Pro Skateboarder To Real Estate Investor

Full Transcript Below

Intro
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 Rock Stars and we talk about how they build incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons and get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome to another edition of The Lifetime Cashflow Through Real Estate Investing. I’m Rod Khleif, and I am thrilled that you’re here. And we have a very unique guest today who I’m embarrassed to say I really didn’t know until we kind of connected on social media. But you very likely may know him, especially if you’re into skateboarding. His name is Mikey Taylor. And Mikey has a very unique story. And I’m not going to steal his thunder, but we’re going to have a lot of fun today. And I know we’re going to have a very wide-ranging conversation, so let’s have some fun. Welcome to the show, brother.

Mikey
Thanks for having me.

Rod
Yeah. No, this is going to be a blast. So why don’t we start– for those that like me that didn’t know you initially, tell your story because it’s a pretty cool story.

Mikey
Yeah. So, you know, like every kid in Southern California in the 90s, skateboarding was becoming a thing. I picked up a skateboard at 12 years old thinking nothing of it. I thought it would be like anything else I did try and have fun. And now, knowing my personality, I am attracted to things that are challenging. I like trying to master something. And skateboarding was so hard that it just kind of kept me obsessed with it. And so I got to the point of, you know, 16, 17, needed a job, started getting you know pressure from my parents to do so. And I didn’t want to stop skating. You know, I felt like me getting a job meant letting go of that. And so I figured out a plan to convince companies to ultimately give me free products. So I started getting shoes and skateboards and clothes, and I started selling some of the excess products to friends. So that was my little bit of income. And then that lasted me till about 18 when I graduated high school. And my parents looked at me and said, where are you going to college? And I was like, oh, I just don’t want to stop skating yet. And so that little sponsors I had, I convinced them to start paying me so that at least seemed like somewhat of a justification to skip going to school, or at least for the short-term. And then at that point, skateboarding kind of exploded. And I went from you know, being a small, not very known skateboarder from a small city to one of the biggest pros out there.

Rod
No kidding.

Mikey
Yeah.

Rod
Now, I remember Tony Hawk.

Mikey
Right.

Rod
That’s the only name I remember from the industry.

Mikey
So Tony Hawk changed everything for us. That’s kind of what happened for us. We were just the young kids coming up. He had a video game that kind of brought skateboarding to the mainstream. And then all of a sudden people wanted to dress like skaters, even if they weren’t skaters.

Rod
And my boy. That’s my boy. I remember taking him to a skate shop because he wanted the clothes.

Mikey
Right.

Rod
And of course, he wanted the skateboard and all that or the longboard or whatever.

Mikey
Right.

Rod
Yeah.

Mikey
But what changed is that they didn’t necessarily have to skateboard to start buying the product.

Rod
I see.

Mikey
So that meant our companies started growing and then we started being able to make you know somewhat of a decent income. That all happened from Tony.

Rod
No kidding.

Mikey
Yeah.

Rod
Very cool. Very cool. So you killed it in skateboarding. Tell me what happened next.

Mikey
So what I left out was when I told my mom I wasn’t going to go to college, she panicked. It was not a, oh, yeah, cool. Go do your thing and have fun. It was very, very frightening because back then, you know, kind of the message was if you don’t go to school, certain doors are just never going to open for you. And truthfully, I believe that as well. So, you know, my original sale to my parents was, I’ll do this for three years, four years, right? And then I’ll go back to school. Well, my mom’s only way in finding comfort was to basically have somebody come in and help me with my money, like financially. But the funny part was I wasn’t making any money. I was making 800 bucks a month. Right?

Rod
So you got a mentor or tutor in the financial?

Mikey
He was a– by trade, he was a financial adviser. What he became for me was a mentor. And thankfully, right, like now knowing what I know, most financial advisors will manage your assets, they’ll rebalance your portfolio. And you in a lot of cases have no clue why they’re making the decisions they’re making or really don’t know much about money at all.

Rod
Right.

Mikey
You just have somebody managing it.

Rod
And you rely on them, which is frankly dangerous.

Mikey
Correct.

Rod
Right.

Mikey
Or very much so can be. This guy, for whatever reason, took me in as like a little brother. And he actually spent time educating me on how money worked. Even from you know, 19, he asked me a very simple question that I didn’t have an answer to. And I was confused why I didn’t. He looked at me and went, when do you want to retire? What’s your financial freedom number? I had never heard anything like that. Right?

