How to Crush Real Estate at 30: Lessons from a Cleveland Powerhouse | Movers and Shakers Podcast

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[00:02:16] Hello and welcome.

[00:02:17] My name is Gino Barbera, one of the co-founders of Jake and Gino.

[00:02:21] And in this Movers and Shakers, we have Michael Orlando back on the show.

[00:02:26] Since joining Jake and Gino in 2019, it's been a while.

[00:02:30] Michael has closed multiple apartment JV syndications and built a portfolio of single and small multifamily rentals,

[00:02:36] primarily serving Section 8 tenants, and he's only 30 years old.

[00:02:41] Now, when I said he was 30, he's like, man, I'm getting old.

[00:02:43] Bro, you're still a young lad.

[00:02:46] As a specialized real estate agent in Northeastern Ohio,

[00:02:49] he helps clients with everything from duplexes to 50-plus units apartment complexes.

[00:02:54] Welcome back to the show.

[00:02:55] Michael, how are we doing, brother?

[00:02:57] Doing very, very well.

[00:02:58] I appreciate you having me back on and looking forward to reconnecting here and hoping I can help some people out.

[00:03:04] Michael, when you joined, you were only 26 years old.

[00:03:07] I remember you joining and you're like, I'm leaving my job.

[00:03:10] I'm going into multifamily.

[00:03:12] I'm like, I like this guy.

[00:03:13] I don't know how he's going to do it.

[00:03:14] He's only 26.

[00:03:15] Because every time I talk to someone who's young, they've always got excuses.

[00:03:18] I'm too young.

[00:03:19] I don't have experience.

[00:03:21] Walk me back to that time when you decided multifamily and real estate was your gig and you're sick of the whole startup route and the whole corporate route.

[00:03:31] Absolutely.

[00:03:32] Yeah.

[00:03:32] I mean, it definitely still was not an easy decision for sure.

[00:03:36] How it went for me was basically we found a small apartment deal.

[00:03:40] I was working full time at a nine to five and always wanted to do my own thing.

[00:03:45] And basically, we ended up buying this 22 unit building.

[00:03:48] It was my partner and I's first joint venture type deal.

[00:03:53] And once we bought it, I just kind of like a lot of people kind of caught the bug and saw the power of kind of what we were doing.

[00:04:01] And maybe prematurely, some would say, just left my job and was like, I just want to focus on this full time and knew that I could spend a lot more time finding deals and working on that business if I had some additional time in my day.

[00:04:15] So it was a bit of a leap of faith, like not, you know, I wouldn't recommend it to everyone that quickly necessarily.

[00:04:21] But, you know, I was I was eager so I couldn't help myself.

[00:04:25] So what Michael is saying is if you're named Gino Barbaro and you've got six kids and you've got a mortgage and you've got bills to pay, maybe buying a 22 unit and leaving your job may not be the most responsible thing for Gino.

[00:04:38] But we're all built differently.

[00:04:40] And sometimes I could be using that as an excuse as well.

[00:04:44] So you need to check yourself and see why you're getting into it.

[00:04:47] Now, when you bought that 22 unit, what did you like about it?

[00:04:51] And we have to go through any kind of mistakes, any kind of learning lessons before you get into what you're doing today.

[00:04:55] What attracted you to that 22 unit deal?

[00:04:58] Well, I mean, it was off market.

[00:05:00] That was the first thing.

[00:05:02] This was in early 2020.

[00:05:04] So times were obviously a little bit different.

[00:05:06] You know, rates were still pretty good.

[00:05:08] It was right during COVID, actually.

[00:05:10] So there was some interesting opportunities kind of popping up, you know, when other buyers were a little bit scared.

[00:05:16] And off market, got it at a fantastic entry point.

[00:05:19] I think we bought this thing at like $35 a door, something like that.

[00:05:23] We put about $5,000 to $6,000 per door into it.

[00:05:27] And, you know, on the back end, we obviously did pretty well.

[00:05:30] I think we ended up in about one and a half years, basically doubled our money on it.

[00:05:36] So, yeah, we did really well with it.

[00:05:38] I mean, there's obviously things along the way that we learned.

[00:05:40] It was our first deal.

[00:05:42] Definitely underbid some of the construction stuff.

[00:05:45] Went through a few contractors trying to find the right people to work with, which is always, you know, pleasant when you're dealing with those guys, trying to go through three, four different crews until you find someone.

[00:05:56] And, yeah, you know, underwriting at that point was new to us.

[00:05:59] So we probably were a little bit less conservative than we are today, for example.

[00:06:05] But, you know, all in all, we bought it right.

[00:06:07] And that was obviously that's one thing that you guys always preach is like buy right.

[00:06:11] And we definitely bought it right for sure.

[00:06:13] So we could afford a couple of little hiccups in the process and still did really well with it.

[00:06:17] But I mean, doubling your money in your first deal is probably, I would say, excellent.

[00:06:23] I sure as hell didn't double my money on my first deal with Jake.

[00:06:27] I did.

[00:06:28] But by myself, I crashed and burned.

[00:06:30] I didn't have the buy right, the manage right and the finance right.

[00:06:33] I didn't even know what the heck that was.

