Ep #100 – Ted Mortarotti as a broker, investor and syndicator, Ted has been involved with over 2,000 multifamily units in his career.

Here’s some of what you will learn:

  • If you’re willing to do what others are not, you’ll make money.
  • How Ted made the leap into multifamily real estate investing in the 1980s.
  • A great place to start in multifamily.
  • Why it’s important to do the things you may not like to do.
  • Why it’s not smart to go it alone.
  • How to choose partners.
  • Finding a mentor.
  • How to use a mentor to gain 20+ years knowledge in a year.
  • The cardinal sin in real estate investing (and how to avoid making it).
  • Time in real estate can sometimes fix deals.
  • How to fit reading into your busy day.
  • Connect with me on Facebook at: Rod Khleif
  • Text ROD to 41411 or visit RodKhleif.com for a FREE copy of my book, “How to Create Lifetime Cash Flow Through Multifamily Properties.”

Our Guest

You can learn more about Ted Mortarotti at: tm@thehowgroup.com

Do you want to learn more about Multifamily Real Estate Investing? Work with Rod in the Lifetime CashFlow Academy's Multifamily Course & Coaching Program

Full Transcript Below:

Ep #100 – Ted Mortarotti as a broker, investor and syndicator, Ted has been involved with over…

Welcome. This is the Lifetime Cash Flow Through Real Estate Investing Podcast. This is where you’ll learn strategies to help you achieve lifetime financial freedom through real estate investment. Your host, Rod Khleif, has owned over 2,000 homes and apartments. And he brings experts in all aspects of real estate investment and management on to the show. Now, here’s your host, Rod Khleif.

Rod Khleif: Welcome to another edition of How to Build Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif, and I’m thrilled you’re here. You’re gonna get a lot of value from the guy we’re interviewing today. His name is Ted Mortarotti.

I actually met Ted at a family office workshop or symposium in Miami, gosh, probably been about a year ago. Then we saw each other again just a month and a half ago at the Thought Leadership event, I think it was San Jose.

Ted has been very active in the multi-family business his whole career. He’s a syndicator. He’s been involved in I think close to 2,000 multi-family units, and has several hundred right now. And when I saw him again the second time I said this is a serendipity. I need to have you on the show so… Ted, thanks for joining us today, buddy.

Ted Mortarotti: Thank you, Rod. It’s a pleasure to be on your show.

Rod Khleif: Thank you. Let’s go back and talk a little bit about how you got started in the business. My listeners are aspiring, seasoned multi-family investors. So, I know you can add a ton of value. Let’s talk about how you got started in the business.

Ted Mortarotti: Okay. Well, to digress, I’ll make it quick.

Rod Khleif: [chuckle]

Ted Mortarotti: I go through the early parts quickly. But I was… The only real job I’ve ever had was managing the service department of the Oakland Harley-Davidson shop when I was a kid. A gentleman came in and was spending money like a drunken sailor on this motorcycle that really didn’t… It really wasn’t something he should have been spending money on. And I asked him what he was doing. I said.. he is robbing banks, “what are you doing?”

Rod Khleif: [chuckles]

Ted Mortarotti: And he said, “I’m in the real estate business, and I said, “Wow! How does that work?”. And then we started talking. He would come in. He came in over a couple of weeks a time and we started talking about what he did in real estate business, what the income potential was and so on. And I ended up going to meet with his broker of record. They put me through real estate school and I got my license…

Rod Khleif: Wow.

Ted Mortarotti: I got a real haircut. I didn’t look anything like I look now back when I was in Harley days.

Rod Khleif: [laughter]

Ted Mortarotti: The hells angels who used to come in there called me the hippie.

Rod Khleif: [laughter]

Ted Mortarotti: My hair was down to my belt. It was in a ponytail and shoved down my coveralls.

Rod Khleif: Holy cow!

Ted Mortarotti: I had very humble beginnings.

Rod Khleif: I didn’t know that.

Ted Mortarotti: Yeah.

