Ep #455 – Mark Hentemann – From “Family Guy” to $90 Million Multifamly Portfolio
Starving-artist writer backs into multifamily real estate in Los Angeles
- House Hacking in LA
- Invest in your ‘must’ to follow your dream
- Becoming an evangelist for multifamily investing
- Weathering the storm in 2008
- Tips for managing lines of credit
- Focusing on what you are best at
- Creating Reach
- Factoring in Risk during a Pandemic
To find out more about our guest click here.
Full Transcript Below
Ep #455 – Mark Hentemann – from Family guy to $90 million multifamily portfolio
Hi my name is Rod Khleif and I’m the host of the “Lifetime Cashflow through Real Estate Investing Podcast” and every week I interview Multifamily Rockstars. We talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the like and subscribe button and get notified every Monday when a new episode comes out. Let’s get to it.
Rod: Welcome to another edition of How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. And I know you’re gonna enjoy the nice gentlemen that we’re interviewing today. His name’s Mark Hentemann and Mark has a very unique way that he got I guess financed and got into this business and I’m not gonna steal his thunder. I’m gonna let him tell you about it. So that’s kind of the lamest intro I’ve probably ever done but mark I want you to tell people how you got into this business because this is so unique and your background is so unique. So welcome to the show my friend
Mark: Thanks thanks for having me
Rod: Absolutely so so okay now with that again that lame preframe I want you to talk about which I think is really cool, your background, and maybe why you shifted from that to what you’re doing now. I mean Mark by the way Mark has a 90 million dollar multifamily portfolio in LA, in Austin, Texas now, and so you’ll see even more why I think it’s an amazing transition that he made. So please take it away talk tell us about how you started, where you came from, and all that business
Mark: Sure, so you know I never set out to be a real estate investor. My passion was always to be a writer. I grew up in Ohio and I had never known anybody who’d ever made it in the entertainment business but I guess I was dumb enough to try. So I moved to New York and you know set out to you know after college set out to learn how stories and jokes worked, why they work when they work, and why they’re bad when they’re bad and I became that proverbial starving artist you know in the starving artist, the starving artist thing might get romanticized at times. There’s nothing romantic about you know bolting awake in the middle of the night not knowing how you’re gonna pay your rent and having that just perpetual anxiety and you know it’s hard to get into the business. I thought you know probably impossible but I went on you know year after year you know work, writing 12 hours a day 15 hours a day I had no money to do anything else but yeah you know I knew I learned that chasing a big dream, you’re gonna encounter big resistance and you know you got to be able to stick with it and weather it and you know it was traumatic but I eventually broke in. I got hired to write for David Letterman on The Late Show back in the late 90s. Then I moved to LA and I started with a brand new show called Family Guy back in 1999 and with my first script payments on Family Guy you know I had this, the scars from my traumatic starving artist days were still fresh. So I was like I need to find some kind of financial cushion you know who knows whether I’ll be employed in you know six months from now or not and so with my first script payments I bought a duplex.
Rod: No kidding
Mark: Yes in LA and I didn’t know what I was doing and actually I backed into that duplex you know our landlord, we were in a one-bedroom apartment and my landlord raised the rent and I went out looking for another apartment and left this, visiting an apartment and crossed the street and went into an open house and a broker was like why are you throwing your money way on rent when you could put it towards mortgage. And I was like you think I want the responsibility of a mortgage like you know there’s no certainty to my career ever and I don’t want to be saddled with that but we talked, and eventually I said all right like if there’s a way that I can put something towards a mortgage and it could give me a financial cushion that I am desperate for in this business, I’ll consider it. But don’t show me any cute houses I want you know ugly rock from the edge and we parted ways and I figured I’d never hear from her again. But she called two weeks later and said I found the property you need to buy but there’s a catch. You need to become a landlord and I was like a landlord you know that doesn’t sound very fun but I met her at the property and it was this old 1920s duplex in LA it was definitely not a cute house it was totally overgrown. The sellers were raising goats and chickens in the backyard in the middle of LA. It was in a up-and-coming neighborhood very close to this place called Larchmont Village which was you know becoming hot and so I said yeah I kinda, this looks interesting. It has old great architecture that’s completely lost and I could see how this could be a lot nicer place. But I took her guidance and she said I think you should go for it I think the price is okay, is pretty good. And so I did and of course being LA there was 15 other buyers and I got into a bidding war and you know over two weeks, the price went up by about 15 grand just to stay into it and I was terrified you know I was on this rollercoaster ride and I didn’t know when to get off because I didn’t a lot of, value the property. But so it was listed at $379,000 I offered $350,000 and after 2 weeks, I won the bidding war by paying $435,000 and I thought I had made the biggest mistake of my life that I’d be broke. Maybe bankrupt or even in jail because of this disaster but you know I tried to embrace it and moved in and my first tenant was a guy that I work with you know if anybody watches the show his name is Mike Henry, he does the voice of Cleveland and Herbert and Consuela and you know he made fun of me for being a landlord and I basically threatened to a victim every day. But I read every book I could on real estate you know devouring any knowledge I could get to hopefully navigate my way out of this mess. And so this was in the early 2000’s, I didn’t know a good time at the market. I didn’t know it at the time but you know in year one I thought I’ve made the biggest mistake of my life. In year two, I refinanced lowered my rate by like a point and a half
Rod: That’s significant
Mark: It was back in when things were around 7%-8% rates and got out a PMI and I thought maybe this is okay. And then in year three, Mike moved out and I raised the rent by about four hundred dollars and it was covering all my costs and I was like, this is amazing. This is the greatest thing in the world
Rod: So all of your mortgage everything was covered with your new tenant. So you’re living for free.