[00:06:34] But as you're getting into real estate and buying more deals, what does buy right, manage right and finance right mean to you?

[00:06:41] And how do you apply that to every deal you're underwriting and eventually taking over and purchasing?

[00:06:46] Yeah, I mean, it's extremely important.

[00:06:48] Like, I mean, obviously, buy right is a no brainer, especially in today's environment.

[00:06:54] It's like you have to make sure you're going in, you know, on a basis that makes sense when you factor in all your renovations and your closing costs and all that stuff.

[00:07:02] I mean, being into a property for, you know, at an uncomfortable point is not a good feeling.

[00:07:10] I think we kind of pride ourselves on being pretty conservative on the buy side.

[00:07:14] You know, God forbid you have to sell or exit at some point or you have to refi.

[00:07:19] I mean, you don't want to be in a spot where you're in it to, you know, way more than you should be.

[00:07:23] That's for sure.

[00:07:24] So, I mean, that's obviously the first and foremost.

[00:07:26] But I imagine the property is huge.

[00:07:29] Management can make or break it.

[00:07:30] Thankfully, we linked up with a really good manager here in Cleveland pretty early on.

[00:07:35] But I mean, absolutely.

[00:07:36] Like, if you don't have a good manager, I mean, you're going to struggle.

[00:07:39] So, like, making sure you do your due diligence on the management company or if you're going to self-manage them, making sure you have all your systems and processes in place is huge.

[00:07:48] Things can get out of control relatively quickly, I would say.

[00:07:51] So, you want to make sure that piece is taken care of, obviously.

[00:07:54] And then finance, right, is, you know, pretty self-explanatory.

[00:07:57] If you're going to go in and you're planning to exit a deal in a few years, you want to make sure you don't have some crazy, you know, prepay and penalty.

[00:08:04] Or you want to make sure that the debt that you're getting for the property makes sense for your business plan.

[00:08:09] And again, like, that's something I think we've done really well.

[00:08:11] It's like when we underwrite and project out our syndications, our joint ventures, we make sure that we're accounting for, like, potentially multiple exit strategies.

[00:08:20] We're not just going, like, all in on selling a property in a couple of years and banking on the market being, you know, fantastic.

[00:08:28] And it's obviously you're making some assumptions, right?

[00:08:32] Like, that's part of the game.

[00:08:33] But we try and be realistic but conservative, as we say, with our assumptions.

[00:08:39] Michael, I'm not going to wait until the end of the show to get your contact information.

[00:08:43] And this is for all the Jake and Gino community and for anybody who wants to work in the Cleveland area because you're brokering deals.

[00:08:48] That was the next progression is getting your broker's license.

[00:08:51] But, you know, give us your contact information.

[00:08:53] If I want to buy deals in Cleveland, if I possibly want to, you know, get into a syndication that you're running, where can I get more information about you?

[00:09:01] Absolutely.

[00:09:02] I mean, the easiest way is definitely hit me up on Facebook.

[00:09:05] I can send you my personal, you know, phone number and stuff.

[00:09:08] And my email is Michael at PremierClevelandInvesting.com.

[00:09:14] That's usually the easiest way to get a hold of me.

[00:09:16] But, yeah, I would love to connect with some people in the community for sure.

[00:09:19] And what did you, I can actually say, what made you want to get your broker's license after doing deals for a couple of years?

[00:09:28] I mean, I was still out of a job, so to speak.

[00:09:32] So, I was just focusing on the real estate thing full time.

[00:09:36] And, you know, it kind of just made sense.

[00:09:38] My business partner, who, you know, we've been doing business together since we started doing this in 2020.

[00:09:44] He was a real estate agent at the time.

[00:09:46] And he was an investor specialized agent.

[00:09:48] He had actually just started doing that.

[00:09:50] And he had a real estate team that he started here in Cleveland.

[00:09:54] And I was like, you know what?

[00:09:55] Like, I technically don't have a full-time gig right now.

[00:09:59] And they kind of align.

[00:10:00] And I could spend time on both.

[00:10:02] And they complement each other.

[00:10:03] So, I was like, screw it.

[00:10:05] I'm just going to go get my license.

[00:10:06] And it's gone super well.

[00:10:08] Our real estate team actually has been the top performing team at our brokerage for like the past couple of years.

[00:10:14] And it's only me, him, and one other guy.

[00:10:17] So, we've been crushing it pretty good here in Cleveland.

[00:10:20] It's been fun, too.

[00:10:21] You know, it's nice to help people buy and sell things that I was buying and selling.

[00:10:25] I think I have a good understanding and perspective when working with people because of that.

[00:10:31] I mean, obviously, a lot of agents, they don't, you know, they're not buying.

[00:10:34] They've never bought a 50, 60, 70-unit apartment building or even like a duplex sometimes.

[00:10:39] And, yeah, so I think it gives me good perspective.

[00:10:42] And I can give like some really honest like insights on the market here in Cleveland and also like deal specific stuff.

[00:10:48] Like, you know, I think that I have a good approach to helping people out.

[00:10:53] Michael, would you recommend that to somebody who's possibly thinking of leaving their job?

[00:10:57] And they've got a couple of assets and say, hey, let me try this brokerage out.