Rod
Right.

Mikey
I just throw a million bucks because that was you know, the number of wealth, at least in my brain back then. And, you know, he began to explain how that actually worked. And once he said, well, look, as you start investing, your investments can make you interest. And that interest is actually the goal of which we’re going to try to live off of. And I was like, great, I need $2,500 a month, and I’m good. And he was like, no, no, no, it’s not how it works. You need to think about the future. Do you want to get married? Do you want kids? And then he started talking to me about roadblocks that could happen in the future that can disrupt at least the targeted percentage that I was attempting to live off of. Just that question was so impactful for me. And then that was the beginning of him really working with me to build out a plan as a skater. Now, my challenge was I wasn’t making any money. Most pro skateboarders never make over 100 grand a year.

Rod
Wow.

Mikey
That’s the norm, right?

Rod
That’s surprising.

Mikey
It’s little.

Rod
Yeah.

Mikey
And so our strategy was almost like a reverse strategy of Dave Ramsey’s get out of debt. Right? Live off top ramen, live like I was absolutely broke.

Rod
Right.

Mikey
So for 10 years, the strategy was live off as little as I can, try to control lifestyle inflation as much as possible so that I can actually invest a decent amount into– at that time, it was a little bit more basic, stocks, bonds. Real estate didn’t open up for a few years later because I had to save for that. And that was basically my original plan was to try to get as close to financial freedom as possible before my sponsors let me go. And if I didn’t get to financial freedom, at least I would have somewhat of a cushion to figure out what was next.

Rod
Yeah.

Mikey
I thought that was everything until I had this kind of idea of starting my first business. And once I started my first business, that changed the strategy a little bit. But that wasn’t for a decade. It was about a decade of this original plan.

Rod
You know you’re talking about living as if you’re broke.

Mikey
Right.

Rod
And that just triggered a memory for me. I remember living in a two-bedroom apartment when I had about 500 units, mostly houses actually. And it was free because I had a rooftop balloon company, you know, those cold air balloons that you put on a roof that say move-in special or first month free. And I would climb up there, throw that balloon up once a month. And that’s how I had free rent for a couple of years, actually. My daughter was born there. So, you know, I totally believe in that strategy, and that’s awesome. And so then you became an entrepreneur?

Mikey
Yes.

Rod
Wow. So how did that come about? I mean, how– first of all, you know, did you get any formal training in starting a business? I mean, I’ve had lots of business failures, I call them seminars, and I’ve built 27 businesses, some worth tens of millions of dollars, most spectacular, flaming seminars.

Mikey
Right.

Rod
You know, we failed our way to success, right?

Mikey
That’s right.

Rod
So what sparked that in you? And then talk about what you did.

Mikey
Okay, so it all started– I got my first signature shoe. So I had a Mikey Taylor Pro model.

Rod
Oh, cool.

Mikey
And that was really my first kind of view or experience on how the business aspect worked of selling products in my industry. And so, you know, in the beginning, it was working with the designers to come up with the design of the shoe. Once we had that, it was presales. And then it was you know, me being introduced to marketing on both sides, which was building my brand and marketing to sell product, which then led to a whole new type of revenue coming in because I got a royalty off my shoe and I love that.

Rod
Was it online prevalent back then? Was it all online?

Mikey
No, this was all retail.

Rod
It was all retail?

Mikey
Yeah. When I got my first shoe–

Rod
So it’s a storefront, brick-and-mortar.

Mikey
It was all brick and mortar.

Rod
So how did you get in the stores? Were you aligned with a distributor that had other products and they added your lineup?

Mikey
Yeah.

Rod
Okay.

Mikey
So I was sponsored by a shoe company that was pretty large.

Rod
Okay.

Mikey
And so my shoe became one of their multiple offerings.

Rod
Got it.

Mikey
And so what I originally needed was I needed the big– you know the Journeys or the Zoombies or some of the big retail footprints.

Rod
They have the distribution network.

Mikey
I needed them to just say yes.

Rod
Right.

Mikey
Right? So the first one was make a design that I think they’ll pick up. And then once they picked it up, I needed to worry about sell-through. And I just enjoyed it.

Rod
What do you mean by sell-through?