Mark: Yeah and
Rod: Guys, guys, and this is in LA, one of the most expensive places in the United States. So those of you that have not bought a place yet, please pay attention here okay. Yes you’ll have to pay initially but what a fantastic way to house hack Mark. What an awesome story especially in LA where things are crazy expensive anyway Wow
Mark: Yeah and I rode you know that price pressure in LA. I experienced it firsthand is I overpaid. I thought I’d disastrously overpaid but eventually I sold it in 2005. So five years after I bought it and what I had paid $435,000 for, I sold for 1.27 million and I had put 10% down. I didn’t know about that FHA loan at the time but you know my $43,500 turned into about $835,000. And I took the owner occupy, married five hundred thousand dollar tax credit, pulled out five hundred thousand dollars tax free and then rolled the other three hundred and thirty thousand dollars into 14 unit in Hollywood
Rod: No kidding. And so here we are 400 units later and 90 million dollar portfolio. So that, you bought a 14 unit next. When, and that was all with your own capital then I take, it was your money that bought that deal?
Mark: Yes that’s about six years you know at that upon selling that and even prior to selling that original duplex, I was all in on real estate. I realized, I kind of had to switch Goff my brain like writing is my dream but real estate investing is my must, something I have to do. And I knew that I was gonna do it until I’m a hundred you know whenever I get spit out of the business. It’ll happen at some point and I can’t control that but I will invest in real estate so I went on a bit of a buying spree you know investing spree in the mid 2000s and you know I another
Rod: So mid-2000s, I’m sorry mid 2000 so it could be more specific when?
Mark: Yes so you know I sold, I bought my duplex in I think we closed in early 2000. I sold that in 2005 but I had already bought a couple other four unit buildings while owning that first duplex. And then I was just picking up any time I had script payments or show fees, any money I was making, you know there’s this virtuous thing had happened is that you know no longer was I really interested in buying a fancy car or on any of the dumb status symbols that entertainment business people you know
Rod: Not just entertainment people, even people that were successful in real estate have done those stupid things as long as he looks in the mirror yes anyway please
Mark: I couldn’t wait to save money and just pump everything into this cuz this was my Savior like this was gonna allow me to weather the storm in this business and yeah so I continued that alternative 2000s all on my own with my own money maybe bought about ten properties, eight to ten properties and I was always targeting you know my rule investing in a city like LA was, I bought the cheapest buildings I could find and I targeted like half like $200 a square foot I think back then it was even lower I tried to buy it half of replacement cost you know given the permitting and regulations and land in LA. And that felt to me like it would give me a cushion against any volatility. But also it was just practical it was I didn’t have unlimited funds so I had to find these cheap buildings and it drew me into buying like 1920s product 1930
Rod: Which have a lot of, those are those have a lot of character. I mean there’s some beautiful stuff that was built back then
Mark: Yeah and I’ve kind of stuck with that. I just, I’m doing a syndication now with the property that’s really cool it’s called Chateau Westmoreland. It’s a hundred-year-old French architecture building in right out off of outside of Hollywood. It’s in Koreatown and you know and when I buy these buildings there the architecture is lost you know they get these bad remodels there was like linoleum flooring in the lobby. They had this grand lobby and you know we fix it up and the tenants you know I run into the tenants and they’re they rave about it they like it
Rod: Very cool very cool, so what was your first syndication? Talk about that
Mark: So I was spending a lot of my days in writers rooms and I was became like an evangelist for real estate investing to all of my peers. I was like, we’re in this you know industry that’s so unpredictable. So many people we know at any given time are unemployed like you’ve got to do yourself a favor and build yourself a financial cushion. And do it through real estate you know trust me. It’ll be the best thing you ever did but weirdly no one seemed to do it. I guess it could be intimidating but you know I was some of them were like you know you won’t stop talking about this so why don’t you find a property and you know we’ll give you some funds.