[00:11:02] This may work.

[00:11:02] I mean, become a commercial broker.

[00:11:04] Would you recommend that?

[00:11:05] It's tough.

[00:11:06] Like, it's a grind, you know.

[00:11:08] It's like especially building my business from the start as an agent.

[00:11:12] It was not easy.

[00:11:13] Like, I was pounding the phones cold calling for five, six hours a day in the beginning.

[00:11:20] And I was decent at it because I was actually cold calling for our apartment deals to get some off-market deals.

[00:11:26] So I just literally jumped right into that.

[00:11:29] And it worked out really well.

[00:11:30] Like, had some really, really good years recently where, you know, we're doing some really good production.

[00:11:36] But it's, I mean, it's another job.

[00:11:38] There's no doubt.

[00:11:38] Like, if you're not ready to like grind and build your business, it's probably not for you.

[00:11:44] And I don't even see myself as an agent forever.

[00:11:46] Like, it's more so just a thing I enjoy and also obviously a way to keep, you know, putting some cash away and buying some more deals ourself.

[00:11:55] But it's a good career.

[00:11:58] Like, there's no cap, right?

[00:12:00] Which is always something that drew me to it.

[00:12:02] So for the people that are super motivated, I would say, yeah.

[00:12:05] But if you don't love it, it's a little tough.

[00:12:09] I'm going to translate this for anybody listening to this.

[00:12:12] What Michael is actually saying is he's using this as a stepping stone.

[00:12:16] He's generating revenue to help pay for his bills, right?

[00:12:20] He doesn't want to kill all his baby money soldiers.

[00:12:23] The baby money soldiers that he makes from his brokerage, he's using some of those for operating expenses.

[00:12:29] And he's pulling a lot of those to put into deals.

[00:12:32] Now, does he want to do this for the next three years, the next five years, the next 10 years?

[00:12:37] Doesn't, don't know.

[00:12:38] And we're not thinking out that far.

[00:12:39] But what Michael does have is he's got the investor's mindset.

[00:12:42] He knows that the brokerage, he could build that up and possibly sell his book of business the next three to five years.

[00:12:47] That may be a goal, may not be a goal.

[00:12:49] But what it does, it allows him the ability to hone his craft.

[00:12:53] He's in contact with buyers and sellers all the time.

[00:12:56] And guess what?

[00:12:57] When somebody sells their home and they have a nice chunk of change and Michael has a syndication,

[00:13:02] hey, would you like to put some money in my deal?

[00:13:04] There's so many symbiotic relationships.

[00:13:07] But the key word is, it's work.

[00:13:10] Everything is work.

[00:13:11] You can go to work for your boss to work 40 hours a week.

[00:13:14] You can work yourself 40 hours a week.

[00:13:16] You have to make the decision, right?

[00:13:18] You can either make money or you can make excuses.

[00:13:21] You can't make both.

[00:13:22] And I think it's an awesome, we were considering doing this years ago.

[00:13:27] But for us, we had enough capital that we didn't need to do that.

[00:13:30] And we can go the syndication route.

[00:13:31] So for any of you that are out there considering, or even if you are a real estate broker or an agent right now,

[00:13:38] don't be afraid of multifamily.

[00:13:40] Use that job.

[00:13:41] That's the credibility.

[00:13:42] You're already in the business.

[00:13:44] You're already in the business of real estate.

[00:13:46] You're just not an investor yet.

[00:13:48] Start getting some of those commissions.

[00:13:49] Start putting them aside.

[00:13:51] Start deal dogging.

[00:13:51] If you find a 20 unit and bring it to an investor and say, hey, my commission, can I roll it into the deal?

[00:13:58] That's how you start utilizing your baby money soldiers very wisely.

[00:14:02] And to me, last thing before I ask my next question, is it really comes down to a mindset shift.

[00:14:08] It's really if you're an agent there and you're used to doing the same thing.

[00:14:12] Transactions, they pay the bills and they're great.

[00:14:14] But ultimately, at the end of the day, what Michael is doing, he's creating equity from his transactions.

[00:14:19] It may take a little bit longer, but that's the goal, I think, of any investor.

[00:14:23] Would you like to add anything to that?

[00:14:24] Hey, Jake.

[00:14:25] It's not often that we get a sponsor that transforms their industry.

[00:14:30] You're telling me.

[00:14:31] After years of fine print contracts and getting ripped off by overpriced wireless providers,

[00:14:37] if we've learned anything, it's that there's always a catch.

[00:14:41] So when I heard that all Mint Mobile wireless plans are $15 a month when you purchase a three-month plan,

[00:14:47] I thought, dude, what's the catch?

[00:14:50] But after talking to them, it all made sense.

[00:14:52] There isn't one.

[00:14:53] Mint Mobile's secret sauce is that they sell wireless services online.

[00:14:57] They don't have retail stores or salespeople.

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[00:16:27] Additional taxes, fees, and restrictions apply.

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[00:16:33] Yeah, I think that you're right on point there.

[00:16:36] It's like, yeah, most people only have so much cash, right?

[00:16:40] And especially when I started at a relatively young age, I was coming from a pretty low-paying startup job.

