Finding Your Superpower

Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome to another edition of “How to Build a Lifetime Cash Flow Through Real Estate Investing”. I’m Rod Khleif, and I am thrilled that you’re here. And I know you’re going to get value from the gentleman I’m interviewing today. His name is Mark Cira, and Mark is a CPA and has been involved in all sorts of different real estate projects, from mobile home parks to development to multifamily. And we’re going to talk about investor relations and raising capital and who knows where else we’ll go today. Mark, welcome to the show, brother.

Mark
Hey, thanks a lot. Really happy to be here, Rod.

Rod
Glad you’re here. So why don’t you take a minute and give us a little background, you know, do a little better job than that pathetic intro I just gave you. So please tell us a little bit more about who you are and why you’re where you are in real estate.

Mark
Yes, I’ll kind of take you back to the beginning. I graduated in 2002 with an accounting degree and came out, got my CPA, went into management consulting, you know, worked at Ernst and Young Consulting, and along the way, I came across one of my clients that brought me on board over the last ten years as their CFO. And really, that’s been my role today. And how I got into real estate was about halfway through my career. My wife is a general contractor here in Chicago.

Rod
Oh, wow.

Mark
I met her. We were going to build a house. We ended up buying a piece of land that we– didn’t build our own house on, but we developed some spec homes on it, divided the property, went through all the zoning and all that sort of thing, and that really lit the light bulb on real estate for me. It showed me that you didn’t have to be an ultrawealthy person to get into real estate. You know, there were regular people out there investing. And so when we did that, we just kept doing it for the, you know, next few years. We started to build up a nest egg, and I started to, you know, look at other ways to make money in real estate, especially as my career was taking off as the CFO is getting busier. I didn’t have as much time to be an active investor. And we were involved in a variety of deals at that point for mobile home parks like you mentioned, you know, some capital, you know, projects around multifamily. You know, all kinds of different real estate things we’re feeling our way out. And I really got involved in much more passive investing. And that’s where I am today is really focused on that passive investment for people like myself that are busy professionals that maybe don’t have the time or energy to get out there and really do all the legwork to investigate sponsors and that sort of thing.

Rod
Sure.

Mark
That’s how I got involved, and that’s our kind of history.

Rod
Okay. Well, you know, I know before we started recording, we talked about a couple of topics that I think we can add value with today. And I guess let’s start with, you know, in today’s hot market, you know, there is a lot of aggressiveness going on out there, you know. How do you feel about that? Do you feel like mistakes are being made right now in this hot market? Let’s start there.

Mark
Sure. And this is a lot of the reason why I’m trying to add value to professionals like myself. I see a lot of deals come across my desk and there are many new operators out there. As you know, there’s a lot of capital in the economy right now. People have a lot of money that they’re looking to invest, especially as, you know, bonds are not paying anything. So people are looking for yield as well. And so this money is coming in looking to new investors who are popping up. And a lot of them are underwriting projects more and more aggressively for a number of reasons. Either they have to outbid, operators who are already entrenched in those markets, have deep relationships. You know, the brokers know they’re going to close on the deal. So a new operator is really going to show their capability and they may overbid. They may underwrite rent.

Rod
May is the wrong word.

Mark
I agree. I’m being soft here.

Rod
Yeah. Sorry I interrupted. Yeah. Okay.

Mark
So all of those things, you know you look at the underwriting and you see expenses that are underestimated, you know, build-ups that are underestimated. Rents that are increasing at, you know, 5% or 10% for the next five years, which, you know, maybe that was an anomaly last year, but is that going to continue throughout the whole period? And these are the things that you really start to understand these operators and how they look at a project and how they’re winning, what they’re doing. You know, you really want to be careful.

Rod
Yeah, no question. And, you know, we get into the best and final. For those of you who don’t know what that means, it just means, you know, it’s almost like a bidding process. And we get into you know, that best and final. And when we see what a property ultimately trades for or sells for, it is just blown away. It’s like, do they even have any cost of funds? You know, how are they coming up with these numbers? And, you know, there’s a big operator, very well known. I’m not going to say his name, but anybody would recognize it out of Miami that, you know, I saw one of his packages and he buys A-class assets and he was showing a 10% rent growth a year for the next five years. And I’m like, you know, listen, that’d be awesome. I think Florida is going to explode. I really believe Florida is going to explode and continue to explode, but boy, that is super aggressive.

Mark
Exactly.

