weekly asset management call. So, it’s not even like we’re doing our own work. Exactly. Right. We’re just direct without a cog in the wheel now to the site level team. And so, um, we can train them on our processes. Everything’s going better on that front. Utilities, we’ve gone in and there’s different things you can do on the utility front. Like we had a uh like a special water meter installed actually on our Houston building that it takes the bubbles out of the water that comes from the utility provider, the from the water company and it reduces our water bill because the bubbles like that’s gets measured in the water meter. So it’s right before the water meter takes out all the bubbles and by removing those bubbles, it reduces our water bill by 15 to 20%. like as crazy as that is. And then we put and then we reairrate it with lowflow fixtures and faucets and showerheads and stuff in the apartment building so they’re not using as much water either from the tenant standpoint which saves our water bill another 30% if you will. So like you’re doing a couple things. You can knock your water bill down by 50%. LED lights, right? We harden the properties instead of like having carpet. We do LVT flooring. It’s easier to turn and clean and patch and all that stuff. So anyways, controlling the controllables. We looked at all the different components in our in our portfolio and realized there’s a lot of things outside of our control, but there are some things that we can control and we need to get all the friction out of the way and then take control over this stuff, implement it, tighten up the the profit and loss statement because if the P&L looks good, that solves all other problems. That’s how these apartment buildings are valued. and uh and that is the the key component to be able to refinance, to be able to raise more money, to be able to pay investors, to be able to sell the property. And so that’s been a key part over the past few years. So now I’m getting to your your question, sorry, uh roundabout way, but where do I see the market? Thankfully, insurance is starting to come back down a little bit, right? 5 10 15% savings without doing anything, which is awesome. Insurance rates have finally stagnated and are starting to come down a little bit. the tenure hasn’t been as affected as the short-term curve has. And so it hasn’t really helped us out too much from a long-term debt perspective, but hopefully that that continues to move in the right direction this year and next year. Here’s the big one. The big one is supply. The housing supply is 4 million housing units short today. And we need about a million housing units a year in order to maintain demand and population growth in the United States from immigration and from child birth, people coming of age, getting their own place. We’ve had a lot during all these adverse headwinds. A lot of developers had started projects in 2020 that were delivered in 23, started in 21 that were delivered in 24, started in 22 that were delivered in 25, but they’ve all been pencils down since rates started going crazy in 22. So, they haven’t been taking on new projects. They haven’t been improving land. They haven’t been banking land. They haven’t been building because builder loans are based on short-term debt rates. And when those rates go like this and they don’t know what they can sell this thing for and they don’t know what their cost of capital is going to be, they don’t want to be stuck holding the bag because they’re transactional. So, there’s been product hitting the market for the past three years and that has all stopped. There’s literally no product hitting the market. If there is any product hitting the market, meaning new housing, it is luxury because you physically can’t build and make a profit on affordable housing. So, all that to be said, I think affordable housing, workforce housing, probably these 70s and 80s vintage type apartment buildings that are pretty well located that you can buy for 50 to $100,000 a door, dude, you can’t build it for twice that cost. Yeah. And I think there’s going to be a massive massive movement towards that. That’s like there’s no other solution for affordable housing. And we need we’re going to be 7 million housing units short. And m over 50% of that it needs affordable housing. And there’s no more affordable housing coming on the market. Even if they started developing today, they couldn’t build it for a price point that they could rent it for less than $1,500 to $2,000 a month. So it creates an opportunity. I think the back half of this decade is going to crush for this older vintage multif family. I think it’s going to do really, really, really well. And so, um, we’re selling some of our portfolio just for efficiencies, but if you don’t have to sell right now, I probably wouldn’t. I’d probably sit tight. All the economic indicators say that rents are going to continue bumping by 3 to 5% per year for the next 5 years. Now, again, there’s still some headwinds on cost and expenses and all that kind of stuff, but I think there’s going to be some serious demand for these housing units. The other thing that we’re looking at is converting some of our buildings into