[00:16:46] And that first deal, I basically threw my life savings into that one.

[00:16:51] Thankfully, obviously, I did pretty well on it.

[00:16:53] And as he's doing this, he's saying, Gino, you better be right, bro, because if you're not right, I am going to come and kick your ass.

[00:17:01] No, I mean, I trust you.

[00:17:03] It better work.

[00:17:05] You better not be just scamming me right now.

[00:17:09] And thankfully, I know it works because over 85,000 units from the students, it does work.

[00:17:14] It is work, but it does work at the same time.

[00:17:19] 100%.

[00:17:19] Yeah, I mean, if you find good deals, there's no reason.

[00:17:22] I mean, real estate's tried and true, you know?

[00:17:24] So I believe that you guys, for sure, I didn't have any hesitations about that.

[00:17:28] But yeah, you know, it's like you have to make some money to buy some deals.

[00:17:33] It's like, I feel like there is a misconception now where it's like everyone wants to buy deals, no money out of pocket.

[00:17:38] There's the sub two and everyone wants to sell or finance everything for nothing down.

[00:17:44] It's like, one, it can be dangerous, right?

[00:17:47] You over leverage or whatever.

[00:17:49] And I've seen this happen a bunch of times as an agent too, where like people are trying to just buy these deals that simply don't make sense.

[00:17:56] And they're trying to get like almost like overly creative where, you know, they don't have the cash to buy the deal.

[00:18:02] So they're trying to make it out of thin air basically by pulling different levers.

[00:18:06] And it doesn't really work that well.

[00:18:07] I mean, the best way to do it is to make money and buy deals.

[00:18:11] Like that's what we've realized.

[00:18:13] And at the same time, like doing our syndications and our joint venture partnerships on the larger apartment complexes that we were buying and still are buying when the opportunities present themselves.

[00:18:24] That's also obviously a piece of the puzzle.

[00:18:27] You know, it's a stepping stone and that's equity or that's a potential exit in a few years that we can then take that and go buy bigger deals or, you know, we can buy some other stuff.

[00:18:35] But, you know, it really is like at that point, you know, for generating some income or making our investors happy.

[00:18:41] It's like whatever happens, happens.

[00:18:43] We can go after any deals we want at that point.

[00:18:46] You know, Michael Orlando is the embodiment of the conveyor belt of real estate.

[00:18:52] He's putting assets on his conveyor belt and allowing them to matriculate.

[00:18:57] And, you know, you make money in real estate when you buy.

[00:18:59] I'm not going to deny that with cash flow.

[00:19:02] But you make your true money when you exit or you sell or you refinance and you crystallize that equity and you go put it into the next deal.

[00:19:10] The next deal is bigger.

[00:19:11] You crystallize that equity and as you get more and more equity, you keep rolling it into it.

[00:19:15] And I'm glad you talked about seller financing because on our very first deal, we did get seller financing.

[00:19:21] The market gave us a 10% seller finance carry back note.

[00:19:25] We had to bring 10% down.

[00:19:27] It was only because it was a function of the marketplace.

[00:19:30] Now, on our fifth deal was a massive seller finance deal.

[00:19:34] 20% from the seller was an $11 million deal.

[00:19:36] But that doesn't happen unless you're in the game and you have credibility and you understand the value and the market cycle.

[00:19:43] Now, the market cycle is coming back.

[00:19:45] But don't hang your hat and just learn how to seller finance or sub to.

[00:19:49] Learn how to do that.

[00:19:50] Learn how to do JVs.

[00:19:51] Learn how to syndicate deals.

[00:19:54] Learn all of the strategies.

[00:19:56] And when you become a really good investor, you'll know what strategy to use when with what type of deal.

[00:20:02] Because not all deals are seller finance.

[00:20:04] You're not going to buy an A class or B class seller finance deal.

[00:20:07] It's going to be a lot more challenging.

[00:20:09] So understanding that.

[00:20:10] Now, your whole mentality and mindset over this, I should say, short four-year period.

[00:20:16] Because it's been amazing what you've been able to accomplish in these last four years.

[00:20:18] But you've gone through a transformation in your business.

[00:20:22] Going from going to multifamily, then the brokerage, and now you're syndicating, doing joint ventures, selling deals.

[00:20:29] What does that look like?

[00:20:30] How has your mindset shifted over these last three or four years?

[00:20:33] Yeah, it's definitely changed.

[00:20:35] I would say my partner and I, our overall mindset hasn't shifted that much.

[00:20:40] We both got into this to create some financial freedom.

[00:20:45] And basically, cash flow was always our main priority.

[00:20:49] Cleveland's a pretty good cash flow market.

[00:20:50] So we were lucky there.

[00:20:51] But at the same time, when the market got extremely competitive, like 2021, 22, things started getting kind of crazy.

[00:20:59] Deals were obviously harder to come by.

[00:21:01] At least the larger multifamily deals just got so competitive.

[00:21:04] And we weren't seeing as many deals as we wanted to see for the JV syndication portion of our business.

[00:21:10] So we kind of were like, okay, well, we don't want to stop buying, right?

[00:21:14] Like we don't want to stop doing this.

[00:21:15] But at the same time, we're seeing less deals.

