Michael Davidov is the Managing Attorney of Davidov Law Group, specializing in estate planning. As a Certified Financial Planner and wealth manager, he oversees over $100 million for high-net-worth investors through his SEC Registered Investment Advisory Firm, Davidov Financial Coaching. Additionally, Michael owns and manages a $30-million real estate portfolio, including multifamily properties and redevelopment projects. He is based in New York.
Here’s some of the topics we covered:
- From Immigrant to Real Estate Mogul
- The Hustle Behind Michael’s First Real Estate Win
- Why Michael’s First Deal Was a Total Game-Changer
- Secret Hacks to Skyrocket Rent Profits
- The Truth About the U.S. Market and Its Impact on Multifamily Investments
- What the Wealthy Do Differently
- The Ultimate Must-Know for Every Aspiring Investor
If you’d like to apply to the warrior program and do deals with other rockstars in this business: Text crush to 72345 and we’ll be speaking soon.
Full Transcript Below:
00:00:52:07 – 00:01:11:13
Rod
So I’ve got Michael David off on today. And, Michael, is a certified financial planner. He’s an attorney, has a wealth management practices sec. Registered, and, he’s got about a $30 million real estate portfolio. and we’re going to dig in to a couple of those deals. Michael, welcome to the show, brother.
00:01:11:19 – 00:01:15:09
Michael
Thank you for having me. Rob and Mark, nice to meet you.
00:01:15:11 – 00:01:23:10
Rod
Of course. Why don’t you take a minute and talk a little bit about your journey, your history, your background. To start with that, give us a little bit.
00:01:23:12 – 00:01:43:05
Michael
well, first, I’m an immigrant. I’ve been here in the States for 40 years. came here as a kid. my parents came here for a better, better future. And, so I don’t take that for granted. I’ve, been an attorney now for almost 20 years. I practice with my wife, and our real estate has always been something that I’ve done as a family.
00:01:43:05 – 00:01:45:08
Michael
Now, just doing it in a bigger way.
00:01:45:10 – 00:02:14:19
Rod
I love it. So, you know, we’ve got all sorts of different listeners that tune into this show, different backgrounds, different ethnicities, different income, you know, business owners, W-2 people. You know, one of the questions we like to ask is, what type of listener do you think will be able to relate to you? Michael? You know, as far as job, personality, you know, skill sets, family, you know, all of that?
00:02:14:21 – 00:02:42:18
Michael
Yeah. I think anybody who’s family oriented, I’m married, happily married, four kids, just married off two of them. this year has been a doozy of a year. anybody who’s a professional who is, maybe making a significant amount and their W-2 job or in their small business and looking for a way to diversify away from that to build some passive income, to get into real estate or to do more in that area.
00:02:42:20 – 00:03:02:03
Mark
Now, I know we talk a lot about superpowers on this show, which you had mentioned earlier in your bio here that, you know, you do a lot of different things. So having, I guess, many different skill sets. How do you then go about building relationships with other people and getting into doing deals with many different skill sets?
00:03:02:03 – 00:03:04:03
Mark
What does that go? Does that sound like or look like for you?
00:03:04:04 – 00:03:22:23
Michael
Yeah, yeah, that’s a great question Mark. I think for me, I’m not really good at, I’m not I don’t have a superpower of any sort other than to be a good creator of lots of people that that are really good at what they do. And so I think that more than anything, that’s, that’s the best thing that I can do.
00:03:23:00 – 00:03:42:18
Michael
I’m good at lots of different things, but not, not not not exceptional at them. And so I want to team up with people that are great underwriters, people that are great asset managers, people that are great money raisers. and to kind of build a team that’s, been been kind of what I’ve done in the past.
00:03:42:20 – 00:03:53:15
Mark
So then how did that bring you into your first deal? Did you did the opportunity present itself to you? Did you go to it saying, hey, maybe I can help here? How did how did that end up, coming about? Walk us through.
00:03:53:15 – 00:04:07:23
Michael
That. Just about who, who I would, go into business with so that that’s really important to me. I want to make sure that I’m comfortable with the people that are involved. And so, took a little bit of time to get to know the people. once I.
00:04:08:00 – 00:04:10:04
Rod
So these are these are warriors? Yes.