condos. Dude, this hasn’t been done for 20 years. Nobody’s been doing condo conversions, but you can’t build a house for less than, I don’t know, $300,000. You can’t build a multif family unit for less than $150 to $200,000 a door. And like if I can buy or if I already own an apartment complex and I’m in for $70,000 a door in Georgia and I can maybe add another 10 or 15 or 20 grand in order to really spruce it up and then I can sell it for $140,000 to the tenant as an owner occupant. Dude, that turns a that turns a break even deal for me into a grand slam of a deal with a little bit more work, right? There’s some there’s some hoops to jump through on that front, but I think that can save both the affordable housing market and a lot of these investors that got kind of punched in the gut over the past few years with multif family. Wow. All right. So many things there, Tim. I love the property management perspective. And just from my background, that’s why and you make it reinforced to why I’ve done what I’ve done. I just never handed it off. I built it myself and I always just heard people saying that they had issues just like you. And then to see you go back, that’s a huge one. And then yeah, no one has ever shared that perspective of yeah, sort of the C-class, the affordable housing. I mean, we’ve a lot of people are talking about the need for affordable housing, but just the fact that that being a great asset class in a solution, yeah, the solution is a 50-year mortgage. It’s not it’s not reducing the price point, right? It’s just it just reduces the monthly payment and keeps people in debt and handcuffs for a longer amount of time. Like that’s the only other option. Yeah. Oh yeah. And then so not only like the value there and then the other point I wanted to make is with affordable housing is you you kind of touched on it like well wait what if like with AI jobs losing like economy different stuff. It’s like yeah but there’s still all these people alive that need housing. So maybe they got to two people are got to be split. Maybe you’re going to co-l livingiving doing other options right? But they the housing need doesn’t go away right? And so that I see what you mean that stays stable. So that’s so good. And the last thing is the condos. We’re literally right in the middle of a refinance on a Boldy family that was that is been condominiumized or however you say it. They’re all condos and we’ve gone back and forth, me and my partner, of like, do we try to buy out these last six? Cuz if you’d asked a couple years ago talking to multif family guys, they’re like, get it on the fairway was the advice. Like, get them all, buy them all, standardize them by multif family. But we’re looking at it, we’re like, your exact analogy is the truth. Like if we sold these off, you can’t go buy a two-bedroom apartment or house to live in. Do not change the zoning on those. Do not do not cuz I’ve seen a lot of guys do that. Like why would you take it like you own the HOA? Like it doesn’t matter that you still have HOA dues, but it gives you more exit strategies, right? Like having more options. It’s like going golfing and if I only have my ball and I have one exit strategy, that score is not going to look that good, right? But if I go and play in a scramble and it’s your ball and my ball and two other guys, the chances that one of our shots is pretty good because we have four different exit strategies means we’re gonna have a better score, right? And same thing in in real estate where you have multiple exit strategies, you have a better chance of winning. And having them condo converted and into like being able to sell them individually is going to leave the door open for you to make way more money and and have less stress and figure things out. Yes. Perfect. All right. Well, I wanted I want to make sure we have a couple minutes to talk about sort of the family component, but the other thing I did want you to highlight, Tim, is you mentioned the property management and your latest project. Just give us a quick update on like why it sounds like the need to build I’m assuming you guys were transitioning to property management, doing it in house, and just saw the the headaches and maybe the obstacles of management software and you guys have solved that, but go ahead. A few years ago, we realized when we were doing all this, bringing everything in house and trying to control the controllables, one of the variables, one of our biggest investors was or is a software engineer or like an engineer, manufact smart manufacturing was like his big thing. you’d go into work for a $45 billion company would go into companies like Disney and NASA and uh defense contractors and Boeing and be able to, you know, know which lever to pull, which screw to tighten in order to then create efficiencies and save them hundreds of millions of dollars, right? And so he was a big investor of ours, hopped onto our asset management calls. He’s like, “Man, how I want to see if I can bring my mind and tighten up processes. ” I said, “Absolutely. Would love to have you. ” and he’s like, “How does anybody get anything done? ” Because there’s so many different technologies. They’re not all in one place. You