[00:21:17] So we kind of evolved from only pursuing larger apartment complexes to doing that.

[00:21:25] You know, when those opportunities present themselves, obviously we go after them.

[00:21:28] But at the same time, we also started buying some single family stuff, which a lot of people, you know, that are hardcore multifamily guys, they were like would never touch it with a 10-foot pole.

[00:21:38] You know, they like hate the single family space.

[00:21:40] But it's been kind of the opposite for us.

[00:21:43] You know, we can basically our model for our single families is we're buying at the 2% rule all day.

[00:21:49] So like we're in a house for 75 grand.

[00:21:51] We're running it for 1,500 through Section 8.

[00:21:54] And we're in areas that are still totally fine.

[00:21:57] Like we're comfortable in these areas.

[00:21:58] These aren't like extremely high crime areas or anything like that.

[00:22:01] So we kind of have at the same time is still potentially pursuing apartment building syndication deals.

[00:22:07] We've also been growing this cash flow portfolio.

[00:22:11] That's, you know, that's why we got into it in the first place.

[00:22:14] So we didn't want to like stop that momentum.

[00:22:16] And we didn't want to like wait years and years to do, you know, maybe one, two apartment deals a year, whatever, you know, however it ended up being.

[00:22:24] We didn't want to waste that time.

[00:22:25] So we did evolve our business model for sure.

[00:22:28] But I mean, like you said, you know, you could do it all.

[00:22:30] Like there's no reason you can't do a little bit of everything.

[00:22:32] So having the skill set to do everything is pretty beneficial.

[00:22:37] You know, whenever you see a sweet deal, you can swoop it up as long as you, you know, have the skill set to kind of do it all.

[00:22:43] So what's amazing with that strategy.

[00:22:45] Once again, I'm going to make the analogy of the baby money soldier.

[00:22:49] You've got assets.

[00:22:51] You're pulling them back.

[00:22:52] You're the general of your financial battlefield.

[00:22:54] You're pulling them back because you're saying no deal is better than a bad deal.

[00:22:58] I'm looking at all these bad deals out here.

[00:22:59] I'm not going to sacrifice my baby money soldiers just for something in the short term where I may get some acquisition fees, but it's going to be very challenging.

[00:23:07] So let me pull them back.

[00:23:08] Let me survey the battlefield, which is a.k.a. the market cycle.

[00:23:12] It's crazy right now, these large multifamilies.

[00:23:14] I know better.

[00:23:14] I've learned how to buy right and finance right and manage right.

[00:23:17] It doesn't make sense.

[00:23:18] But wow, these $75,000 assets, I'm going to deploy my baby money soldiers into there and they're going to continue to work.

[00:23:25] And listen, the next five, six, 10 years, that asset may appreciate to $100,000 or $110,000.

[00:23:33] But guess what?

[00:23:33] Your principal is going to get paid down.

[00:23:35] You've got the tax benefits of cost segregation and you're getting baby money soldiers every single month.

[00:23:41] So if you have a small portfolio of those, let's say 30 or 40 of those, let's say you've got consistent baby money soldiers coming in, feeding your business.

[00:23:49] You've got consistent baby money soldiers coming in from your brokerage.

[00:23:53] And then as the market is starting to shift now, well, let's get back into the multifamily where we can get larger assets.

[00:23:59] And you have your supply here.

[00:24:00] Whereas what most people do is they're like, you know what?

[00:24:02] There's no deals.

[00:24:04] I'm quitting.

[00:24:04] I'm leaving forever and I'm going back.

[00:24:06] And then when the deals do come back, they don't have the capital.

[00:24:09] They don't have the mental toughness.

[00:24:11] They don't have the relationships.

[00:24:13] And they're like, well, you see, real estate's not for me.

[00:24:15] Real estate's risky.

[00:24:16] It's not risky and it's not for you because none of the reasons that you know, it's because of the reasons that I just outlined.

[00:24:23] It's a long-term game and you have to look at it as a business.

[00:24:27] And it takes a couple of years for you to get momentum and getting on that.

[00:24:33] So I'd love to hear your thoughts on that.

[00:24:36] 100%.

[00:24:36] I mean, it really is a business.

[00:24:37] It's like some people have a syndication business and they do the three, four, five, six deals a year.

[00:24:44] And they've built a team around that syndication business.

[00:24:47] And yeah, maybe, you know, they're kind of living on the fees and the exits and that's totally fine.

[00:24:51] Like, you know, for some people, that's what they want to do.

[00:24:55] And it was just us personally.

[00:24:56] We always were going after the cash flow.

[00:24:59] You know, the monthly cash flow is what we wanted.

[00:25:01] So as we kind of saw that diminish a little bit is when we had to kind of pivot a little bit and adjust our strategy.

[00:25:07] But I mean, it's there's no necessarily right answer, I would say.

[00:25:12] But it's really what you want to do and what fits your lifestyle and like what you're trying to create is like the biggest thing, you know.

[00:25:18] And I think for what we're trying to create, buying the apartment deals has been life changing because like that kind of got us to where we're at now.

[00:25:25] And for example, we sold a 48 unit recently that was actually beginning of this year and we bought it in 2021.