00:04:10:04 – 00:04:11:07
Michael
Yes, absolutely.
00:04:11:08 – 00:04:15:08
Rod
Okay. Did you come to a warrior event or how did you how did you meet them?
00:04:15:08 – 00:04:42:13
Michael
I did, I came to, Sarasota and, I came there with my wife. We, we happened to have dinner with, another couple from Real comfortable, and, that led to, getting together on other occasions by phone, listening to what kind of deals he was working on. and, then an opportunity presented itself, and, I thought I could take a big part in that opportunity.
00:04:42:13 – 00:04:45:21
Michael
And, that’s when I decided, okay, let’s jump in.
00:04:45:23 – 00:04:57:06
Rod
Let’s do one. Okay. So so let’s talk about that first deal. as a warrior, why don’t you describe it where it is, how big it was? Class. All of that talk. Talk about the deal.
00:04:57:08 – 00:05:25:16
Michael
Sure. It’s, a property we purchased in Fort Worth, Texas. It’s in the Dallas MSA. It’s, 123 units. it’s an older, property. It’s, I think 1960s, is okay for me. I’m from New York. I’ve had, experience rehabbing properties from the 19 early 1900s. So, comfortable with that. in that deal, I acted as, as a cape.
00:05:25:16 – 00:05:27:23
Michael
I also raised a million and a half.
00:05:28:00 – 00:05:48:17
Rod
Let me stop here for one second. so, by the way, he said MSA so that Dallas Fort Worth, MSA, that’s metropolitan Statistical Area and and that’s how that’s that’s that’s a classification that used for big geographic areas like Phenix would be in MSAs. Tampa would be in MSA Dallas for sure. Is. And you just said keep key principle.
00:05:48:17 – 00:05:54:09
Rod
Key principle means you signed on the debt. Please continue. Sorry to interrupt. I just want to clarify things as you describe them.
00:05:54:11 – 00:06:20:10
Michael
Sure. So I raised them about a million and a half for that, project, just to give it a taste and, now I’m focused, on asset management, on investor relations for the property. and it’s been a great property for us. we started out with maybe 135,000 a month and rent roll. that was about a $100, month per unit.
00:06:20:12 – 00:06:37:05
Michael
we’ve increased the rents a couple times already. we’re now at about 155,000 a month. trying to add value at every opportunity that we can, purchased space was 11.25, but $91,000 a door.
00:06:37:07 – 00:06:38:12
Rod
So nice.
00:06:38:14 – 00:07:01:02
Mark
How did this become an opportunity? You bought it last year, which I might say in many might say 2023 was probably the hardest year buying multifamily in a long, long time. What about this deal made it a good deal in such a tough market, whether it be the debt, the opportunity, the relationship with the seller, whatever it was, what still made this a good deal?
00:07:01:04 – 00:07:01:17
Michael
Yeah, well.
00:07:01:20 – 00:07:10:17
Rod
That thought, hold that thought for one second. I just want to flag something. So you got a 20,000 a month increase in your rent?
00:07:10:19 – 00:07:11:06
Michael
Yes. Okay.
00:07:11:09 – 00:07:29:24
Rod
To give you guys some context on what that means, if you and annualize that number, you take the 20,000, you multiply it times 12 and you divide it by a cap rate. That’s how you get the value increase okay. So let’s let’s say a five cap divided by well you know where we can even say a six cap to be super conservative.
00:07:30:01 – 00:07:34:12
Rod
That’s a $4 million increase in value. And how long have you owned it?
00:07:34:14 – 00:07:35:19
Michael
less than a year now.
00:07:35:21 – 00:07:36:19
Rod
Less than a year.
00:07:36:21 – 00:07:38:08
Michael
Tell me a year.
00:07:38:10 – 00:07:43:08
Rod
All right, hang on. I just want to do it at a five cap. Just for the. Just for the hell of it. Just to see what it is.
00:07:43:12 – 00:07:47:12
Michael
We probably purchased that at a at, closer to a six cap going.
00:07:47:12 – 00:07:58:17
Rod
Okay. All right, all right. Fair enough, fair enough. Well, for 4 million is better than a sharp stick in the eye. Okay. Anyway, you shake it. Okay. So please continue with the answer to his question. Sorry, I just couldn’t let that go by.