Rod Khleif: That’s funny to hear because I know what you look like now, that’s really funny to hear that. Wow. [chuckle]

Ted Mortarotti: Yeah. It’s a kind of my colorful past but anybody can start from anywhere in this business. We’re all pummeled with no money down, and started from scratch. All this bootstrapping stuff.

Rod Khleif: Mm-hmm.

Ted Mortarotti: And you truly can. It’s just a manner for me and for a lot of people. It’s “I wanna be, five years down the road today”, in a nut.

Rod Khleif: Right.

[overlap talk]

Ted Mortarotti: So, I had to grow. I had to take certain steps. I got my real estate license. I wasn’t real keen on what these folks were doing. They were doing recreational land sales to people who really couldn’t even afford a house. And they were saddling them with mortgage payments on a piece of dirt up in Northern California; Little Lakes project. I really couldn’t. In my heart, I couldn’t get there. I told them after a very short period of time, and no sales, I said, “You know, guys? I don’t see myself here long term, and I’ve got to leave.”

Rod Khleif: Yeah.

Ted Mortarotti: And so, I talked to a group of friends of mine. I said, “Who do you know that can help me get started in real estate, and as an agent?” And so somebody pointed me in the right direction, warmed me up, and pushed me out the door. I went and met with these guys, and they said, “Oh yeah. You can come in, and you can get started in real estate. You don’t need to know anything or anybody”.

And on of the guys, I mean this is oh so embarrassing even to admit to. But when at one of my brokers handed me a phonebook, ‘cause I told him, I went to him the first day and I said, “I don’t know anybody.” I said, “How do I do this?”, and he hands me a phonebook. He goes, “Kid, look at all these people…”

Rod Khleif: [laughter]

Ted Mortarotti: “These are all local people. They all wanna buy and sell.” I said, “Wow! You know? That’s pretty cool.” I was so green, so naive, I thought he was really taking care of me and what he was doing was just having fun at my expense.

Well, I took the phonebook and in two weeks, I had a listing appointment and I had two sales contracts that I’d written, and I was only in the Bs. It’s silly to say, but I mean you really can start in this business anyway and even against what kinds of odds…

Rod Khleif: Sure.

Ted Mortarotti: And still be very successful.

Rod Khleif: I tell people all the time, if you’re willing to do what other people aren’t willing to do, you’ll make money. Obviously, that worked for you back then. Now, I know you worked with Marcus & Millichap for a while.

Ted Mortarotti: Right.

Rod Khleif: Correct? And obviously…

Ted Mortarotti: Yeah.

Rod Khleif: They’re the 800-pound gorilla in the commercial real estate space, and that’s a great proving ground for you. Now, this is back… This is gonna date you, I think it’s back in 1982, is that correct? Or 81?

Ted Mortarotti: Yes. Yeah, 82 to 85, I was there two and a half years.

Rod Khleif: Okay.

Ted Mortarotti: Here’s just a little Reader’s Digest on that.

Rod Khleif: Okay.

Ted Mortarotti: I had two friends of mine that I’ve been talking to in Oakland. They were both securities attorneys. I’d met them along the way, and they seemed so far away from me, as far as what they did, that I’d never be in that league. I could never hope to even need their services.

But I said to them, “If you guys for me, you’re in residential real estate. You want to make the leap into apartments on a real like 24/7. This is a real deal, this is my life kind of a situation. How would you do it?”. And they both agreed.

And this was independently, independent conversation, they said, “Well, if you want to learn fast and you don’t care if you make a lot of money, and how much it hurts, go to Marcus & Millichap in San Francisco.” At that time, there were only three or four offices nationwide.

Rod Khleif: I went in there and the regional manager and I really disliked each other just on sight.

Rod Khleif: [chuckle]

Ted Mortarotti: It was a battle. It took me a long time to get in there. I finally came in there I got a second appointment out of him. The only way I got into the office was I brought in my tax return, and I threw it on his desk. And he said, “What’s this?” and I said, “This is my diploma”.

He said, “Diploma? It’s a tax return.” I said, ”Look at page two, on the bottom”. And I said, “If I can make that much money selling houses, little boxes in the East Bay that are selling for 32 to $50,000 a piece”, which they actually were back then.