[00:25:35] And we had like a really, really sweet exit on it, like got a silly deal on it up front, bought it right.

[00:25:41] And we took our portion in 1031, our portion of our sale proceeds and bought like about 14 houses that myself, my partner just owned together.

[00:25:51] So we took that chunk and just bought a portfolio of houses.

[00:25:54] And instead of cash flowing X per year through the apartment building, we basically two and a half times that cash flow by being able to do that and then buy these smaller assets, but buy them in like a chunk.

[00:26:08] And now we're getting the point where now our cash flow portfolio is basically its own business.

[00:26:13] You know, we have 30 or so of them and we're slowly getting to the point where, you know, soon here we'll get our own property manager and hire like a part-time maintenance guy and stuff like that.

[00:26:21] So, yeah, I mean, it is all a business and you have to kind of treat it, you know, no matter what it is, you have to really treat it like that.

[00:26:29] And obviously as you scale and grow, like you need to appropriately adjust.

[00:26:33] Hey, Jake, it's not often that we get a sponsor that transforms their industry.

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[00:28:43] Come talk to me for virtual assistance.

[00:28:45] I've got a great company that we work with, and you could probably do a lot of this stuff, especially the property management with VA.

[00:28:51] After the call, I'm going to definitely talk to you about virtual assistance, but you said something that's so profound and so important, and I hope people didn't miss it because I'm going to ask you, how do you start?

[00:29:02] But you sort of answered it because it's know what you want.

[00:29:05] There is no one way to make money in real estate.

[00:29:08] We syndicated three deals, 2018 and 19.

[00:29:12] We needed to do that because we ran out of capital.

[00:29:14] We're like, we need money, so we needed to raise those three deals.

[00:29:18] We raised $10 million.

[00:29:19] It continued the real estate business.

[00:29:21] We scaled up, and then in 2020, we're like, we have to stop syndicating because the deals don't make sense.

[00:29:26] We're not going to be able to return capital to our investors.

[00:29:29] And oh, by the way, we don't really want to deal with investors.

[00:29:31] We've got 100 investors right now.

[00:29:32] We're vertically integrated.

[00:29:34] We have a property management company.

[00:29:35] We have enough assets and cash flow that we don't need to expand by syndicating and by raising more money.

[00:29:41] Let's exit these deals, and as we're exiting these deals, we're refinancing the other assets out and then using that capital.

[00:29:48] And now, you know, over the last four years, we've only self-funded our deals.

[00:29:51] Now, that works for Jake and myself.

[00:29:53] It sounds as if it's a nice model for you.

[00:29:55] Although, I told Jake, Jake, if a $35 or $40 million deal comes and we need to raise $10 million next year, guess what?

[00:30:02] I don't got it.

[00:30:03] We're going to hit the syndication well.

[00:30:04] We're going to hit that button because it's important.

[00:30:07] So keep yourself flexible.

[00:30:08] But knowing what you want to accomplish, do you want to just sit around, collect paychecks?

[00:30:13] Maybe you hit up Michael and say, I want to invest in your syndication.

[00:30:16] Do you want to be an active investor that is young, that doesn't need the cash flow today, is working at a good job, wants to create appreciation?

[00:30:24] Well, you look at markets that have low cap rates that you can add value to.

[00:30:28] If you want to create cash flow or get that dividend every month, you look at other different markets with other different strategies.

[00:30:34] Knowing what you want to accomplish is first and foremost the most important thing.

[00:30:39] Don't let anyone tell you what you want.

[00:30:41] But for anybody out there, I want to start in this business.

[00:30:44] I saw that you started a 26-year-old.

[00:30:45] I want to get into multifamily.

[00:30:47] What would you say to them?

[00:30:48] What are some of the things that they should start doing right now?

[00:30:51] Yeah, 100%.

[00:30:52] First thing is like you have to just kind of really think about what you want to build and what you want your life to look like.

[00:30:57] Because there are so many avenues you can go down and they can look very different, honestly.

[00:31:06] If you want to be hunting for deals consistently, you want to build a big business, you want to have employees, whatever.

[00:31:12] Maybe, yeah, maybe you get into development or you do like the syndication thing or you kind of just go all in on that.

[00:31:18] If you want to kind of have your own, almost like a mom and pop style thing, right?

[00:31:24] Then maybe you go after some smaller assets.

[00:31:26] You start building up a portfolio kind of like what we're doing on the side.

[00:31:29] So it really depends what you want your life to look like.

[00:31:31] It depends on your personal goals.

[00:31:33] Even with my clients, like on the agent side of things here in Cleveland, it's like almost always the first thing I ask them is like, yeah, you want to buy stuff.

[00:31:41] But what's your actual goal here?

[00:31:43] Do you want cash flow?

[00:31:45] Do you want tax benefits?

[00:31:46] Do you want appreciation?

[00:31:47] What do you want?

[00:31:49] Do you need the cash flow?

[00:31:50] Do you not need the cash flow?

[00:31:52] Because that's going to got like...

[00:31:53] I like strategizing with them.

[00:31:55] Like, hey, if you're going after this, we should start here.

[00:31:59] And this is kind of what that path looks like.

[00:32:01] Like, whereas if you're going after something else, you know, maybe we can go a different route.