Rod: Oh you fell into it wow that’s awesome but just because you were telling everybody because you were passionate about it
Mark: I was totally passionate about it but so I did my first syndication in 2008 and I brought in five writer colleagues of mine and we removed contingencies in I think October of 2008 and
Rod: Wow that’s interesting timing
Mark: A week later Lehman Brothers collapses
Rod: oh my god
Mark: And the whole world economy goes down the tube
Rod: A little deja vu music playing right now right [Laughter] so what’d you do? Did you pull the trigger and follow through? or did you did you pull out?
Mark: Yes I followed through. We bought and you know I was terrified. It was the first C-class building I had ever bought I was buying like B or B –
Rod: Was this in LA as well?
Mark: This was in LA as well yeah but it was the first like workforce C class and you know it whether the storm well it’s stayed occupied. I think the biggest hit we got was not, we stayed fully occupied and actually you know we had people coming down from B class in the C class and we had people who had gotten foreclosed on. So there was a lot of demand for this product. The only thing that you know kind of was a punch in the gut is the lender came to us and said you know we’re now marking the value of this property down and you need to maintain a minimum LTV. So they said you know we need you to contribute $90,000 more and you know luckily I was employed. I was I think running family guy at the time so I had the money at the time. So I paid it off and
Rod: What kind of lender, what kind of lender was that? Was that a local bank?
Mark: It was yeah regional bank
Rod: Wow, guys and I will tell you, that’s the kind of stuff they pull and those of you with lines of credit you know they will they will freeze them. And if you put the money in their bank after you extend it they can claw them back out of your bank account. So those of you you know that that you know we’re heading into some questionable times and I think we’re heading into a you know a similar dynamic to what we had in 2009 and with that said you know cash is king in that. So if you’ve got some lines of credit extend them but do not deposit the money in the same bank put it open up a bank account at a different bank so they can’t claw it back because there will be opportunity especially in the smaller property range that you know I would say 10 to 50 unit range. I was just reading in Business Week last week that you know they’re already landlords that the title was I think the new real estate crash about landlords bemoaning the fact and in trouble because they you know the rent concessions that world that were happening in California and New York and it was in Business Week last week. So anyway I digressed. So you made it through ‘08 and ‘09 without too much pain then sounds like
Mark: Yeah we had to wait until 2015 to sell but you know it wasn’t boasting, I was really just relieved not to have lost my friends money but we all tripled our money when at a time when the stock market had made 48 percent and that was my sort of yay we you know but really just happy to have survived
Rod: Yeah so do you do real estate full-time now or you still writing?
Mark: No, still writing, still writing television and doing working on a movie. So still a very active in writing and you know I still do, still I love you know writing all day being in writing writer’s rooms laughing and having fun and then I also love coming home and shifting to the other side of my brain to you know the numbers and it’s just a refreshing it’s a
Rod: Wow that’s actually I will tell you that your skill sets are kind of unique in that typically a creative is not an analytical and you’re, it sounds like your both and that’s kind of unique. Do you have a partner in the business or is it all you?
Mark: I do. In around 2015, I started a company called Quantum Capital or just to formalize my
Rod: Equity raising and all that business
Mark: Yeah and I hadn’t really done many syndicated, just basically done that one at the time but yeah I was thinking looking towards syndications and you know had maybe 20 properties at the time and I brought in there’s a guy his name is Nick EmaLuxan and he’s my partner and asset manager. I also have a CPA who I work with and it’s kind of the three of us and yeah I’ve expanded into Austin and Nick is actually based in Austin. I’m in LA. So those are our two markets and that’s where we kind of mine for opportunities
Rod: So just talk about team for a second, do you find that, have you divided responsibilities where you’re responsible for one thing and he’s responsible for the other? or do you both do both? Talk about the team dynamic
Mark: We divide and conquer. We collaborate on a lot of things and we talk a lot and we just do a weekly call and we set priorities and action steps. And then we kind of split off and yeah with the notion that you know I try to identify what my strengths are and you know identify what my partner’s strengths are and they do the same and we try to focus on what we’re best at.