Rod Khleif: [chuckles]

Ted Mortarotti: I said, “What could I make selling five to $10 million apartment buildings?” And he gave it this pensive, made a big deal out of it… Anyway, put me in on six months probation, and I promptly made a listing on a New York Life building. I had two apartment buildings that were 200 units plus, and I was off to the races.

Rod Khleif: Wow.

Ted Mortarotti: But I was there with a purpose. I was there because it wanna be, it was very corporate minded, I was not. Again, very humble beginnings, new haircut. [chuckles] It was interesting, but I came in and I just…

Rod Khleif: That’s a great proving ground.

Ted Mortarotti: Yeah.

Rod Khleif: That’s how you learn. And those of you who’re listening, if you have an opportunity to work with a commercial brokerage to learn this business, that’s a great place to start. Some of you started with property management companies. Some of you just go out on your own, and that’s obviously great, too.

But, that’s a great framework. I know you’re still a licensed broker. You were with Keller Williams for a while in Beverly Hills.

Ted Mortarotti: Right.

Rod Khleif: And you’re a licensed broker in your own now. Formed your own company, and you do syndications. You’re always out there beating the bushes, looking for good deals.

Let’s add some value to my listeners. Let’s say, I’m an aspiring real estate investor, and I wanna get into the business. I wanna get into multi-family. What suggestions would you make to somebody like that in that space? What would you suggest they do?

Ted Mortarotti: Well, my suggestion is everything that I didn’t wanna do in the beginning. Which was, after Marcus, I started my own syndication company. I found that it’s really a team sport, and I was never big on team sports. I like running, I like anything cycling. Anything that just depended on me.

Rod Khleif: Right.

Ted Mortarotti: I didn’t have to rely on you, Rod. I didn’t have to rely on, Ron. I didn’t have to rely on anybody. It was just a ‘me’ sport. So, if I made it happen, I made it happen. If I didn’t, I didn’t. So, I had to really suck it up and give some thought to… Okay, who do I want to play with in this space? Who do I trust?

[00:10:02]

Rod Khleif: Right.

Ted Mortarotti: And that was it. So it was this thing where I had to go way outside my comfort zone, and start playing with others, and on a daily basis, in a long-term basis.

That’s what I found right now, our focus is in the Southeast. We’re currently closing escrow. I mean, as we speak, we’re supposed to close day after tomorrow…

Rod Khleif: Congratulations.

Ted Mortarotti: On an 82-unit apartment project… Thank you. And I wish you’d relay that to the lender.

Rod Khleif: [chuckles]

Ted Mortarotti: The lenders changed the loan three times in the last two weeks, and again, this is part of that. We’ve got a lender, and then there’s another lender contact, so we have a mortgage broker, and then we have the lender, and then we have Freddie Mac and…

Rod Khleif: Wow.

Ted Mortarotti: I have to rely on each of those players to do their thing on my behalf, and trust that they can get the job done. I had a really hard time. That was one of my biggest obstacles is, I would go to mentors of mine, and I would say, “You know, you guys, I can only seem to grow my business to this point, and I keep hitting my head on the ceiling, and I can’t get any further.”

Rod Khleif: Right.

Ted Mortarotti: “What’s my problem?” And they said, I’m big enough. And I said, “Well, I don’t wanna build this big thing where I have… It’ll cost me $25,000 in payroll and office space and everything else…

Rod Khleif: Right.

Ted Mortarotti: But these days I got a cell phone, I got a laptop, I got a tablet, and that’s it. We do deal at Starbucks, at Peach Coffee…

Rod Khleif: Right.

Ted Mortarotti: Wherever I am, there’s always another office. That’s kind of the modern deal. I’ve got a home office that I work out of. And everything we do is with others, but we keep them on… I mean, this is just our business model.

Rod Khleif: Sure.

Ted Mortarotti: We keep people out there. We use third party. So, we don’t have to build this big thing where we’ve got 10 people in a big office, and it costs us all this money to open the doors every month.

Rod Khleif: No, that’s the way to do this.