Mikey
Well, basically they’re going to buy a certain amount of shoes. And if you’re not selling through, they’re not going to order more. Or if you’re not selling through their maybe potential test run, they’re not going to open up multiple colorways.

Rod
Got you.

Mikey
And so what you’re trying to do is really hit it out of the park off the jump so that they then, you know, bring you in at a larger footprint.

Rod
I’m just curious what you did in that regard because I remember having a conversation with Sara Blakely, you know, Spanx, the women’s undergarments started with $5,000. Now she’s a billionaire.

Mikey
Yeah.

Rod
She’s in Forbes. And I remember her telling us that she actually went from store to store and she would put her stuff in the front and she’d talk to customers and she’d pretend she was an employee.

Mikey
Right.

Rod
I heard the same thing from John Paul DeJoria, you know, Patron Liquor, and Paul Mitchell, hair products.

Mikey
Right.

Rod
He did the exact same thing. He’d go to the stores and– did you do any of that or what– yeah.

Mikey
We did that with the brewery, which I don’t want to get ahead of myself but we did that with the brewery.

Rod
Okay, all right, we’ll get to that in a minute. By the way, guys, I know you’re thinking, hey, what does this have to do with multifamily? Well, this is business. This is entrepreneurship. This is freaking important. Okay? So, you know, don’t lose sight of the value in this conversation because there’s absolute value in this. So anyway, please continue.

Mikey
And this will tie in because a lot of the stuff I learned in this path, we apply to our business now.

Rod
Right. Right.

Mikey
Which is in multifamily and storage.

Rod
Right. And multifamily is a business.

Mikey
That’s right.

Rod
I mean, an apartment complex is a business.

Mikey
Right.

Rod
You do a business plan. You’ve got marketing, you’ve got operations, you’ve got sales, all of that. You’re leasing a sales.

Mikey
Right.

Rod
Yeah, this is a very relevant conversation. Anyway, so–

Mikey
So I start getting kind of obsessed with selling products. And so I had this idea that I could be more than just a skater for the company I rode for. So I basically scheduled an appointment or a meeting with the president and pitched him on this whole idea that I was going to help with you know, creative, with shoe design and be a pro. And he looked at me and went, are you out of your f***in mind? And he said, why don’t you just go skateboard? And at least how I took that, I took it as, well, my time here is done. Because I just felt like I wanted that, and that wasn’t ever going to happen at that company. So then I get an offer to ride for a new shoe company, which was kind of that hybrid role. I was going to be a pro skateboarder for them, and I was also going to help rebuild their skate program. Now, I had no experience with people, with teams. I only knew I’m a pro skateboarder, was basically a solopreneur. And if I work hard, I could make money. When I got into the environment of having to truly work on shoe design on products that went beyond my signature shoe, I had this idea that a leader or a boss was kind of like a Steve Jobs or like an authoritative kind of role to the employee.

Rod
Do what I say kind of a thing.

Mikey
That was my view of business or leadership. And so, you know, we’re working on shoes. And it takes a lot of time and multiple samples until you figure out, you know, the finished version. So I keep getting all these samples that are just terrible. Like they are not good. Little I knew I got frustrated and I’m sitting in front of all the designers, I’m going, This is shit. You know, I’m throwing shoes in the trash can. It was a scene. I left there thinking nothing of it until I got a call from the– who called me? It was either one of the presidents or it was somebody real high up. And he goes, what happened today? You know, I was like, oh, it’s fine. We’re getting business done. And he goes, are you kidding me? Lays into me and basically tells me how I can’t do that anymore. Now, again, me being young and naive, I took that as this company will always and forever look at me as a skater. I will never be a business owner or an entrepreneur in this setting.

Rod
Let me interject something, if I may. You know, I spent a lot of time with Tony Robbins, and Tony Robbins talks about three archetypes in a business. There’s the artist, which you would definitely at that point, you were the artist, you were the innovator, the creator.

Mikey
Right.

Rod
There’s the entrepreneur who takes that creation and brings it to the public and markets it and everything else. And then there’s the manager, the leader who comes in and manages, softly and lovingly and supportingly, the team to help build the business. Now, some people wear– you know, when you start, you got to wear all three hats if you’re doing your own business, but you are actually in a large company.

Mikey
Right.

Rod
And– yeah, so anyway, I just want to interject that. Please continue to what happened.

Mikey
That’s really good.