got a CRM, you got workflow management, you got property management, you still need accounting because property management doesn’t do all the ownership level books. You have investor management software, construction management. There’s um people using their personal Gmail accounts, people using their personal cell phones, like the leasing agents, to communicate with tenants. All that communication’s lost if that person gets fired or whatever. Like, guess what? Like, you have no defense, right? You’re totally open if a lawsuit comes. Not to mention, you need Docu Sign. So, now it’s another software program. And then you have stuff written on a whiteboard, right? There’s stuff in Google Drive. Like, there’s just documents everywhere. And there’s nothing nothing’s talking to each other. And so, that that’s what ours looks like, by the way. Yeah, dude. That’s the industry standard, which is insane to me that an industry with this much money is okay with that lack of efficiency, right? It’s insane. But nobody’s nobody’s had to really address it because it was just flowing in the past, right? And there’s a big barrier to entry to to go and develop a software this robust. But that’s what we did, dude. We took essentially QuickBooks with Appfolio with monday. com with podio with docysine with email with text messaging with all the communication with all of it. Not using those right we built it all out internally so it all talks to each other and it’s all in one place and it’s easy to manage and it’s we put all these automations in place for a property management software that I would take it toe-to-toe against any of them any of the big boys out there. They’re all billion-dollar companies. Our smokes them all. I know everybody probably says that, but like I can quantifiably show how how it does that. And you don’t need all the technology. So now not not only that, but you save 50% or more on your cost of of softwares that you’re paying for right now, but it it obsesses over all the things that we were talking about before of increasing income and decreasing expenses, of optimizing NOI. If you optimize NOI, then you optimize asset value. And that’s what none of the other softwares are doing or talking about. And so, and our software is called Smart Management. Smart Management, it’s active in my portfolio right now. We have our investors that we’re going to be onboarding. It’ll be open to the public probably in like Q, late Q2, early Q3. And so, if anybody’s interested, yeah, just go to smartmanagement. com or ping me personally on it. But, man, it’s a desperate need. It’s a desperate need. And people just, they’re so in the trenches. They’re so in the weeds that they can’t work on the business. They don’t have time to try to figure out this other stuff. And we have these national firms that can go and appeal your property taxes. We have the master insurance policy. We can invite people onto our policy to save them 30% on their um on their insurance costs. Right? We have all these different resources and things linked into our software to immediately impact the net operating income. And so we’re really fired up about it. The the market and the industry is like desperately needs it. And we have an unbelievable weight list right now of people who want to uh who want to onboard. So that’s that’s where a lot of my attention is going too, right? Because of the opportunity that I have there that I never thought I’d be in tech, man. Ever ever ever. And uh because the opportunity I have there though, we’re we’re consolidating our portfolio. That’s probably the third reason why we’re doing that. So I’m I’m super excited about it. It’s really really fun to think about the prospects of where this can go and like like think about the stuff that we could do. like I have all the contacts. Like if somebody can’t sell their property, you know, they’re trying to sell it. They just want to get a seven cap cap rate out of this thing. Guess what? We could put an option on it or we can consolidate it with our portfolio and a couple other portfolios and then have $2 billion of property and be able to go and get a 5 a. 5% cap rate from private equity who comes in and buys a $2 billion package of property. That it doesn’t exist anywhere else, right? But it’s but that’s how we think and how we’re designing the software to create more opportunities for owners to be able to increase their cash flow, increase their peace of mind, and increase their asset values. Yeah. Oh man, I didn’t we didn’t even get that far. I was excited. I was just about to say I was excited. I can’t wait for this come out because uh we’re we’ve been trying to combine systems and do all that. So guys, I’ll for sure put that link in the notes. You guys can check it out and if you guys are like me and want to look at it here in Q3, check that out. So Tim, let’s uh last one. Let’s segue into the family component, right? So you mentioned the was it two boys, 8 and 12 or 10 and 12. Girl, boy, girl, girl, boy, girl. So man, how’s 10, eight, and three now? 10, eight, and three. Okay. So I’d love to hear how that’s evolved and then like what does it look like going forward? How do you make time? Kind of talk to all