Ted Mortarotti: Yeah, it’s my partner, it’s me, and a couple of key people that we use, but everybody is out there. It’s all about team building. And it’s about having the right property management company that will do just a pile of work for you for free in helping you analyze, and get comfortable with the new market.

We have lenders, we have just in all kinds of people. We have people at the city that we use in the Economic Development Department. I mean, people who are actually part of our team, but we don’t have to pay them. They’re not on payroll. We’re not responsible for them. They’re just out there.

That’s the way we found it to be most profitable and most nimble. Because we can move quickly, we can jump into a new market. I’m always analyzing markets and visiting markets. And…

Anyway, that’s kind of down the road. So, to speak to the people where there’s a guy like me coming out of humble beginnings, and going, “How do I do this?” You just need to find another person, because you really have to have at least one other person. There has to be some way to set up some continuity.

If something, you get some assets together, you get four, 500 units, whatever it is… If you’re the lone ranger, you need somebody… You owe it to your investors to have some form of continuity. So, there’s got to be at least one other person involved, so if something was happened to you, he could continue the business without you. So you wanna do that if… [overlap talk]

Rod Khleif: Well, and more than that, you need a sounding board. Right?

Ted Mortarotti: Sure.

Rod Khleif: There’s strength in numbers, and I recommend this for you guys listening. You don’t have to go it alone. Great to network with other people in the space, I tell you, go to these; you go to your local REA meetings, go to meet-up groups meet, find somebody that you get along with, and particularly, when you’re first getting started.

Maybe find a mentor, your reference mentors, highly recommend that you seek people like that out. When you’re analyzing a deal, it’s great to have a sounding board. It’s great to have a second of set eyes.

Ted Mortarotti: That’s it.

Rod Khleif: Somebody you trust. Right, Ted?

Ted Mortarotti: Yup, and what we do, I have more… I’m more about the market, and about the physical aspects, renovation, that kind of stuff.

My partner, and we chose each other wisely, is he’s all about analytics. He loves to analyze deals. He loves to run the loan process and the management. All these stuff, to some degree, bores me.

Rod Khleif: Right.

Ted Mortarotti: I like to be involved. I like to get out there. I like to meet people. I like to see properties. I like to analyze markets. I like… That’s my thing.

Rod Khleif: Right.

Ted Mortarotti: Get the renovation done. Do that kind of thing. But we all have different skill sets so, don’t go on and find another you. Go out and find another…[overlap talk]

Rod Khleif: Right, no, that’s a great advice.

Ted Mortarotti: Yeah, yeah. Find what you lack, find what you hate. If you hate analyzing deals, go find a guy who loves his laptop, and it’s always under his arm, and everywhere he goes he’s got a tablet, or some form of analysis attached to his body. Find what you need and then bring him in. And you don’t have to just have one person.

Rod Khleif: Right.

Ted Mortarotti: Early on, I had five, six different partners depending on the kind of project.

Rod Khleif: Yeah.

Ted Mortarotti: I got started simply with, I bought a house and I bought three houses, and then I bought a couple, together bunched up duplexes and four-plexes. And then…

Rod Khleif: No kidding.

Ted Mortarotti: I moved out of those, into other things and… Yeah.

[overlap talk]

Rod Khleif: I didn’t know that. So you started in single-family.

Ted Mortarotti: Yeah.

Rod Khleif: That’s such a common progression.

Ted Mortarotti: Yeah. Sure. Well you have to get your feet wet.

Rod Khleif: Right.

Ted Mortarotti: You got to understand the business and that’s a very safe way to do it because there’s usually really easy exit on…

Rod Khleif: Houses.

Ted Mortarotti: Single-family.

Rod Khleif: Sure. Sure.

Ted Mortarotti: Yeah.

Rod Khleif: I didn’t know that. I should’ve asked you that.

Guys, don’t be afraid to start with the smaller deals, the duplexes and whatnot. You got to build your risk muscle, and really it is a muscle. And you have to build it. Some guys will go for the hundred-unit deal right out of the gate but a lot of people start smaller and that’s awesome.