Rod
Anyway, how do you think about investing when, you know, the market is so hot and, you know, we’re seeing incredible rent increases? I mean, I think Tampa was 24% or some crazy number in 12 months. You know, what do you think about it?

Mark
Well, it’s hard to take all of your money off the table and just wait, right? That’s not a great strategy. So it’s obvious that you need to be investing, but investing carefully. And I look at that as investing with operators that have been around for a very long time, who, you know, have those deep connections to both their markets and can get deals at favorable rates or prices.

Rod
Terms.

Mark
Yeah. Favorable terms. They’ve got long relationships with contractors, you know, vendors, and especially their lending partners, because if things do go wrong, you want to know that they have the staying power and that they can work with their lenders. They can find the capital to withstand a downturn. And, you know, a lot of those operators who have been around for a long time have that ability. And so I think of things in diversification and staying power because as you know, real estate is a long-term game. Right? We’re not trying to turn something necessarily in two or three years. I think those are usually the high-risk projects that may end up in failure if things go wrong or poorly.

Rod
Right.

Mark
I’m not saying that there isn’t any room for that in your portfolio, but I like to have a section of my portfolio that’s focused on these diversified assets and longer-term operators that have that staying power.

Rod
Yeah. Now, I know you do a lot of focus on investor– you know raising capital and investor relations, and you’re doing a fund of funds, which is basically where you create a fund to put money into somebody else’s deal. What do you do to build relationships with new investors and nurture those relationships? Because I know, in fact, before we go there, you know, you’re a CPA and I get a lot of clients that are in accounting. And, I mean, when I say clients, I mean the students that are in accounting or they’re in I.T. or they’re in engineering or, you know, so on and so forth. They’re very introverted, and I have to pull them out of their shell because this business is a team sport. Can you speak to how you overcame– because I know you mentioned you were introverted before we started recording.

Mark
Absolutely.

Rod
Can you speak to what you did to overcome that and push through it?

Mark
Sure. This is not natural for me. I’m not one that likes to put myself out in the public, you know, in front of the public and speaking and all of that sort of thing. So this is unnatural. And the way that I got over it is that you kind of just got to realize that you’re not going to be everything to everyone. You know, I may not be the personality for every person out there, but I don’t have to be, right? There are people like me who understand my personality and my, you know, like for spreadsheets and numbers. There’s another person out there that is, you know, excited about marketing and getting the word out. And that is a room for growth for me or in the future as our firm, you know, grows. Finding other people, you know, the who not how to do more of that legwork. So it’s a combination of things. It’s having a team that helps push you in that direction, you know, to get out there and talk about what you do. Finding mentors that will help you, guide you through finding your voice and talking about what you know, and realizing that you have value to add. You know, having confidence in what you know and what you speak and really just kind of getting over it. Right, Rod? You’ve got to believe in yourself.

Rod
That’s the bottom line. And recognize. You know, a lot of people fear rejection. They fear– me, that was huge for me. You know, all these childhood things happened to me that caused me to believe I might not be good enough. You know, I was embarrassed to raise my hand in class for fear of being embarrassed or humiliated and, you know, just afraid of rejection and ultimately fear of failure as well. And, you know, so many people have these limiting belief systems. And, you know, there’s a reason that the acronym for belief systems is BS because they are 99% BS, but they hold people back and they do throughout some people’s complete lives. And so, you know, you are an anomaly in that fact, Mark, that you’re able to push through that because my wife is introverted. She could spend all day in her freaking closet and be happy as heck, being left alone, you know, just to piddle or do whatever she does. And so it’s tough for her to, you know, get out and meet people and so on. And it was for me initially as well. But, you know, I think one of the things you said is around confidence, and I really believe that you know, what I tell people is you build your competence so that you feel like, you know, you really have an idea of what you’re talking about and that’ll equate to your confidence. And then, you know, if you push yourself, even if you’re introverted, then you’ll have the ability to influence people. And, you know, I think that’s kind of a progression there. But it starts with competence. Otherwise, you have to–

Mark
And you have to accept who you are and what your strong suits are. Right?

Rod
Right.

Mark
You know, you don’t want to try to mold yourself into somebody that you’re not, because then you will never be confident in that person. And you need to get out there and speak to what you know.