00:07:58:19 – 00:08:00:21
Michael
Sure. Sorry, Mark. Go ahead.
00:08:00:23 – 00:08:08:18
Mark
No, no, this back to that question. In in in such a tough year to buy deals, how was this such a good deal? What were the aspects of it that made it good?
00:08:08:20 – 00:08:28:04
Michael
I think for me most importantly, were the people that were involved and, having confidence in in the individuals was important for me being comfortable with them, that that was the start. Obviously, the deal penciled out and, made sense. from that perspective, and I thought.
00:08:28:08 – 00:08:32:05
Rod
What did you pay, what did you pay and what sort of financing did you get for it?
00:08:32:07 – 00:08:49:20
Michael
Sure. we paid 11.25, million. We got, I believe close to 70%, with, Fannie Mae, that debt on it. we did a seven year loan with three years of interest only, and we planned to hold it for about five years.
00:08:49:22 – 00:09:02:09
Mark
And you mentioned the team. What? Because I know people ask this all the time. What? What about the team made you feel confident? Was it people that had done deals already? Did they have boots on the ground? Describe that a little more if you could.
00:09:02:15 – 00:09:22:14
Michael
Yeah, it was a combination of both. one was boots on the ground. There was one. that’s a person who was the local investor who found the deal, put it under contract, but really couldn’t, put the team together. and then the other warrior, that, introduced this deal to me that I felt really comfortable with.
00:09:22:16 – 00:09:32:15
Michael
put the rest of the team together. We help raise the funds. We help manage the assets. so that, that that really made me feel comfortable.
00:09:32:17 – 00:09:47:09
Rod
To talk about your business plan. You know, every business has to have a plan. I don’t care what it is. An apartment complex is no different. You create, you create a business plan, and you present that to investors, and that’s how you raise money. We’ll talk about the plan at this asset. What? What was the plan?
00:09:47:15 – 00:10:12:24
Michael
Sure. well, first, this property was purchased directly from the owner, who happened to be a broker, but, they found it for a long time. they self-managed it. I’d say not. Not so great. it needed, some fresh eyes on it. I would say it was, 100% occupied. Rents were low. so our idea was just to increase rents.
00:10:13:01 – 00:10:41:18
Michael
and as the unit turns, and I had an average, tenant live there for five years. and, we wanted to, to just maintain high occupancy, do small improvements to the property, both outside, inside of the unit as people were vacating and, to push rents now, that now we’re a couple of hundred dollars more, in terms of what, rental ask is nice.
00:10:41:19 – 00:10:57:16
Mark
What are what are a couple of those unique things to push rents because I see, you know, on this list light renovations, better maintenance. Some of the things we talk about a lot, but I also see a couple of unique things on here that I don’t know if we’ve ever talked about tenant appreciation events. some different things walk us through that.
00:10:57:16 – 00:11:00:18
Mark
Who came up with that and had you done it before? Where did that come from?
00:11:00:19 – 00:11:22:12
Michael
But I think it’s always, always easier to keep a person who you’ve done business with before in the, in the place and figure out what makes them tick and what makes them feel appreciated and want to stay there, rather than having to find to look for a new person to do business with. And so whatever we can do, and I think that that’s a small price to pay to do that.
00:11:22:14 – 00:11:47:00
Michael
It’s just some operational efficiencies that, you know, instead of looking for somebody new all the time, you can you can really cater to that person, find out, listen to them, see what, what they need. So better maintenance, response times, being able to, to cater to them on occasion. We give them something, for breakfast, as they’re heading out to work, that kind of thing.
00:11:47:00 – 00:11:51:01
Michael
Just to say thanks. We appreciate you that, I think.
00:11:51:03 – 00:12:10:15
Rod
That that creates an incredible culture when you do that. and, and people feel like they’re coming home, you know, you, you know, like, like you mentioned Easter egg hunts. You can do holiday parties, you can do pool parties, you can. Do you know that breakfast on the go thing is, is a great idea. And anything you can do to make them feel welcome is fantastic.