Rod: That’s, guys, that’s a recipe for success okay. Don’t focus on enhancing or building your weaknesses, align, partner or hire for your weaknesses and focus on your strengths. I’m really glad you shared that. And so, okay and let me ask you this, tell us about any aha what you kind of already did an aha moment would have been that duplex when you didn’t have to pay to live anymore. But any other aha moments come to mind in your real estate career? I think you know, to a point you just made is it took me a long time to partner. And I was a lone wolf and you remember back in the day Rod, there was no podcasts. At least I wasn’t aware of them. I don’t think I met honestly I don’t think I met another real estate investor for the first eight years of my investment career
Rod: Same here
Mark: It was me going into the writers, spending all day in writer’s rooms and then coming home going online or getting broker listings and analyzing them and then looking for something to buy. I knew brokers, I knew lenders, I knew loan brokers and insurance agents but no other real estate investors
Rod: Right right so oh by the way that’s right you said you started a podcast it’s called Wild West Real Estate Podcast just started at late last year which is cool congratulations. And guys you know that’s the beautiful thing about this world we live in. There’s so many ways to create reach right now. Be it a podcast, be it a Facebook group, Instagram, LinkedIn, Tik-tok, whatever the hell that is you know Twitter, I mean there’s so many ways to create reach right now. It’s just incredible and you know I was telling mark before we got a show you know we just broke eight million downloads which just to me is just like staggering. YouTube videos got watched over 30,000 hours and just the ability to create reach in this day and age is just truly unbelievable and it’s what makes this business much much easier than you might think because back in the day like, like Mark said, you know it the only way you built relationships was one-on-one or going to groups and talking to groups are meeting with in groups and and you know it’s all so much easier now. But anyway, so you know if you are coaching somebody you really cared about, what would you tell them about this business you know cuz I have a lot of listeners that haven’t pulled the trigger yet you know they know they want to do this, they know they deserve more, they’re afraid of failure, and I’m here to tell you those of you that that applies to fear being in the same place a year from now than you are right now that’s what you should fear. But what would you tell those people that haven’t taken action about this business you know in your words
Mark: I would tell them probably something that’s somewhat contradictory. I would say that it’s much simpler than you probably are thinking. I went in knowing absolutely zero about real estate and I bought a property and I figured it out. It’s not that tough but also it’s it might be harder than is maybe being promoted. So just get ready to learn, to roll up your sleeves, to be paying attention. It’s not totally passive you’ve got to watch your management company or whoever’s managing it for you and stay on top of them and but you know it’s also one of the best ways I think you could spend your time and best places to put your money.
Rod: Do you love it?
Mark: I love it. I totally loved it. I loved it immediately.
Rod: And that’s such a critical piece guys so you know if you don’t love it yet, you haven’t started it yet, you know learn to love it as you’re getting into it, associate pleasure with it because that’s such a critical piece to success. Every single person that I interview on my show loves this business. And what’s not to love? I mean you know that the freedom it affords us, that income, the tax benefits. I mean there’s just the benefits go on and on and on. So let me ask you this Mark, what did you have to sacrifice or give up to get to where you are right now as it related to because you are writing 12 hours a day then doing this business on after that you know was there anything, anything come to mind when I asked that question?
Mark: I guess I didn’t go to the bars after work and grab a beer. I will hope and it was always like you know we had a we had a bar right across the street from our studio and you know we work in long hours and you know the writers would go across and grab a beer and I enjoyed it you know I loved it. But I would usually have to be like sorry I gotta get home. I got a, there’s these five things I got to get done tonight after work and it was you know it was exciting to me. There’s certain things I just have I think I’ve been blessed that things have hit me in my life where I knew exactly what I wanted to do. I knew I wanted to be a writer probably when I was 15, 14 years old and that never wavered. And I knew I wanted to be a, I knew I was gonna invest in real estate until I was a hundred when after that first deal and you know and I still get it as excited about it as I did that
Rod: Yeah and one thing you said was, you you’ll do this till you’re 101 guys you get into this business this is not a get-rich-quick. This is become unbelievably wealthy over time and you’re gonna do it the rest of your life and that’s why you have to love it okay but when you approach it like that, there’s no urgency. It’s just well there’s some urgency because you want to buy assets and get them going and all that but you recognize that you’re building relationships for life, you’re building you know you’re building your skill sets and when you take it from that approach, it puts it in perspective and it’s just important component to embrace that this is a long play game, this is not a get-rich-quick do it overnight thing. But so, go ahead
Mark: I was just to throw a thing, I use the I’m gonna do this to a hundred based on an experience that I had and I maybe have told this story before but I was buying a property in LA and I think it was maybe like a 15 unit building, maybe five years ago or so and this seller had been hammering me on every deal point. And it took us like three weeks of negotiating and finally we had come to an agreement and then a couple days went by, a few days went by, and I called the broker and I’m like you know I thought we had a deal like how come the seller hasn’t signed the contract yet? And the broker told me, don’t worry, his family’s in town for his hundredth day. He’s gonna sign it. Just give him a couple days and I was like, what? This guy who’s been busting my chops for the last month is a hundred?