those other whether it’s entrepreneurs or even W2s that are trying to prioritize family and and because you don’t get that time back. No, man. You usually don’t realize it until it’s too late, right? And the days are long, but the years just zoom by. And fortunately, I realized this when my daughter, my 10-year-old, was only two years old. And she came up to me and I’m text messaging after uh dinner one night on a Thursday night, and she goes, “Daddy, daddy,” she’s tugging on my shirt. “Will you come play with me over here? Daddy, daddy, come play. Daddy, come play. ” I’m like, “Yeah, yeah, yeah. ” I’m texting. I was like, “Baby, just go play. I’ll be right over as soon as I’m done with this. ” And she goes over there and I put the phone down and I see my daughter playing by herself and like I still get the pit in my stomach of this text was not important and it was not urgent and I’m pushing my daughter away who comes to me for love, support, confidence, just complete protection and safety and and and knowing she’s the most important thing in my world, right? and I push her away. And and how many times do I push her away until she changes those feelings about me to being ignored to being to resenting me to uh thinking a phone is more important than her, right? Like those things started all going through my head as I’m looking at her after I sent this message. I’m like, “Oh my god, like I want to throw up. ” And so I I looked at my calendar for the next day and I canceled everything so I could just spend the day with her. And as I did that, I quickly realized we schedule meetings for podcasts, for coffee, for uh asset management calls, for work stuff all the time, but we don’t schedule it for family. We don’t schedule it for our spouse. We don’t schedule it for ourselves to go get a workout in, right? When I’d be like, “Oh, I’m just going to go work out whenever, you know, the day would just consume me and then I wouldn’t get a workout in. ” If I don’t schedule it, it doesn’t happen. And it might sound crazy to go and schedule time with your family. Like this podcast is a perfect example. You asked me to film and said, “Hey, I film on Friday afternoons. ” And I said, “Dude, I’d love to be on the pod. ” Unfortunately, I have a standing appointment on Friday afternoons. It’s with my wife and my kids. And we go and get them from school. We play at the park. We do dinner at at this one restaurant all the time. And it’s our family tradition on Friday afternoons. And I’m not going to the same way that I didn’t double book this meeting right here with you. I’m not going to double book a meeting with my family. And if you don’t put it on the calendar, dude, it doesn’t happen. If you don’t lock it out the calendar, somebody else is going to fill your time with something that’s less important than your family or your health or your spirituality or your hobbies, right? It’s going to be somebody who’s just dictating what to do with your life as opposed to you dictating what to do with your life. And so it’s really important to one have clarity on what matters most to you and then to design your calendar and block out time for those priorities in that priority list. Right? We all say we do this for the family, but if you look at how you spend your time, your time is the greatest indicator of your priorities. And if you look at how you spend your time, we all spend more time working than we do with our families. So is family really the priority? I don’t I don’t think it is. Right? You think your kid wants you to make an extra $100,000 a year or spend an extra five hours a week with them? Dude, we don’t even have to ask the kid, right? Everybody knows our kids want us to spend more time with them. And so that’s what I do, man. I go through my calendar. 6:00 to 8:00 a. m. I I designed my ideal average day. 6:00 to 8:00 a. m. I get up. I get the kids ready for school. I take them to school. Right? This isn’t something I staff out or anything along those lines. 8 to 9 I go and I go to a workout class, get my workout in, work on myself personally, right? 9:00 to 10, I get cleaned up. From 10 to 4 pm, I work like a psychopath from on Mondays, Tuesdays, and Thursdays. And I don’t do coffee meetings because it always it’s like, dude, I’m going to drive 30 minutes in order to have an obligatory hour meeting and then drive 30 minutes back on on something that could have been done in a 15-minute phone call, right? I’m way more efficient. I’m doing one to many activities as opposed to additive one-on-one activities. I’m doing evergreen activities like a podcast, which somebody can come and watch this at three o’clock in the morning when I’m sleeping, right? And still get to know who I am and what I stand for. Those are the types of things that I’m doing inside the hours that I have dedicated to economics. I’m not saying don’t make as much money as you can. I make as much money as I possibly can inside the hours that I dedicate to making money in business and economics. I think we all should, right? But I’m not going to let that creep over and spill into after 4 p. m. kids are home back from their activities. It’s dad time, right? We’re going to be out in the yard throwing a ball, playing on the play set, taking a golf cart ride, doing fun stuff that uh whatever they want to do, doing movie nights, doing family dinner, and uh is Dude, is there spillover? Of course there’s spillover. Is there times when I’m not perfect? 