I’ll run a rehash on something you just said, because the same thing applies to me. I’ve got an analytical person on my team. I’m not an analytical person. I’m out there shaking hands, meeting people. I love kicking the tires on deals like you do.

Ted Mortarotti: There you go.

Rod Khleif: I don’t love getting buried in a spreadsheet, and getting buried in the financial analysis. I don’t love that. And so, you want to play to your strengths and…

Ted Mortarotti: Thank you.

Rod Khleif: Hire people that will supplement, and enhance what you do. That applies to business as well. You see, a lot of people, the real, successful businesses, you’ve got one person that’s the artist, the innovator, the creator. But then, they don’t have a business head. And they need the operations side. And it’s the same dynamic, or you will bring in what you’re lacking. Well, that’s really great advice.

Now, let me ask you this. Knowing what you know, you’ve been… You’re long at the tooth like me, you’ve been around a long time, and you’ve done a lot of deals…

Ted Mortarotti: Yeah.

Rod Khleif: What would you tell your younger self, knowing what you know now, if you were to start over again? You’re 25 years old and you’re wet-behind-the-ears, you’re ready to get going. What would you tell your 25-year-old self?

Ted Mortarotti: It’s interesting ‘cause as you’re asking the question, I had no clue, and then by the time you were done, I went, “How?” The lights went on.

Rod Khleif: [chuckles]

Ted Mortarotti: But what I would do is what I… Well, I mean the thing is, and we evolve to a place in business that we, should have we known earlier, life would have been easier.

Rod Khleif: Right.

Ted Mortarotti: I would find somebody who’s doing… Kinda like finding mentor.

Rod Khleif: Right.

Ted Mortarotti: Find somebody who is doing what you wanna do. Find somebody, it’s like finding a mentor. Find somebody who’s doing what you wanna do, in a way that you wanna do it. Whether it’s in state properties, out of state properties, office, retail, apartments, groups of single-family. Whatever it is, just find somebody, and then link up with them even if it means working for them.

Rod Khleif: Right.

Ted Mortarotti: We all hate that kind of thing. But if you spend like, I went to Marcus for two and a half years. I hated the experience. I really… And this is not to be crude, but it really didn’t like the people. I didn’t get along with most of them. Most of them were really snobbish, and I was very low-key, and still my-humble-beginnings kind of a guy. I didn’t really fit in it. It was very Ivy League rah-rah.

It wasn’t me, but I went there with a goal in mind. That I’m here for a couple… three years, and I’m gonna learn what I want. Then I’m gonna take that. That’s my road show, and I’m gonna get out here, and I’m gonna go do it myself.

That’s what I would do, is I would go find somebody, and just go work there, or see if you can somehow pick his brain, pick her brain. Just shadow them. Whatever they’ll allow you to do.

Rod Khleif: Right.

Ted Mortarotti: So that you can pick up that long-term knowledge in a shorter frame of time. So that you can get 10, 15, 20 years’ worth of knowledge; condense it into a year, 18 months, 2 years. Whatever it takes you when, and whatever, whether you’re a quick study or a slow study, that’s gonna be your own time frame. But that’s what I would do, and it would’ve put me into where I am now… Yikes, like two lifetimes ago.

Rod Khleif: Wow. That’s very, very valuable advice. I hope you guys took note of that. That’s a very valuable advice.

Let me ask you this…

[00:20:00]

Rod Khleif: I want you to go back, and tell me about when you got your butt kicked on something. I want you to tell me war story, where you got bloodied and what the takeaway was. Then I wanna hear about a success story. So, let’s start with the war story first.

Ted Mortarotti: Okay. All right. Had a deal, it was a project. It was converted from an old factory into apartments. I was very excited about it, just emotionally. I’d made the cardinal sin, which was, I just like… I was in love with this project. [chuckles]

Rod Khleif: Oh, yeah, and that is a cardinal sin, guys.

Ted Mortarotti: It wasn’t getting away.

Rod Khleif: That is a cardinal sin, guys.

Ted Mortarotti: It wasn’t getting… yes.

Rod Khleif: Yeah.