Rod: And he was probably loving every freaking you know and that’s why he’s a hundred as well, he probably loves this business oh that’s just hilarious
Mark: He’s my hero immediately
Rod: Oh yeah God I love that story I have to remember that. So talk about a mistake or a failure that you made and the lesson learned if anything comes to mind because I know there’s lots of them we encounter in this business
Mark: Sure. I think a mistake that I made was you know when I was working a lot on the writing side. This may sound cynical I trusted third party property management, probably more than I should have and you know I would look at my statements every month but I didn’t monitor them and you know I’ve now made a practice of auditing property management on an annual basis, not trying to be the nice guy I think I was trying to be the nice guy in those early days like hey we’re pals like and you know I think one of them you know one of them admitted that you know he was siphoning off like 10 grand and you know not a huge not a deal-breaker in you know luckily my success exceeded that to a degree where it wasn’t that significant. But yeah like you gotta watch you know these property management companies
Rod: Yeah for sure you know and I had a manager embezzle hundred thousand dollars from me and was lying about properties being vacant and was pocketing cash and taking cash for rentals. It was ugly. That’s my Memphis story that I get a lot of, I tease people about you know when I do my live events anybody here from Memphis and they said nobody raises their hand then I can unload on. Now those of you on, don’t send me hate mail if you listen on the podcast about Memphis because I love the food and you know and all that but anyway, so you know what’s next for you are you looking for more assets right now? Are you gonna develop? Are you gonna buy? What’s next?
Mark: Yeah you know we were in contract on a 90 unit building in Austin Texas uh as March whatever that date was xx as coronavirus hit and you know we liked it. We liked a lot about this property but I think just a lending situation, the lending environment and just a total uncertainty. We didn’t want to proceed with other people’s money not knowing where we were going. And so we backed out and now we’ve reengaged with that seller. I’m sure a lot, this is a familiar story
Rod: Oh sure are you renegotiating? Are you trying to get the price down?
Mark: Yes and we’re getting close. We’re down quite a bit on the price and I think the seller, we’re trying to factor in you know now what’s future rent deal
Rod: Oh risk, risk, you’ve got to factor in risk you know that’s no question that that’s been exasperated who knows what’s gonna happen when that stimulus siphon turns off or gets turned down or and all of that, it’s gonna, there’s no question it’s gonna impact the economy so yeah we’re getting we got a million and a half on one asset half a million off another asset and that we have under contract and ready to close. So let me ask you this, what inspires you Mark? Any a are there any quotes that you love or you know talk talk about what where the drive comes from?
Mark: You know I think I’m an optimist and I think I’m you know like I said, I’ve been lucky to be passionate about a few things in life and I try to go, I love going all out for them. I’m not some person who you know one of the experiences that I have as a writer is we get these hiatuses over the summer. And you getting three months off and you know it’s a chance to get a taste of retirement like not having to do anything. And I don’t really like it. I mean, what excites me about life is finding something I love and getting really good at it and trying to be getting to that 1% where you can master something. That’s exciting, that makes life worthwhile and
Rod: Love it. That’s awesome. That’s awesome. What’s the best advice you’ve ever received? Sorry I know I didn’t prepare you for these you know
Mark: I would just say off the top of my head the best advice I received was that broker in 1999 who said don’t put your money towards rent, buy and I thought she was, she could have taken me to the cleaners, she could have you know got my business got a commission and left me stranded but no. She gave me fantastic advice
Rod: That’s funny you know I just got interviewed earlier today on a podcast that’s geared towards agents and brokers and my messaging is, hey guys every January first you go back to work, buy some of these freaking assets that you’re selling and create an annuity and create a lifestyle like you’ve created Marl and so is this interesting that you said that because that reminded me of that interview that I got interviewed on. Well listen my friend thank you for sharing your value and your your really cool story. I appreciate it. It’s pleasure to meet you. I appreciate you being on the show and guys check out check out his podcast, Wild West Real Estate and it’s a pleasure to meet you my friend
Mark: All right thanks Rod I appreciate it
Rod: Yeah take care
Mark: You too
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when?
Mark: Yes so you know I sold, I bought my duplex in I think we closed in early 2000. I sold that in 2005 but I had already bought a couple other four unit buildings while owning that first duplex. And then I was just picking up any time I had script payments or show fees, any money I was making, you know there’s this virtuous thing had happened is that you know no longer was I really interested in buying a fancy car or on any of the dumb status symbols that entertainment business people you know
Rod: Not just entertainment people, even people that were successful in real estate have done those stupid things as long as he looks in the mirror yes anyway please
Mark: I couldn’t wait to save money and just pump everything into this cuz this was my Savior like this was gonna allow me to weather the storm in this business and yeah so I continued that alternative 2000s all on my own with my own money maybe bought about ten properties, eight to ten properties and I was always targeting you know my rule investing in a city like LA was, I bought the cheapest buildings I could find and I targeted like half like $200 a square foot I think back then it was even lower I tried to buy it half of replacement cost you know given the permitting and regulations and land in LA. And that felt to me like it would give me a cushion against any volatility. But also it was just practical it was I didn’t have unlimited funds so I had to find these cheap buildings and it drew me into buying like 1920s product 1930
Rod: Which have a lot of, those are those have a lot of character. I mean there’s some beautiful stuff that was built back then
Mark: Yeah and I’ve kind of stuck with that. I just, I’m doing a syndication now with the property that’s really cool it’s called Chateau Westmoreland. It’s a hundred-year-old French architecture building in right out off of outside of Hollywood. It’s in Koreatown and you know and when I buy these buildings there the architecture is lost you know they get these bad remodels there was like linoleum flooring in the lobby. They had this grand lobby and you know we fix it up and the tenants you know I run into the tenants and they’re they rave about it they like it
Rod: Very cool very cool, so what was your first syndication? Talk about that
Mark: So I was spending a lot of my days in writers rooms and I was became like an evangelist for real estate investing to all of my peers. I was like, we’re in this you know industry that’s so unpredictable. So many people we know at any given time are unemployed like you’ve got to do yourself a favor and build yourself a financial cushion. And do it through real estate you know trust me. It’ll be the best thing you ever did but weirdly no one seemed to do it. I guess it could be intimidating but you know I was some of them were like you know you won’t stop talking about this so why don’t you find a property and you know we’ll give you some funds.