100%. But being aware of it and being intentional around it eliminates 80 90% of the of the um time that you could have been dominated by somebody else’s emails or text messages or social media scrolling or something like that. So yeah, man, that’s been the best tool is just time blocking. So good, Tim. Like that’s one of my favorite parts about this podcast. Get to hear other perspectives. I just even hear in yours, right? I try to do what you’re doing at a high level too and blocking it out, right? But just like the time blocking, great, right? Like I love that. I think that’s good. Everyone should do. And I like too like you’re intentionally working in your time for working out to I love the 10 to four you’re going to be like just as incredibly efficient as you can during those hours. Accomplish your goals, but then you still got the family. And that story about man when she was two that that hit home again, man, cuz I still think about I think about this morning, right? It’s like I’m getting helping the kids get out the door and they want to go outside and they’re playing and like I’m like feel like I’m didn’t get everything done. Like my big work window is like f about 5 to 7 and I’m trying to but it’s always gear I’m getting that spillover. But to your point, man, that’s just Well, here’s and here’s the thing. And by the way, I go I go in the office at 8:00 on Wednesdays and I stay till 2 or three. So, you know, I I work like a psycho four days a week as much as I can inside those hours. The thing is, my family knows if I’m in this, if I’m going to work, I’m going to work, right? Like my wife doesn’t call me and to chat in the middle of the day. She doesn’t interrupt me in the middle of the day because there’s like the setup time, man. Like I I I’m think about multiple things at once. I have to be in the zone and doing something until I finish it before I then transition to something else. Like I can’t jump around. That’s that’s just how my brain works. But the family knows if daddy’s working, daddy’s got to be in the zone working, right? and cannot be interrupted when I’m working. So that way I can be in the zone with my family when it’s family time, right? And so it’s a very all-in or all out kind of a thing. Obviously, if there’s an emergency or something, I’ll I’ll jump on it. But, you know, there like very rarely does that happen. And if I can if I can be focused, as crazy as I am, on business stuff during the hours I dedicate to business stuff, that allows me to have the presence that I that I want to have, my family wants me to have when I’m not doing business stuff. That’s great. I think that’s anyone listening to this, even if you’re working at your W2, a lot of W2s are working from home these days, too. And having that I know I that’s good clarity even just advice for me. It’s like struggling with that boundary of having that when I’m in here like I’m got to be all in. But I know close the door, man. You got to like because I work from home too, right? So you got to close the door. You got to tell them, hey, I’m I’m over here working, you know? Yeah. Oh, yeah. And then but then show them the respect and the the honor when you are out them. You’re not still on it and you’re you’re all in. So like I’m my phone is in another room and I’m like all in when when I uh am with the fam like I’m not looking at the phone and all that stuff. So again, you’re not perfect about it, but if you’re intentional and you’re prioritized, man, like you could do better than than how we’re already doing, right? Yes. Oh, I love it. So Tim, so much inspiration today, so much mindset, so much even just market stuff. Like these are gold nuggets that you I’m just telling you guys, I have a lot of conversations with a lot of highle people. They’re not thinking they don’t have the clarity Tim has. So Tim, this has been incredibly helpful, incredibly insightful. Last thing is, where can people find you and connect with you? Yeah, man. Well, I appreciate you having me. You have some really great questions. It’s just awesome to to have high level conversations with guys like you. So, I’m excited to see you at the mastermind next month. Yeah. If anybody wants to connect, just find me on social media, Tim BRZ on Facebook and Instagram is where I’m most active, but I’m also on LinkedIn and Tik Tok and all the other ones, too. So, yeah, we don’t have anything to sell. It’s just I try to put out as much value as I possibly can based on lessons that I’ve learned over the years. And so, yeah, I appreciate you having me, brother. Awesome. Thanks again. We’ll see you guys next week on Breaks the Riches. If you’re listening to this because you’re chasing freedom, not just for yourself, but for your family, then don’t let this just be the background noise. Take action. Shoot me a DM. Reach out. Find a property. Make a call. Remember, small moves today create the life your future self and your family will thank you for tomorrow.