00:12:10:17 – 00:12:30:07
Rod
talk about and so you talked about maintenance. Yes. If they have a legitimate maintenance request, you want to get it done immediately. Now you use the word legitimate by design, because if they screw up a blind, then, you know, that’s a whole different story. But if there’s a plumbing leak and Hvac problem, something like that, and you want to deal with it immediately and make sure they’re happy with it, would you agree with me, Michael?
00:12:30:09 – 00:12:55:01
Michael
Oh, absolutely. Absolutely. Do you want to fix things, that are that, that, that are problematic, situations. I think with the prior owner, they perhaps weren’t getting that, level of service. and, we hired a third party property manager. They’ve been great. I think that’s another, example of where I felt, confident that, this was a company that could, could help us.
00:12:55:01 – 00:12:58:22
Michael
And it was very important to find the right nice. Do that.
00:12:58:24 – 00:13:23:22
Rod
Nice. And so, you did this with other warriors I know, and, and you each huge kind of divide and conquer, they raise money, you raise money, you do different aspects of the business. By the way, guys, if you’re interested in checking out our warrior program, text the word crush to 723 4 or 5. We’re somewhere between 200 and 210,000 units, that they own at this point, which is blows my mind.
00:13:23:22 – 00:13:41:08
Rod
And, and and and they’re almost all done between warriors. They go out there, they find these deals, they make it happen. It’s just very, very exciting. And we have our next warrior event actually coming up in September, again in Sarasota. and, and we discovered a long time ago, our most successful warriors are the ones that are most connected in the group.
00:13:41:10 – 00:13:57:15
Rod
And so we started doing things to help facilitate those connections, like the warrior on the event. And but anyway, again, text crush to 72345 if you want to apply. We don’t take everybody. But I can tell you leave that call better than when you got on it. so you hired a third party property management company.
00:13:57:15 – 00:14:12:00
Rod
I noticed that you you did something else to to to raise money. I mean, to get more revenue coming in, which is something that I did on a San Antonio asset which is assigned parking spaces. So your numbered parking spaces. Yeah. How many people took them?
00:14:12:02 – 00:14:16:19
Michael
I don’t recall exact numbers. I say it was about 20 or 30. okay.
00:14:17:00 – 00:14:18:00
Rod
Okay.
00:14:18:02 – 00:14:21:09
Michael
but that that’s another added revenue source. Why not?
00:14:21:11 – 00:14:23:04
Rod
Everything goes to the bottom line. Yeah.
00:14:23:10 – 00:14:47:19
Mark
So today’s August 5th. And, for people listening, you may have noticed a few changes across the board in the economy. Ten year treasury, massively down from last week. Stocks down, Bitcoin down. Since, unemployment is up. Right. Everything is coming down, including interest rates. Now, Michael, I know you have, another deal that’s coming up here.
00:14:47:21 – 00:15:12:06
Mark
and we were talking about, all the debt that’s coming due, and you mentioned that, this seller is in that situation. And in my opinion, with interest rates coming down right now, that means we’re close to a bottom. Maybe not quite at it yet, but we’re very close to a bottom. What have you been seeing on this particular deal as well as just broadly in the market for kind of where we’re at in terms of the multifamily market?
00:15:12:08 – 00:15:32:16
Michael
Sure. I think that a lot of people that have debt that is, coming due, maybe didn’t plan very well for it, but, they may not be able to refinance or they’re forced to sell because of it. that, creates some opportunities. that’s an opportunity that we have, in front of us. One contract and another property.
00:15:32:16 – 00:15:54:09
Michael
It’s a 44 unit property in, Saint Pete, Florida. And, that, seller is, reluctantly having to sell because they don’t really have any other choices. they can’t recapitalize. They bought it two years ago. Short term debt. now their interest rate is through the roof. They’re going to have to do something different.
00:15:54:11 – 00:16:10:17
Michael
So they’re selling the property and we’re coming in to pick it up. it needs a little more, to take it full cycle in terms of the value add that they were doing. And, I think we’re getting we just actually locked in the rate under 6%.
00:16:10:19 – 00:16:11:21
Rod
Wow. Nice.
00:16:12:00 – 00:16:14:09
Michael
Good for you. What? Freddie.
00:16:14:11 – 00:16:17:03
Rod
Did you just do that today?
00:16:17:05 – 00:16:18:19
Michael
well, a couple days ago.