Rod: Oh you fell into it wow that’s awesome but just because you were telling everybody because you were passionate about it
Mark: I was totally passionate about it but so I did my first syndication in 2008 and I brought in five writer colleagues of mine and we removed contingencies in I think October of 2008 and
Rod: Wow that’s interesting timing
Mark: A week later Lehman Brothers collapses
Rod: oh my god
Mark: And the whole world economy goes down the tube
Rod: A little deja vu music playing right now right [Laughter] so what’d you do? Did you pull the trigger and follow through? or did you did you pull out?
Mark: Yes I followed through. We bought and you know I was terrified. It was the first C-class building I had ever bought I was buying like B or B –
Rod: Was this in LA as well?
Mark: This was in LA as well yeah but it was the first like workforce C class and you know it whether the storm well it’s stayed occupied. I think the biggest hit we got was not, we stayed fully occupied and actually you know we had people coming down from B class in the C class and we had people who had gotten foreclosed on. So there was a lot of demand for this product. The only thing that you know kind of was a punch in the gut is the lender came to us and said you know we’re now marking the value of this property down and you need to maintain a minimum LTV. So they said you know we need you to contribute $90,000 more and you know luckily I was employed. I was I think running family guy at the time so I had the money at the time. So I paid it off and
Rod: What kind of lender, what kind of lender was that? Was that a local bank?
Mark: It was yeah regional bank
Rod: Wow, guys and I will tell you, that’s the kind of stuff they pull and those of you with lines of credit you know they will they will freeze them. And if you put the money in their bank after you extend it they can claw them back out of your bank account. So those of you you know that that you know we’re heading into some questionable times and I think we’re heading into a you know a similar dynamic to what we had in 2009 and with that said you know cash is king in that. So if you’ve got some lines of credit extend them but do not deposit the money in the same bank put it open up a bank account at a different bank so they can’t claw it back because there will be opportunity especially in the smaller property range that you know I would say 10 to 50 unit range. I was just reading in Business Week last week that you know they’re already landlords that the title was I think the new real estate crash about landlords bemoaning the fact and in trouble because they you know the rent concessions that world that were happening in California and New York and it was in Business Week last week. So anyway I digressed. So you made it through ‘08 and ‘09 without too much pain then sounds like
Mark: Yeah we had to wait until 2015 to sell but you know it wasn’t boasting, I was really just relieved not to have lost my friends money but we all tripled our money when at a time when the stock market had made 48 percent and that was my sort of yay we you know but really just happy to have survived
Rod: Yeah so do you do real estate full-time now or you still writing?
Mark: No, still writing, still writing television and doing working on a movie. So still a very active in writing and you know I still do, still I love you know writing all day being in writing writer’s rooms laughing and having fun and then I also love coming home and shifting to the other side of my brain to you know the numbers and it’s just a refreshing it’s a
Rod: Wow that’s actually I will tell you that your skill sets are kind of unique in that typically a creative is not an analytical and you’re, it sounds like your both and that’s kind of unique. Do you have a partner in the business or is it all you?
Mark: I do. In around 2015, I started a company called Quantum Capital or just to formalize my
Rod: Equity raising and all that business
Mark: Yeah and I hadn’t really done many syndicated, just basically done that one at the time but yeah I was thinking looking towards syndications and you know had maybe 20 properties at the time and I brought in there’s a guy his name is Nick EmaLuxan and he’s my partner and asset manager. I also have a CPA who I work with and it’s kind of the three of us and yeah I’ve expanded into Austin and Nick is actually based in Austin. I’m in LA. So those are our two markets and that’s where we kind of mine for opportunities
Rod: So just talk about team for a second, do you find that, have you divided responsibilities where you’re responsible for one thing and he’s responsible for the other? or do you both do both? Talk about the team dynamic
Mark: We divide and conquer. We collaborate on a lot of things and we talk a lot and we just do a weekly call and we set priorities and action steps. And then we kind of split off and yeah with the notion that you know I try to identify what my strengths are and you know identify what my partner’s strengths are and they do the same and we try to focus on what we’re best at.