Rod
Right. Well, you know, some of the best partnerships I see and the reason I wanted to ask you this, some of the best partnerships I see or somebody that’s analytical and introverted like yourself, with someone else, that’s like a mouthpiece, like I’ve become now, you know. And that’s my partnership. I’ve got a partner that’s super analytical. And the previous one was a CPA and super analytical as well. You know, it works really well, but you’re wearing both hats. And that’s why I thought it’d be interesting to, you know, chat with you about it because–

Mark
Yeah. I mean, I think it is important to know your lane. But to get comfortable and be out there, people still should know who you are. Even if I did have another partner who was more outgoing, they may do the majority of things, but I think, you know, even when I do due diligence on partners, I want to know all of the partners, not just the guy that’s selling me the product or the next deal.

Rod
Yeah. By the way, guys, I’ve got a couple of free resources here. I’ll mention to you, one is around partnerships because so many partnerships fail and hang on, I got to take a quick look at what the text is. But if you text, I think it might just be the word “PARTNER”. Hang on one second to “72345”. Remember that number “72345”. I know it’s not partner, it’s “PARTNERSHIP”. Text the word “PARTNERSHIP”. And I’ve got this book that’s got, you know, loads of questions you should ask a potential partner before, you know, you get into a partnership, because a partnership, like a marriage, is easy to get into and hard to get out of. And then another resource that I’ll mention real quick is, you know, you talked about really checking out an operator before you invest in a deal. And really, you know, you like long-term investors, which I agree with, and you know, people that have gone full cycle on deals and knowing, you know, well entrenched in a market or submarket. And I’ve got a list of questions you should ask a general partner before you invest in a deal. It’s great for a passive investor and text “GPQUESTIONS” to “72345”, you know so that you’re asking. You don’t get caught up in the emotion of a deal. You really dig in to see what the person is all about and get to know them. What do you do to maintain, you know, once you’re out there, you know, I guess you’re out there doing podcasts. What are the sorts of things do you do to meet people, you know, to approach them around, maybe investing in deals that you find? What sorts of things do you do?

Mark
Sure. I mean, a lot of the things that you probably do, which is outreach. You know, I have blogs as well. You know, we go to conferences.

Rod
Okay.

Mark
You know, it’s all about that investor relations.

Rod
Right.

Mark
Which I got to be honest, that coming from my perspective as an analytical person, doesn’t seem natural to me. To me, it’s like if the dollars are there, it’s going to attract the right people. But if people don’t know about you, they’re never going to invest in your products. Right?

Rod
Let’s be specific. So do you do educational pieces? You go to conferences, you meet people, and you shake hands. That’s the best way. Networking like that’s the best way. But do you do anything to create reach? Do you have your own meetup or do you just speak to other people? Tell me, tell me a little more.

Mark
Mostly, speaking at other people’s at this point. I do not have my own meetup. We do have educational resources on our website as well. So very similar to what you just mentioned around due diligence packages and underwriting, things like that.

Rod
Okay.

Mark
So we do focus on educating our customer clients, as you may refer.

Rod
Everybody does. I mean, you got to do that. The more you do that, I mean, we really are in an education-based marketing, you know, environment right now. You know, it used to be you could just market, but the smart people educate.

Mark
Yeah. I think that’s the first step in getting to know your clients and getting comfort with your clients is educating them, because many of them, as we know, are new to real estate. I think this is an expanding investment arena, and many investors are only now discovering, you know, real estate as an option, as an accredited investor. And many of them are venturing out here for the first time. And so you want to help them understand, obviously, what they’re investing in and the options that are out there and how to do it safely and effectively and not to get too excited too fast and just start jumping at the first deals because those are the mistakes that you hear all the time.

Rod
Right.

Mark
I found the first operator that I came across, I invested $50,000 or $100, 000, and the deal didn’t go well. All of the red flags were there, and I just didn’t see them. That happens all the time.

Rod
Yeah, it does. And that’s one of the reasons I also mentioned, let me mention this. I’ll do a little plug. I’ve got an event coming up, you know at the end of July, the three-day boot camp. And even if you’re going to invest passively, frankly, you should come because why would you give your hard-earned money to someone if you don’t have a real good understanding of what it is. I mean, that applies for the stock market, that applies to, you know, investing in businesses and, you know, bonds, whatever. You should have some basic understanding. Otherwise, you’re just dealing with a broker, which is really, a glorified salesperson, you know, trying to sell you on something. And so, you know, if you are interested in investing passively, come to my boot camp and learn. And by the way, they’ll also, of course, be scores of operators there. And you can really get to break bread with some of these people and get to know them and, you know, trust your gut. Your gut is super powerful as well. I know that sounds really simplistic, but if something doesn’t feel right when you meet someone, trust it because your brain can see these little nuances subconsciously that you’re not even consciously aware of. And every time I’ve not trusted that, I’ve regretted it. Same with you, Mark?