00:16:18:21 – 00:16:22:12
Rod
Oh, last week, today would have it. Today would have been a good day. Yeah.
00:16:22:18 – 00:16:23:24
Mark
I think the market from.
00:16:23:24 – 00:16:26:00
Rod
Day to day. Yeah. No, you can’t, you can’t.
00:16:26:00 – 00:16:28:13
Mark
But today was still probably good though. Yeah.
00:16:28:14 – 00:16:28:20
Rod
Yeah.
00:16:28:20 – 00:16:34:08
Michael
Oh no it was rates went down up six last weeks and we took advantage of that.
00:16:34:10 – 00:16:54:06
Rod
By the way Bips is basis points guys. And there’s 100 basis points in every 1% of interest. So it went by what it what 0.15. percent of interest there went down. That’s bips basis points. You got to learn the nomenclature as you get into this business, you learn. And that’s one of the things we teach at our bootcamps is you got to learn the glossary of all the different things.
00:16:54:06 – 00:17:14:07
Rod
So when you’re talking about the business, people know that you’re not a newbie. So, you know, as a wealth manager, an estate planner, you know, you’re meeting people that have accumulated assets and net worth and, you know, typically some pretty decent income. What are some of the commonalities you find between your clients that may add value to my listeners?
00:17:14:09 – 00:17:35:24
Michael
Well, I’ve been doing this kind of work for almost 20 years, and I think that’s a good question. maybe about, a dozen years or so. I started noticing some patterns, and I’d see, people that accumulated a lot, over the years. And I see, real estate investors, and, it’s no surprise, why they they’ve done.
00:17:35:24 – 00:18:01:02
Michael
Well, there’s, you get to leverage, you get to have tax benefits. So that was one, type of, client. And, you know, you just mimic what they do. another type has been maybe the professional that’s been stashing away their money, tax deferred accounts, pension plans, those kinds of things. And so they’re not having to, to pay lots of taxes as they go.
00:18:01:04 – 00:18:03:12
Michael
and they’re able to, to put away quite a bit.
00:18:03:14 – 00:18:16:13
Rod
You have a lot of business owners, but you found that, I mean, you know, there’s a statistic that 90% of the, millionaires either made their money in real estate or invest in real estate for that very reason for their tax benefits. And you see that basically in your.
00:18:16:17 – 00:18:31:13
Michael
Oh, absolutely. Absolutely. There’s no question about it. majority of of my multi-millionaires that that, that we work with are, people that own, at the very least some if not a lot of real estate. Yeah.
00:18:31:15 – 00:18:48:21
Mark
So what was it for you that pushed you into this? Because I know a couple things is that I know you mentioned you had been interested in multifamily a few years back, but didn’t really start taking action until the past year or so. And also, I think I see here your wife is an attorney as well, so I’m sure you guys do very well financially.
00:18:48:21 – 00:18:54:24
Mark
What what pushed you to finally take that action and take the leap and say, hey, this is something I need to get into now?
00:18:55:01 – 00:19:19:05
Michael
Well, I think that the real estate, maybe 12 years ago was when I first, looked at it and I said, you know, I’ve got to stop doing fix and flips, which is what I used to do up until then. And I started saying, I’ve got to start owning the real estate. I had a client who was a Holocaust survivor, and I sat him down one day and I said, Julius, tell me, how you how you’ve become incredibly successful in real estate.
00:19:19:05 – 00:19:44:00
Michael
And he owned thousands of apartments in New York. And he said, Michael, time does its thing. And so, real estate is really a long term game. You have to be an owner. You have to own, the property, and you have to learn how to maintain it over a period of time. And so I started buying small multifamily duplexes, quads, those kinds of things for families, as they call, we call them here.
00:19:44:02 – 00:19:56:16
Michael
and I’ve done that for about a dozen year. And over the last year or two, I’ve been, selling off some of those and, and moving into, bigger real estate, into bigger projects.
00:19:56:20 – 00:20:08:16
Rod
So let me ask you this. You know, you’ve done a lot, a lot of water under the bridge if you have to go back and start with no knowledge or experience, what would you do to get started in this business or really any business? Frankly.