Ted Mortarotti: That’s it. It wasn’t gonna get away. I was gonna have this thing come hell or high water. I pursued this thing to like the gates of hell…

Rod Khleif: [chuckles]

Ted Mortarotti: And the seller ended up, toward the end of it, saying… I had all these grand schemes… So, I was gonna… the seller had these two problems, one with the loan and one with property taxes both in a bad way. And they were both going to explode and change the deal, or kill the deal.

I was gonna do this kind of conversion where neither thing mattered. I didn’t care about the loan, didn’t care about the property taxes because it was gonna sell all the units up. And the whole thing imploded the seller just got really hinky on us one day. And just said, “You know what, you guys, I just… I’m out of here. I’m done.”

I said, “What? Done? You can’t be done. We’re closing in three weeks.” And he said, “No, I’m just done.” That afternoon, I did a real quick, like a 15-second judgment call. I got three options. I can scream at him, tell him what I think of what he’s doing. I can sue him, or I can understand his position, shake his hand and walk away. Or live to fight another day with a good reputation with this gentleman who owned thousands of units, and was really a big fish.

So, we lost $40,000 on a phone call, and we really didn’t have the $40,000 to lose. We lost lender deposits. And all these stuff… When people tell you guys, “Oh, yeah! No money down, blah, blah, blah!” It’s bull, somebody’s money is going to hit the skids. Somebody’s gonna pay for that lender deposits. Somebody’s gonna pay the attorney deposit.

Rod Khleif: Right.

Ted Mortarotti: Somebody’s gonna pay, pay, pay, pay, pay. So, this stuff, though you can do without your own money, it doesn’t mean you’re gonna do it without money.

Rod Khleif: Right. Somebody’s gonna pay. Yeah. Somebody’s gonna pay.

Ted Mortarotti: There’s a lot of money that gets spent really quickly.

Rod Khleif: Sure.

Ted Mortarotti: Yeah. And so just know that, because that was one of the biggest mistakes I got tied up in, and was, “Oh, no money down!” No money down is great if you’re doing a single-family home or duplex, or a four-plex.

Rod Khleif: Shocking.

Ted Mortarotti: But you’re not gonna buy 100, 250 units with no money first… [overlap talk]

Rod Khleif: No, I bought a couple of thousand houses without my own money. But somebody paid. It wasn’t me though.

Ted Mortarotti: Yeah. Yeah.

Rod Khleif: I brought partners in. And guys, you can put team together. You can put the equity together. Put money, bring money into the deal but so these things have to get paid. You have to have an attorney to write you a contract.

Ted Mortarotti: Yeah.

Rod Khleif: You have to put sometimes pay the lender some money in advance. And these you got to get the environmental reports, and appraisal, and all these things that cost money upfront. You got to do your diligence. Inspect the property. All of that. So that was a war story.

Ted Mortarotti: Yeah.

Rod Khleif: So, how about a success story?

Ted Mortarotti: That the war story, cost us 40 grand and that was that…

Rod Khleif: It was painful.

Ted Mortarotti: Not happy. Yeah. Yeah. So okay, happy story and when that’s still really an ongoing story is… Well actually, this is a good story because it kind of goes both ways.

Rod Khleif: Okay.

Ted Mortarotti: I had a partner long ago. We put this deal together. He actually, put it this way, we had discussed the deal, I was out of town, doing something else. I came back, and he informed me that we had bought this property. It was 40 units, it was 10 four-flexes, and he informed me that we’d bought this property. And I said, “Wow. How? What did we pay for it?”

Rod Khleif: [laughter]

Ted Mortarotti: Anyway, the whole thing, it was like the worst deal in history. We got like seven and a half percent equity. We had to raise all the equity. It was like the dumbest deal that could ever… if you wanna know any crappy deal, guys…

Rod Khleif: I don’t understand what you mean by say if you got seven and a half percent equity sounds like a pretty good… Oh, that’s all you ended up with, you mean. Oh, I thought that’s what you…[chuckles]

Ted Mortarotti: That’s all. We had to a raise… We had to do the whole deal. We had to raised money instead of getting like a 70/30 split with the investors.