Mark
Yes, absolutely. And, you know, my wife is much more attuned to that.

Rod
Oh yeah. Women are. It’s not a sexist thing.

Mark
Yeah. When we do due diligence, you know, I focus on numbers. She focuses much more on the people. And, you know, what are the words coming out of the mouth, and does it support what I’m seeing on the paper and what’s their integrity and values. You know, not just, hey, here’s the track record, but does the track record speak to what you’re hearing the sponsors say.

Rod
And feeling.

Mark
And feeling. Yeah.

Rod
I know that sounds foofy, but I’m just telling you. If your stomach’s like this doesn’t feel right, trust it. So what do you do to maintain the relationship with your existing investors? What sorts of things do you do? Some of this is common sense, but let’s do a little micro. I mean, what sorts of things do you do to maintain? Do you just phone calls or what sort of–

Mark
Yeah. I mean, you want to get on a regular pattern of communication with your clients. Right? So whether that’s putting out a newsletter, whether that’s, you know, giving them a call every quarter, you know. And it depends on the client. Some people just want to get an email. Some people want to get a piece of paper in the mail once a year that says, you know, what you’ve been doing over the last year. So you kind of got to be in tune a little bit to your investors, and maybe there’s a little bit of all of that mixed up so that it doesn’t get boring or it doesn’t get lost in the spam filter if it’s email. You know, making sure that you’re out there on the blog, doing podcasts. Right?

Rod
Right.

Mark
Promoting that on places like LinkedIn and Instagram and things like that. So you really need to have kind of a shotgun approach of not only maintaining relationships and feeding valuable information to your clients. Right?

Rod
Yes.

Mark
You don’t want to just be sending an email that says Hi.

Rod
Right.

Mark
You now, keep thinking of me. You need to produce value, because if you’re not, they’re not even going to open your information.

Rod
Right. Yeah. I actually just approved an email to go out to our investor database, which just talks about what’s happening with inflation and, you know, the market and so on and so forth. You know, people like to see that. They like someone that will compile, you know, some general economic information and present it to them in a way that they can digest it without you know.

Mark
Exactly. And those are the things that I love to do, which is why I write them. In fact, I didn’t even intend to raise capital at first. I just decided to write an email. And then I kept writing them because it was kind of cathartic to myself.

Rod
Okay.

Mark
I’m just, you know, doing an update. Here’s my view on what’s going on with the economy and inflation and all that sort of thing. And it started to become, you know, read. And I got feedback that, hey, this is valuable. Keep doing it because I was unsure at the beginning. But hearing that feedback from your clients, that it is valuable. It goes a long way.

Rod
Yeah. Very cool. Yeah. No, it absolutely does. And makes it worthwhile. You know, I’m in the midst of creating a course which this is the first time I’ve mentioned it publicly on really building a brand using social media. And it’s really going to be comprehensive on all the different social media ways to build. In fact, you know, my team got me on TikTok. I couldn’t even spell TikTok 90 days ago and I’ve had videos with 6, 700,000 views. It’s just astounding what’s available. And, you know, that’s a medium that you can use to, you know, add value, educate, and then, you know, let them know if they’re accredited. Let them know when you’ve got a deal publicly like that. Well, listen, I really appreciate you coming on the show. You’re definitely, you know, very knowledgeable about the business. Is it you and your wife? Is that the team or are there some other people involved?

Rod
Yeah, we have some part-time support that does things like help us, you know, improve our copy and blogs and that sort of thing. Right? You’ve got a back team, I’m sure helping you. Like you said on TikTok and Instagram and all that sort of thing. We’re not quite big enough to have a big team, but we have some support behind us. So as we grow, I do hope to bring on additional team members to help underwriting and vet, you know, operators and that sort of thing.

Rod
Sure.

Mark
But right now it is the two of us with some back support.

Rod
Very nice. Well, the last question I’ll have for you is, you know, I have a lot of operators– I’m sorry, let me rephrase that. I have a lot of aspiring multifamily investors. They want to be active and maybe start passively, but want to be active for sure and do their own deals. You know, what advice–because you’ve done, I know you’ve done syndications, you’ve got the mobile home parks and some of these other things that you’ve done. What advice would you give somebody that’s maybe like you introverted, analytical, you know, needs to check off every freaking box before they make a move? You know who you are, who is listening.