[00:32:04] But I mean, that is the first and foremost, like most important thing is just getting clear on that.

[00:32:10] Thankfully, I feel like we were pretty, I would say relatively clear on it in the beginning.

[00:32:14] So it's kind of guided us throughout our whole, you know, our whole journey here.

[00:32:19] And I feel like we've been able to kind of do what we wanted to do.

[00:32:22] And we're on a good path.

[00:32:23] But yeah, if you don't really know that at the core, it is hard to...

[00:32:27] It's easy to also get distracted.

[00:32:29] You can like, you try one thing that maybe it's not exactly what you thought it was.

[00:32:33] Then you go try something else.

[00:32:34] And maybe you start hopping around too much also if you're not really clear on it.

[00:32:37] So that's the most important thing for sure.

[00:32:40] Before I let you go, give me some tips or some things that if I'm starting out or if I'm building a portfolio,

[00:32:47] some of the mistakes you made, some of the things that I need to avoid to make.

[00:32:51] Oh, yeah.

[00:32:52] Yeah, there's a few.

[00:32:55] How much time I got?

[00:32:56] Is that what you're saying?

[00:32:57] Yeah, I'll be here for a little while.

[00:32:59] And listen, Micah, before you answer that, if you don't have an answer to that question,

[00:33:03] that means that you haven't been in the business.

[00:33:05] If anyone is saying I've never made a mistake in real estate,

[00:33:07] that means you haven't invested in real estate.

[00:33:09] Same thing in stocks, same thing in bonds, whatever investment vehicle.

[00:33:13] If you haven't made a mistake, it just means you're not active or you haven't done it yet.

[00:33:16] Yeah.

[00:33:17] I mean, the first mistake would be thinking that you're not going to make mistakes.

[00:33:23] But yeah, I mean, there's a lot.

[00:33:26] I mean, some of the bigger things I would say is when you're newer, obviously,

[00:33:32] you can be overly conservative, but you can also be overly aggressive.

[00:33:36] Finding that sweet spot is pretty important.

[00:33:38] And sometimes it's hard to do in the beginning.

[00:33:40] So you might want to err on the side of conservative.

[00:33:44] But the market changes a lot.

[00:33:46] Things change.

[00:33:47] I remember during COVID, the prices of materials went up.

[00:33:51] And when we were budgeting $5,000 a door to do vinyl plank paint and a couple little things in the kitchen,

[00:33:56] that $5,000 turned into $7,500, then $8,500.

[00:34:00] And it just kept going up, right?

[00:34:02] And that's an example of potentially not being conservative enough and not anticipating some of those things that come along with the market kind of changing.

[00:34:12] Obviously, COVID was a hard one to predict, right?

[00:34:15] But I think that erring on the side of conservancy is typically something you should do in the beginning, especially.

[00:34:23] And then also, I would just say not getting into deals that you're not 100% comfortable with.

[00:34:29] Like we've had some opportunities even with some other people to do some larger deals.

[00:34:34] And when we would underwrite them ourselves or look at the assumptions, we're kind of like, I don't know about that.

[00:34:40] Like we're like, we wouldn't underwrite it like that.

[00:34:43] So like we don't really feel comfortable doing that deal necessarily.

[00:34:47] It's tempting because obviously, you know, you generally just want to do more deals.

[00:34:51] But at the same time, like thinking long term, like, hey, worst case, like if something doesn't work out, we just brought a bunch of investors into this deal.

[00:35:00] Obviously, it's not going to look good for the investors.

[00:35:02] You got to take care of them first.

[00:35:03] You know, they're not going to want to invest with you and they're not going to be happy with the situation if something doesn't go well.

[00:35:09] And it turns into a pretty big headache if you end up in a deal that doesn't go so well.

[00:35:14] So, I mean, you know, not just doing deals to do deals.

[00:35:17] It's like you have to do deals that you're comfortable with.

[00:35:19] Even if someone else is like super comfortable with it, they love the deal.

[00:35:23] If it doesn't meet your standards from like an underwriting perspective and, you know, your assumptions, then probably best to stay true to what you know and, you know, what you're confident in.

[00:35:34] It's important.

[00:35:35] Aligning your values is important.

[00:35:37] And what you just said, I can say it another way.

[00:35:40] It's trusting your gut.

[00:35:41] If it doesn't feel right, then it just it's not right for you.

[00:35:46] If you that goes with the contractor, that goes to the partner, that goes with an investor.

[00:35:52] If you're trying to raise money from an investor and you just don't get a good feeling, you think that investor is going to really drive you nuts.

[00:35:57] Just take a step back and say, I really need that money.

[00:36:00] But do I need it that badly?

[00:36:01] I mean, only you can answer that question.

[00:36:03] But, you know, when you get that pit, that's that feeling in your stomach and you're like, oh, you know what?

[00:36:08] Should I ignore it?

[00:36:09] Please don't ignore it.

[00:36:10] It's trying to tell you something.

[00:36:12] Michael, where can the listeners get a hold of you?

[00:36:14] Yeah.

[00:36:15] Facebook is the easiest.

[00:36:16] I would say like I communicate with a lot of real estate folks on Facebook.