Rod Khleif: Right.

Ted Mortarotti: We got seven and a half percent. [chuckles]

Rod Khleif: Oh my, God.

Ted Mortarotti: He gave seven and a half percent back to the developer of the property. I said, “This is the worst deal. How? What? Were you drunk when you did this?” Anyway, so time passes. I converted that one to condominiums. We bought the units at $53,000 a unit. We’re selling them, we’re still selling them now.

Rod Khleif: Oh, wow.

Ted Mortarotti: At about $225,000 a piece.

Rod Khleif: That’s a home run. Okay.

Ted Mortarotti: Yeah. So, now people have put in like $20,000, $30,000, are taken out, just shy of a hundred.

Rod Khleif: Wow.

Ted Mortarotti: A hundred thousands…

Rod Khleif: Sweet.

Ted Mortarotti: That’s a good one.

Rod Khleif: Yeah.

Ted Mortarotti: Yes, and it started out bad, it started out crazy. So, I mean the thing is, guys, is time in real estate can definitely fix some deals.

Rod Khleif: Yeah.

Ted Mortarotti: Where they start out really crappy, and they end up really being in a home run for new investors, particularly for new investors.

Rod Khleif: That’s a great story.

Ted Mortarotti: Yeah.

Rod Khleif: That’s a great story. I know you’re a really positive, motivated guy. Just you meet this guy, you meet Ted, you’ll know what I’m talking about guys. Very motivated, very positive. I don’t know if you know, I do these five to 10-minute weekly episodes, it’s about the Psychology of Success. And I talk about everything from motivation to goal setting, to dealing with fear and confidence, and all those things. And so, I do these little 5-minute clips.

I always like to ask the question, where you get your drive? Especially, I wanna ask someone like you. What makes you jump out of the bed in the morning to go conquer the day?

Ted Mortarotti: My bills?

Rod Khleif: [laughter]

Ted Mortarotti: Nah, I mean… We all start there. It’s all like all just Gator driven. I remember when I first got into the business, and I had this broker. This guy was hilarious. He loved to bury the young guys in payments. You know, “Hey! Get a big car! You need a good car”.

Rod Khleif: [laughter]

Ted Mortarotti: I was at the time four, 500 bucks a month, which was like a mortgage payment. “Ah, it’s okay, kid.” One more deal and you’re….”

Rod Khleif: [laughter]

Ted Mortarotti: But every… Bills will do it originally in the beginning. Bills will definitely motivate you. But the thing is I have like a whole spiritual side of my life that I stay real focused on that, on God, on my abilities. I feel like I’ve been given gifts…

Rod Khleif: Right.

Ted Mortarotti: Talents, skills. For me it’s a manner of using those, and using them for the right reason, and using them to help other people.

But I mean, it’s like right now, yesterday we had this big ___ [bad audio] with this loan, with the lender. We’re supposed to be closing day after tomorrow. Well, that’s kinda gone south, and we hit this wall, and I just went for… And my partner has a tendency to get down a lot more than I. He just… I had to go for a hike.

Rod Khleif: Sure.

Ted Mortarotti: Took my dog. Went out in the mountains, I went for a hike.  And I mean that’s my kind of thing is, I need to just noodle through things.

It’s I think I read a ton, and I may not… What’s funny, and I’ll admit this now. I’ve got books. My kids come into my office and they come like, “God almighty, Dad, could you get any more books?”.

Rod Khleif: Right.

Ted Mortarotti: And all my stuff, for the most part, is nonfiction, so it’s all about getting your yes, or doing this, or doing that, profiles on different people, biographies, or autobiographies. It’s I like to find other people who have had it tough, or rough, or have done really incredibly, amazing things. And I just read that, even I read like five or 10 pages. I’ll pick that book up for another month.

Rod Khleif: Right.

Ted Mortarotti: But I’ll read those five or 10 pages, and I go “Ah! There it is.” In one of those pages, there’ll be a nugget that will just be like okay. That’s it. Good. Got it.

Rod Khleif: That’s awesome.