00:20:08:18 – 00:20:34:01
Michael
well, I definitely would get a mentor, somebody that, I can learn from, get myself plugged into your program. I think being around other individuals that are like minded, that are learning together, I think the learning happens both between those individuals and, of course, from you in front of the room. there’s a lot that that a person could, could save in terms of time, energy, money by doing that.
00:20:34:01 – 00:20:47:03
Michael
And so I’m a big advocate for that. and I’ve done that in other areas where I needed to have expertise. And so I’ve paid for that and have, plugged myself into an environment like that.
00:20:47:05 – 00:20:50:07
Rod
Effectively paid for speed, really is what you did.
00:20:50:09 – 00:20:54:14
Michael
it’s it’s better learn from other people’s experiences than to learn from yours and.
00:20:54:14 – 00:21:17:04
Rod
Yes, and and avoid the seminars. So let me ask you this. You’ve got four kids, you’ve got a full time gig doing the financial planning, wealth planning, all these other things that you’re doing. How do you find time? How do you find time to build this multifamily business while you’re so busy? You know, with all these other things, the kids, I mean, and still have, you know, spend time with those that matter.
00:21:17:06 – 00:21:41:04
Michael
Yeah, I well, I think first of all, you’ve got to have a supportive spouse and family. it’s got to be a shared goal. that’s a start. and then the second is, for me, I rely on other people to, to help out with, and so underwriting is done by somebody else. I usually vet out the properties after they’ve been underwritten and, and it pencils out.
00:21:41:06 – 00:21:49:11
Michael
and, and I leverage other people’s, experiences that, that could compliment might. That’s been a good answer.
00:21:49:13 – 00:22:12:06
Mark
The last thing I want to leave the listeners with before we end, here are some specific action items, because you have a list of things that you do here, even for people that just want to go do this on their own, forget about working with us. What are some of those things that you take that you do, on a weekly, daily basis, monthly, whatever, however you want to structure it, that anybody listening to this can just go take and go start and do this today.
00:22:12:08 – 00:22:34:07
Michael
Well, first of all, take action that, you know, lots of people get educated on things but never do anything about it. So success requires taking action, implementing what you’ve just learned, whatever it is, just just the movement of action you learn as you go. It’s not something that you’re going to have. You’re going to be an expert at and then do something.
00:22:34:07 – 00:22:56:12
Michael
So that’s one, for me, I, I’m typically reflecting back every week, every month I’m looking at what did I accomplish? I think that builds up my confidence. And I appreciate, where I’ve been. Then I move forward and I say, okay, what do I need to do? What’s going to move the needle in terms of my goals?
00:22:56:14 – 00:23:05:16
Michael
And I’ve got two goals that are five years, ten years in and I see am I meeting those? And if I don’t, I tweak them. I tweak out my goals, my actions.
00:23:05:18 – 00:23:10:04
Rod
Okay. Did did we meet at one of my boot camps? Is that how you, joined our program?
00:23:10:04 – 00:23:16:14
Michael
Absolutely. Yeah. And. Yeah. Mean I came to one of your boot camps. I’m, I’ve ventilate started, but,
00:23:16:16 – 00:23:33:15
Rod
Yeah. Wow wow wow, wow. So the reason it use you started talking about goals, and that’s the first thing we do and I. And by the way, guys, if you haven’t heard, got a boot camp coming up in Orlando November 7th, eighth and ninth or is it eighth, ninth and 10th. Yeah, eighth, ninth and 10th. Three days. There’ll be a thousand people there.
00:23:33:17 – 00:23:45:20
Rod
Talk about networking. it’ll be insane. And we go through every aspect of the business. So FYI on that. But, well, listen, Michael, okay. If people want to get Ahold of you, do you mind sharing your information?
00:23:45:22 – 00:23:59:07
Michael
absolutely. they can. It’s a good way they can. They can go through LinkedIn. and so my. Yeah. My tag. There’s David off Michael. David of Michael. okay. LinkedIn and, be happy to connect.
00:23:59:07 – 00:24:07:04
Rod
Perfect perfect perfect. All right. Well thank you, my friend is great to see you. And, I’m sure we’ll see you in September. All right. Take care, buddy.
00:24:07:07 – 00:24:08:10
Michael
See you guys. See you then.
00:24:08:10 – 00:24:09:00
Rod
See you guys.