Rod
Yeah.

Mikey
I basically decided that the only way I’m ever going to be able to truly bring a vision to reality was starting my own company. And so, that probably took two years until I was with a random friend of mine, and we were just talking about new companies that we could create that had never been done in our world. Because skateboarders, when they go to move into the business side of things, it’s always skateboards, clothing brands, shoe companies, hats.

Rod
All the collateral.

Mikey
Correct. And so we were having a conversation on what it would look like if we brought something that had never been done in our industry. And that conversation just led to him randomly throwing out, like, we should do beer. Like, what if we did beer? And I was so blown away with the idea because that was at the time, Monster and all the energy drinks were kind of coming into skating. They were doing well, but they weren’t perceived as cool. So I was like, oh, my gosh, we could do beverage, open up a whole new category for sponsorship, and it’s cool. And so that night we decided we were going to do brewery. Both of us had no business experience. We knew nothing about beer. We were just kind of hell sent on this idea.

Rod
The important piece is where the money comes from. That’s what I’m curious about.

Mikey
Which we didn’t have enough money to start it either.

Rod
Right.

Mikey
So basically what we did was for the next six months, try to figure out what it meant for us to do a brewery. And our original idea was we understand marketing, we understand branding, we understand experience. We don’t know how to brew beer, we don’t know how to run a business. So what if we just contract our brew or our beer from another brewery, and we just package it and label it and sell it?

Rod
That would have been the easy thing to do. Yeah, sure.

Mikey
The problem was– and we were trying to head down that path. There was zero margins in it at all.

Rod
Okay.

Mikey
And so we got to a point where it was either we go down this path for two years and then we start our own brewery or we start our own brewery. And so we decided that we were going to start our own brewery. We didn’t have enough money to do it. We didn’t have a business plan, didn’t even know how to do a business plan. And so the guy who my mom connected me with when I was 19, I called him.

Rod
The financial guy.

Mikey
The financial guy. I called him.

Rod
Your mentor. Got it.

Mikey
And I was like, hey, I need a meeting with you. I’m going to bring in two of my friends and we want to kind to pitch you on this idea and see how to do this. We give him the idea and then he tells us all the things we have to do, which is, you know, business plan, raise money, etc. And he helped us create the business plan and he helped kind of teach and educate us on how to pitch an investment to investors.

Rod
Oh, wow. What an incredible resource he was.

Mikey
He’s been huge for me. He’s been huge for me.

Rod
Yeah.

Mikey
And so long story short, we went out and we raised– we needed about two and a half million dollars, which was out of this world for us.

Rod
Oh, sure. You’re like, two and a half million. Good God.

Mikey
It was insane.

Rod
By the way, you think this pops up in the multifamily space guys, you better freaking believe it does. Okay? We’re looking at raising 20 million for a deal right now.

Mikey
That’s right.

Rod
You know, I remember when we had to raise five and I had a sleepless night. So, yeah.

Mikey
Yeah. That’s right. And remember, we had no experience. We had no business experience, no experience in beer. So for anyone who’s getting into multifamily, needs to raise money, and doesn’t have the experience yet, I hear you.

Rod
Yes.

Mikey
We had to do that well. It’s a harder pitch in the beginning, but it can get done.

Rod
Sure.

Mikey
So we raised the two and a half million dollars.

Rod
Well, I want to hear how because I’m going to tell you, moving forward, I really believe raising money in the multifamily space is going to be harder than finding the deals.

Mikey
Right now, yes.

Rod
Yeah, right now. So tell me how you raise the money. What did you do?

Mikey
Yeah. So basically, one of the things that my mentor basically explained to me is as you don’t have experience, you’re probably going to want to start with the people who believe in you and want to get behind you more than the actual product you’re selling.

Rod
Right.

Mikey
And so we started with friends and family.

Rod
Okay. That’s how everybody starts.

Mikey
Yeah, that’s how everybody does it.

Rod
I just want them to hear it.

Mikey
Yeah, so we called– you know, when I say friends and family, it was all. My parents, my wife’s parents, my uncles, and aunts, all of my friends in the skateboard industry. And then one of my partners was from the surf industry. So he pitched all the surfers and then–

Rod
And you had a business plan at this point?

Mikey
We had a business plan.

Rod
Okay.

Mikey
We had a business plan.

Rod
In quotation marks, right?