Rod: That’s, guys, that’s a recipe for success okay. Don’t focus on enhancing or building your weaknesses, align, partner or hire for your weaknesses and focus on your strengths. I’m really glad you shared that. And so, okay and let me ask you this, tell us about any aha what you kind of already did an aha moment would have been that duplex when you didn’t have to pay to live anymore. But any other aha moments come to mind in your real estate career? I think you know, to a point you just made is it took me a long time to partner. And I was a lone wolf and you remember back in the day Rod, there was no podcasts. At least I wasn’t aware of them. I don’t think I met honestly I don’t think I met another real estate investor for the first eight years of my investment career
Rod: Same here
Mark: It was me going into the writers, spending all day in writer’s rooms and then coming home going online or getting broker listings and analyzing them and then looking for something to buy. I knew brokers, I knew lenders, I knew loan brokers and insurance agents but no other real estate investors
Rod: Right right so oh by the way that’s right you said you started a podcast it’s called Wild West Real Estate Podcast just started at late last year which is cool congratulations. And guys you know that’s the beautiful thing about this world we live in. There’s so many ways to create reach right now. Be it a podcast, be it a Facebook group, Instagram, LinkedIn, Tik-tok, whatever the hell that is you know Twitter, I mean there’s so many ways to create reach right now. It’s just incredible and you know I was telling mark before we got a show you know we just broke eight million downloads which just to me is just like staggering. YouTube videos got watched over 30,000 hours and just the ability to create reach in this day and age is just truly unbelievable and it’s what makes this business much much easier than you might think because back in the day like, like Mark said, you know it the only way you built relationships was one-on-one or going to groups and talking to groups are meeting with in groups and and you know it’s all so much easier now. But anyway, so you know if you are coaching somebody you really cared about, what would you tell them about this business you know cuz I have a lot of listeners that haven’t pulled the trigger yet you know they know they want to do this, they know they deserve more, they’re afraid of failure, and I’m here to tell you those of you that that applies to fear being in the same place a year from now than you are right now that’s what you should fear. But what would you tell those people that haven’t taken action about this business you know in your words
Mark: I would tell them probably something that’s somewhat contradictory. I would say that it’s much simpler than you probably are thinking. I went in knowing absolutely zero about real estate and I bought a property and I figured it out. It’s not that tough but also it’s it might be harder than is maybe being promoted. So just get ready to learn, to roll up your sleeves, to be paying attention. It’s not totally passive you’ve got to watch your management company or whoever’s managing it for you and stay on top of them and but you know it’s also one of the best ways I think you could spend your time and best places to put your money.
Rod: Do you love it?
Mark: I love it. I totally loved it. I loved it immediately.
Rod: And that’s such a critical piece guys so you know if you don’t love it yet, you haven’t started it yet, you know learn to love it as you’re getting into it, associate pleasure with it because that’s such a critical piece to success. Every single person that I interview on my show loves this business. And what’s not to love? I mean you know that the freedom it affords us, that income, the tax benefits. I mean there’s just the benefits go on and on and on. So let me ask you this Mark, what did you have to sacrifice or give up to get to where you are right now as it related to because you are writing 12 hours a day then doing this business on after that you know was there anything, anything come to mind when I asked that question?
Mark: I guess I didn’t go to the bars after work and grab a beer. I will hope and it was always like you know we had a we had a bar right across the street from our studio and you know we work in long hours and you know the writers would go across and grab a beer and I enjoyed it you know I loved it. But I would usually have to be like sorry I gotta get home. I got a, there’s these five things I got to get done tonight after work and it was you know it was exciting to me. There’s certain things I just have I think I’ve been blessed that things have hit me in my life where I knew exactly what I wanted to do. I knew I wanted to be a writer probably when I was 15, 14 years old and that never wavered. And I knew I wanted to be a, I knew I was gonna invest in real estate until I was a hundred when after that first deal and you know and I still get it as excited about it as I did that
Rod: Yeah and one thing you said was, you you’ll do this till you’re 101 guys you get into this business this is not a get-rich-quick. This is become unbelievably wealthy over time and you’re gonna do it the rest of your life and that’s why you have to love it okay but when you approach it like that, there’s no urgency. It’s just well there’s some urgency because you want to buy assets and get them going and all that but you recognize that you’re building relationships for life, you’re building you know you’re building your skill sets and when you take it from that approach, it puts it in perspective and it’s just important component to embrace that this is a long play game, this is not a get-rich-quick do it overnight thing. But so, go ahead
Mark: I was just to throw a thing, I use the I’m gonna do this to a hundred based on an experience that I had and I maybe have told this story before but I was buying a property in LA and I think it was maybe like a 15 unit building, maybe five years ago or so and this seller had been hammering me on every deal point. And it took us like three weeks of negotiating and finally we had come to an agreement and then a couple days went by, a few days went by, and I called the broker and I’m like you know I thought we had a deal like how come the seller hasn’t signed the contract yet? And the broker told me, don’t worry, his family’s in town for his hundredth day. He’s gonna sign it. Just give him a couple days and I was like, what? This guy who’s been busting my chops for the last month is a hundred?