Ted Mortarotti: And that will be enough to just kind of revitalize me. Say a prayer, pick up the phone and just take the action. Because that for me, if I go deer in the headlights, I won’t do…

I remember sometimes, in that problem deal that I told you about where I would find myself staring at a spot on the wall, and 30 minutes later, still staring at that spot on the wall just trying to think things through.

I’d go, “Get out of here.” So, I have to get up, and do something even if it’s just taking a walk going, to my coffee shop, taking a drive over to Whole Foods. Whatever it is, it’s like I got to go. I got to do something. It may not be deal-related, but it will get me out of myself. It get’s me thinking.

Rod Khleif: No, right. Your subconscious will be working on it. That’s very smart.

Ted Mortarotti: Yeah, yeah.

Rod Khleif: You’ve got to do that… By the way guys, if you wanna reach out to Ted, he’s allowed me to give out his email address. It’s tm (for Ted Mortarotti) @thehowgroup.com. Just like it sounds the thehowgroup.com. Feel free to reach out to him. He’s a syndicator and loves to add value to people.

And now, let me ask you this. How have you been dealing, I mean, tell me that… You’ve had some problems with this deal you’re talking about right now.

[00:30:00]

Rod Khleif: How’s the interest rate, the recent interest rate hike affected? Is that what’s causing you problems right now?

Ted Mortarotti: No. Now, actually we locked at 4.3.

Rod Khleif: Oh, that’s awesome.

Ted Mortarotti: We’re locked in at 4.3%, fixed, seven years.

Rod Khleif: Wow.

Ted Mortarotti: We’re good to go.

Rod Khleif: Okay.

Ted Mortarotti: So that hasn’t caused us the problems. It’s really been the operational side. The seller kinda took their eye off the ball, and had a couple of really droopy months. During the loan period and to lenders kind of looked at the loan and “Hmm” …

Rod Khleif: Okay.

Ted Mortarotti: And they’ve scaled it back, and so it had nothing to do with us. It had nothing to do with interest rates, that had nothing to do with the election.

Rod Khleif: I see.

Ted Mortarotti: It had to do with one of the parties to the transaction not doing their job.

Rod Khleif: Okay.

Ted Mortarotti: Now, everybody pays.

Rod Khleif: Wow. Okay.

Ted Mortarotti: So, anyway… And it’ll all get worked out. It’ll all get resolved. And this will be another war story…

Rod Khleif: [chuckles]

Ted Mortarotti: We’ll just add another notch to the belt, and tuck another story. I love stories. I think stories are one of the most fun parts of this business because you go to hell and back in these things where you just feel like you’re gonna die before you close escrow.

Rod Khleif: Right.

Ted Mortarotti: Then you get that one done and six months later you find yourself in a networking situation, and you’re doing, everybody’s sharing war stories, and now you’ve got this great war story, to throw it on the table, and walk it out to these guys.

Rod Khleif: Right. Right.

Ted Mortarotti: And it’s a fun deal. And that’s the way this business goes. We kind of grow as our deals grow, as our war stories grow. It’s just, it’s rough, I mean. It’s fantastic business.

Rod Khleif: Yeah.

Ted Mortarotti: People talk to me about retiring, I think they’re carrying me out of the box.

Rod Khleif: Yeah.

Ted Mortarotti: I love what I do.

Rod Khleif: I agree completely. And guys you have to love what you do. And I’ve see you’ve heard me say that many, many times.

Ted, listen, I am so grateful for having you on the show. You’ve added a ton of value.

Ted Mortarotti: Thank you, Rod.

Rod Khleif: I hope I see you again soon, and Happy New Year and all of that. So, you be well my friend.

Ted Mortarotti: Thank you so much.

Rod Khleif: All right. All right.

Ted Mortarotti: I appreciate it. It’s been fun.

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Thank you for listening to the Lifetime Cash Flow Through Real Estate Investing Podcast. If you’ve enjoyed the show, please subscribe, and then take a moment to visit iTunes and leave a five star rating and review. For more resources to connect with us further, please visit our website at lifetimecashflowpodcast.com. Tune in next week for our next show.

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