Mark
I am that person.

Rod
Right.

Mark
I’m a perfectionist. Right?

Rod
Right.

Mark
I want to see everything buttoned up and checked off before I go forward.

Rod
Which is fear, by the way. Perfectionism is fear. Fear of taking action. In most cases.

Mark
It really is. Yeah. There is no doubt about that. So you do eventually have to just get over it. Go. You know, the 80/20 rule is very important to keep in your mind. Not only on due diligence, but on your own, getting stuff done list. Right? So that’s one way. I think getting back to your question around, what would I tell someone that’s like me that really wants to get into multifamily? And I would say, take it easy because I was that person. Like I said, I am a busy professional that has a good, day job, that has a good salary, it pays well. And investing passively allows me to continue doing what I do in my day job. I like it. Right? I like being a CFO, but I know that I want to be an active-passive investor if that’s what you want to call it. Full time.

Rod
Right.

Mark
But you need to recognize when you’re going down the syndication route that you’re building yourself a new job, a new career. It is not a passive endeavor, right? So you need to be able to value your time. And is your time in building that worth, you know, more than what you’re giving up in your day job? Or would it be better to continue to be a passive investor, maybe for five or ten years until you’re ready to really step away? Learn the ropes, maybe do some partnerships, that sort of thing? Because you may be giving up something that you won’t get a lot of returns in the syndication business for five or ten years. Because as you know, it takes a while to build that portfolio, to get up the management fees, to get syndication fees. All those things take some time to really start to roll, to replace the income.

Rod
I’ll push back on you a little bit only because I’ve got students that have done it in two or three years, retired from very high-paying, you know, jobs. It depends on what you want, honestly. And certainly passively is a great way to start for a lot of reasons. You get to see behind the scenes. There’s only so much I can teach at my three-day boot camps and you’ll see some of the behind-the-scenes stuff. You know, you can put it on your “resume” that you’re invested in. You know, so many doors pass. Even if it’s passively, you know, it counts for something and it’s a great way to dip your toe in the water and ease into the business for sure. But again, you know, I really meant the question towards people that are wanting to be active. Yes, you can start passively and certainly can. But if you want to be active, you know, the bottom line is like Nike says, “just do it”. You know, it’s not like should I wait to buy real estate? No, it’s buy real estate and wait. You know, right now more than ever with inflation what it is, I’m sure you agree, there’s no better investment than frankly, any real estate right now–

Mark
Inflation protected, you know. Like you said, you know, I think if you’re a new person evaluating whether they’re coming to real estate, you know, and you’ve already made that mental switch, I am leaving my day job. I think you’re already going down that route. I would, you know, not only start with a couple of passive, but probably find that partner that matches your, you know, weaknesses and can fill in the spots because like you mentioned, it’s a team sport. You can’t do everything, especially in this business. There are a lot of moving parts from lenders, marketing, underwriting, et cetera, especially in a very competitive environment right now where there are many other people like you trying to get out there to find that person that fits with your skillset. You mentioned partnerships being very challenging. You want to make sure that that is the right partner and the right fit.

Rod
Yeah. You date before you get married. Just say, let’s do a deal together, and if it goes well and everybody does what they say they’re going to do and you can see the work ethic and the integrity and everything else, well, then you may do more. Don’t get married and say you’re going to do this together forever and that’s what I tell my students as well. But no, you’re absolutely right.

Mark
Very, very good advice right there.

Rod
Yeah. Well, listen. Very much a pleasure to meet you, Mark. I appreciate you being on the show and I want to wish you continued success and good luck in everything you do.

Mark
Thank you very much, Rod. Very happy to be here.

Rod
Thanks. Take care.

Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our warrior students do just that using our “ACT” methodology which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?

Rod
You bet. Guys, we’ve been going nonstop for three years building an amazing community of like-minded people, and our coaching students which we call our warriors have had extraordinary results. They’ve purchased thousands and thousands of units and last year we did over 1000 units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity. To find and close deals and to build partnerships nationwide. Now our warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text “CRUSH” to “72345” and we’ll set up a call so you can check us out and we can check you out. That’s “MentorWithRod.com” or text “CRUSH” to “72345”.