Mikey
Yeah. It looked like a skateboard magazine with some financials, right? But it was visually cool.

Rod
Let me add– I’m sorry to interrupt, but let me add one other comment here. So guys, when you’re raising money from friends and family, please don’t dabble. In fact, I would just say probably don’t do what he did, honestly, because you’d never done it before. Well, you had your mentor helping you with the business plan. But did you have any experts involved, like a brewer or anything like that, an entrepreneur that built a business?

Mikey
No.

Rod
See, extremely risky.

Mikey
Correct.

Rod
I know the end result was positive, but in the multifamily space, you know, if you’re going to take money from friends and family, for God’s sake, know what the heck you’re doing. Come to my freaking boot camp. You know, get up to speed. And I’ll say, ask me how I know, okay? Because it’s no fun at Thanksgiving when people lose a lot of money, which happened in ’08 and ’09, and I had my brothers involved.

Mikey
Right.

Rod
So anyway, please continue. I just want to interject that.

Mikey
So I’m just hearing you– and I don’t disagree with it. One thing that we would say to every single investor we pitched was there is a very, very, very good chance we lose your money.

Rod
Oh, well, that’s cool. That’s really cool.

Mikey
So do not give us anything that you are not comfortable losing.

Rod
Yeah.

Mikey
And even my parents and my in-laws, who in theory should have supported me more than anyone else, they said the same thing, hey, we’re giving you this one, this much. We believe in you, but if you lose it, we’re okay.

Rod
That’s cool.

Mikey
Look, starting anything with no experience is risky, let alone starting a brewery as kids. That was all the risk in the world.

Rod
Yeah. Well, I just wanted to put it out there to my peeps you know because don’t dabble because dabblers get their butts kicked, you know.

Mikey
That’s good.

Rod
So you raise the money, you built a freaking brewery. Wow.

Mikey
So basically, when we raised the money before we launched, we’re looking at our budget. And I think we had somewhere around 75 grand allocated for marketing, which was, you know, in today’s world, nothing. Back then, it was like, oh, my gosh, this is so much money.

Rod
Really?

Mikey
Oh, it was–

Rod
What year was this?

Mikey
We started in 2011. We officially launched in 2012.

Rod
Okay.

Mikey
And so as we’re having this conversation, somebody said, what if we you know, could move maybe the marketing budget somewhere else that it might see a higher return from. And what if we just promote this on Instagram? And this was before influencer marketing. Like today, that makes sense. Back then, there was no one doing this, right?

Rod
I didn’t even know Instagram was around back then. This was 11 years ago.

Mikey
Yeah, it was.

Rod
Okay.

Mikey
And in skateboarding, it just started turning where there were skaters using it for, you know, their promotion.

Rod
Got it.

Mikey
And someone was like, yeah, let’s do it. This is crazy.

Rod
You grabbed the money.

Mikey
And so this was a very pivotal moment in the business. Once we decided to do that, my partner said, if we look at all of our investors, not all, but the majority of them, we have surfers, skaters, snowboarders, musicians, and artists, right? What if we change our marketing strategy and we highlight them? They become the face of this organization and they become ambassadors and investors, right?

Rod
It’s a hell of an idea.

Mikey
And then we start using Instagram to promote them, not the beer. So we were doing mini-documentaries on each individual and it was just presented by Saint Archer.

Rod
Oh, God.

Mikey
Right?

Rod
I got to stop you for a second. Guys, he’s adding value to them before he asks to receive value. Guys, that is so awesome. That is so important. I remember– I don’t want to steal your thunder.

Mikey
No. Go, go.

Rod
I just remember when I started this podcast, I used to take free phone calls for my listeners. I had no agenda, I had nothing to sell. I did hundreds of them, which I know helped me ramp the business. In fact, I was at Grant Cardone’s GrowthCon last week and somebody came up to me and said, hey, I was one of those initial calls you had, which is really cool.

Mikey
That is cool.

Rod
That is such an awesome strategy. So please continue.

Mikey
So we opened doors, we launched this thing on Instagram and it explodes. We knew right away that we had something very special and very rare. And so our strategy– not our strategy, our challenge from basically day one was we have to keep up with demand, and we never could. It was capital raise–

Rod
Do you mean demand for what specifically? For the beer?

Mikey
For the beer. Yeah.