[00:36:19] Again, my email is Michael at PremierClevelandInvesting.com.

[00:36:25] And then obviously, once people connect, you know, give them my personal phone and would love to.

[00:36:31] Yeah, I mean, I enjoy meeting people from the community.

[00:36:33] Like we've done deals with people from the community, like actually a decent amount of guys.

[00:36:38] We've done a few deals like Chris Petrakis and Andy Newman and Kevin Kozak and Ethan Canby.

[00:36:43] We just did a deal with them down in Columbus, a 90 unit.

[00:36:46] And that's always fun.

[00:36:48] Like I love connecting with people to potentially partner with them.

[00:36:50] And at the same time, if you're looking to maybe buy here in Cleveland or, you know, get into some stuff here, I could definitely help out with that as well.

[00:36:58] It's interesting because as I wrap up Michael Orlando's story, at 26 years of age, he joins Jake and Gino.

[00:37:04] He goes out in 2020 and he buys his first 22 unit.

[00:37:09] And it was an amazing deal.

[00:37:10] Amazing price point.

[00:37:12] I mean, that's where the times were.

[00:37:13] He took a big, big risk, big challenge, big chance.

[00:37:17] And he's buying it right.

[00:37:18] He's managing it right.

[00:37:19] He's financing it right.

[00:37:20] He never really, never really worked on that process, that framework.

[00:37:23] He dove right in after a year and a half.

[00:37:26] He almost doubled his money in that deal and he kept it going.

[00:37:29] But what was really great about his story is he's like, you know what?

[00:37:31] The market's shifting now and no deal is better than a bad deal.

[00:37:35] And I'm listening to Jake and Gino and they're like, you know what?

[00:37:37] You have to buy these things right.

[00:37:38] It doesn't matter what they're selling for.

[00:37:40] If it doesn't make sense for your underwriting, you need to pass on them.

[00:37:44] And I'm building this business.

[00:37:45] And oh, by the way, I'm going to become a broker because I can make some transactions here.

[00:37:49] And I can really get dive into more into the real estate community in my market and become

[00:37:54] an expert.

[00:37:55] And I've said, it's hard work.

[00:37:58] It's not that I'm going to sit around and do nothing, but I can either work hard for the

[00:38:01] startup company I was working for or I can work hard for myself.

[00:38:04] And I just chose to work hard for myself and to build my business and to build my equity.

[00:38:09] That starts going.

[00:38:10] And all of a sudden, I start buying homes with a 2% rule.

[00:38:12] And I'm like, you know what?

[00:38:13] I love this because I'm making transactions in my real estate business.

[00:38:17] And then for the real estate business, that's great.

[00:38:19] You know, the selling, buying and selling.

[00:38:21] And then I've got my properties that are starting to sell.

[00:38:24] I'm exiting there.

[00:38:25] And then I'm buying these portfolios of single family homes where I'm making cash flow there.

[00:38:28] So I've got multiple streams of revenue within the same niche, within the same industry.

[00:38:33] And I'm able to take some of that shorter term money and roll it in the longer term money.

[00:38:39] So listen, congratulations on, I think, your evolution.

[00:38:42] And it's been pretty short.

[00:38:43] And at the ripe old age of 30, you're probably going to be doing this for the next 50 to 60 years.

[00:38:49] That's my prayer and hope for you, brother.

[00:38:51] Listen, I love you being on the show.

[00:38:53] And any final words?

[00:38:56] No, I mean, I think that hopefully this was helpful to some people starting out for sure.

[00:39:00] And yeah, I mean, obviously anyone can reach out to me even just for some insider advice and whatnot.

[00:39:06] But no, I appreciate you guys.

[00:39:08] Like you guys, obviously, I mean, I knew nothing just to give you a quick plug.

[00:39:12] I knew nothing about real estate when I started.

[00:39:15] Like literally, I didn't even own a house.

[00:39:17] Like I had never bought a house before.

[00:39:19] And joining Jake and Gino, you know, and going through the, even just the educational platform for me,

[00:39:25] kind of gave me that like baseline knowledge to go buy that first deal.

[00:39:28] So, and that obviously kind of changed everything because it led to where we are today.

[00:39:33] So, and then I know we didn't talk too much about it, but we've, we've closed like over 300 apartment units,

[00:39:39] you know, for like five, six deals or so.

[00:39:42] The biggest one being 90 units.

[00:39:43] And we're working on some big ones right now as well.

[00:39:45] And that was, you know, it all stemmed from just getting the education and kind of going through your guys' platform.

[00:39:50] And I appreciate that you guys are, I feel like very genuine in the space.

[00:39:54] And, you know, you're not like, you, you push people to do good deals and do it right.

[00:39:59] It's not just like join the community and become a deal junkie.

[00:40:02] It's like, you guys really care about the community and the students.

[00:40:05] So appreciate that.

[00:40:07] Thanks brother.

[00:40:08] I want to thank you all for taking part of the time today to listen to Michael's amazing story.

[00:40:12] And I'm looking forward to seeing y'all on next week's Movers and Shakers.

[00:40:17] Thanks everyone.

[00:40:18] Thanks Michael.

[00:40:18] Thank you.