Rod: And he was probably loving every freaking you know and that’s why he’s a hundred as well, he probably loves this business oh that’s just hilarious
Mark: He’s my hero immediately
Rod: Oh yeah God I love that story I have to remember that. So talk about a mistake or a failure that you made and the lesson learned if anything comes to mind because I know there’s lots of them we encounter in this business
Mark: Sure. I think a mistake that I made was you know when I was working a lot on the writing side. This may sound cynical I trusted third party property management, probably more than I should have and you know I would look at my statements every month but I didn’t monitor them and you know I’ve now made a practice of auditing property management on an annual basis, not trying to be the nice guy I think I was trying to be the nice guy in those early days like hey we’re pals like and you know I think one of them you know one of them admitted that you know he was siphoning off like 10 grand and you know not a huge not a deal-breaker in you know luckily my success exceeded that to a degree where it wasn’t that significant. But yeah like you gotta watch you know these property management companies
Rod: Yeah for sure you know and I had a manager embezzle hundred thousand dollars from me and was lying about properties being vacant and was pocketing cash and taking cash for rentals. It was ugly. That’s my Memphis story that I get a lot of, I tease people about you know when I do my live events anybody here from Memphis and they said nobody raises their hand then I can unload on. Now those of you on, don’t send me hate mail if you listen on the podcast about Memphis because I love the food and you know and all that but anyway, so you know what’s next for you are you looking for more assets right now? Are you gonna develop? Are you gonna buy? What’s next?
Mark: Yeah you know we were in contract on a 90 unit building in Austin Texas uh as March whatever that date was xx as coronavirus hit and you know we liked it. We liked a lot about this property but I think just a lending situation, the lending environment and just a total uncertainty. We didn’t want to proceed with other people’s money not knowing where we were going. And so we backed out and now we’ve reengaged with that seller. I’m sure a lot, this is a familiar story
Rod: Oh sure are you renegotiating? Are you trying to get the price down?
Mark: Yes and we’re getting close. We’re down quite a bit on the price and I think the seller, we’re trying to factor in you know now what’s future rent deal
Rod: Oh risk, risk, you’ve got to factor in risk you know that’s no question that that’s been exasperated who knows what’s gonna happen when that stimulus siphon turns off or gets turned down or and all of that, it’s gonna, there’s no question it’s gonna impact the economy so yeah we’re getting we got a million and a half on one asset half a million off another asset and that we have under contract and ready to close. So let me ask you this, what inspires you Mark? Any a are there any quotes that you love or you know talk talk about what where the drive comes from?
Mark: You know I think I’m an optimist and I think I’m you know like I said, I’ve been lucky to be passionate about a few things in life and I try to go, I love going all out for them. I’m not some person who you know one of the experiences that I have as a writer is we get these hiatuses over the summer. And you getting three months off and you know it’s a chance to get a taste of retirement like not having to do anything. And I don’t really like it. I mean, what excites me about life is finding something I love and getting really good at it and trying to be getting to that 1% where you can master something. That’s exciting, that makes life worthwhile and
Rod: Love it. That’s awesome. That’s awesome. What’s the best advice you’ve ever received? Sorry I know I didn’t prepare you for these you know
Mark: I would just say off the top of my head the best advice I received was that broker in 1999 who said don’t put your money towards rent, buy and I thought she was, she could have taken me to the cleaners, she could have you know got my business got a commission and left me stranded but no. She gave me fantastic advice
Rod: That’s funny you know I just got interviewed earlier today on a podcast that’s geared towards agents and brokers and my messaging is, hey guys every January first you go back to work, buy some of these freaking assets that you’re selling and create an annuity and create a lifestyle like you’ve created Marl and so is this interesting that you said that because that reminded me of that interview that I got interviewed on. Well listen my friend thank you for sharing your value and your your really cool story. I appreciate it. It’s pleasure to meet you. I appreciate you being on the show and guys check out check out his podcast, Wild West Real Estate and it’s a pleasure to meet you my friend
Mark: All right thanks Rod I appreciate it
Rod: Yeah take care
Mark: You too