Rod
You couldn’t brew enough? Fast enough?

Mikey
No.

Rod
Holy cow.

Mikey
So for three years, it was raise money–

Rod
That’s called a quality problem. By the way, guys, you’re going to have problems all the way through life, that’s the definition of a quality problem.

Mikey
Yes.

Rod
Okay.

Mikey
And that’s why I started with we knew we had something rare.

Rod
Yeah.

Mikey
You know you don’t typically start getting to a point of people knowing who you are to at least year five. It’s usually an uphill battle to then. This was day one. We are here. And we were so disruptive to the craft beer industry that all of the attention was on us. And for three years, it was vertical growth, and we ultimately couldn’t get out of California. We had national exposure, and we couldn’t even fulfill the demand in California.

Rod
Yeah. Because you know that could have been a real opportunity to take it and blueprint it and go into other states.

Mikey
Right.

Rod
But like I said about problems, guys, the purpose in life is to create better-quality problems as you go. Like right now, I have a coach shortage. I need a couple more coaches. I’ve got them, I’ll find them. But the point is, that’s a quality problem. Right?

Mikey
Right.

Rod
Anyway, very cool. So this thing– what was it called by the way?

Mikey
It’s called Saint Archer.

Rod
Saint Archer. Where did that come from? Is that a long story?

Mikey
No, it’s an awesome story.

Rod
Okay.

Mikey
So the reality of it is the three partners, we were trying to figure out names, and so everybody wrote down 20 names, and we would talk every other night to try to figure it out. We landed on Saint Archer. There wasn’t a lot of– now, this might get me in trouble saying this, but I’m going to say it.

Rod
Was there a lot of stuff going on behind it?

Mikey
No.

Rod
No, okay.

Mikey
We picked Saint Archer. We end up getting picked up by Stone to distribute us. They’re massive.

Rod
Okay.

Mikey
Stone has a day where they introduce the brand and all of us to their sales reps.

Rod
Okay.

Mikey
And they have a Q&A. And all of a sudden they ask us, where did the name come from? And all three of us go, holy crap. There’s no significance to the name.

Rod
Blood drain from the faces.

Mikey
And my partner– he’s so good. He goes, you know, I always wanted to name my first son, Archer. Always wanted to name him that.

Rod
Oh, man.

Rod
And my wife wouldn’t let me. So I figured my first business, it’s like a baby. We’re going with Archer. And me and Paul, you know, the other partner, look at each other, we’re like, he is brilliant.

Rod
That’s really funny.

Mikey
That was the story that was marketed.

Rod
Okay. Awesome. Awesome. So then what happened?

Mikey
So basically 2015–

Rod
We’re getting to multifamily guys.

Mikey
We’re going to get there.

Rod
Hang with us here. We’re having fun here. Okay.

Mikey
2015 comes and we start getting offers from everyone. Anheuser, Moulson Coors, Constellation, everybody.

Rod
Interesting.

Mikey
And it basically turned into a bidding war between Anheuser and Moulson. And throughout that, we ended up settling on selling the Moulson Coors.

Rod
No kidding. Wow. That’s so cool. How big was it, by the way? How many square feet?

Mikey
Oh, gosh. Our original warehouse was–

Rod
So you did it in a warehouse?

Mikey
Yeah.

Rod
Oh, wow. Was there a retail or you’re out there just selling the beer to distributors?

Mikey
Good question. So we created a production brewery with a small front of a tap room or taste room.

Rod
Okay.

Mikey
So people could go, but by and large, it was a production brewery. I would say our first building was probably somewhere around 12,000 feet.

Rod
Oh, wow.

Mikey
15,000 feet. And then we ended up buying every single– or it was renting at that point, renting every single space next to us.

Rod
Yeah. Wow.

Mikey
Yeah.

Rod
Wow. That’s crazy. Now, you said Coors. That triggered another memory on a side note, I remember going to Coors and getting a VIP tour, and I remember getting some beer out of a tap through their process that hadn’t been taxed yet. I remember it hadn’t been taxed yet. It was really good. But it’s in Golden, Colorado, and I lived in Denver for 30 years, so I’m very familiar with it.

Mikey
That’s cool.

Rod
Very cool. So you sold it.

Mikey
Okay.

Rod
Now we’re going to move into the reason we’re here.

Mikey
Right.

Rod
So tell me, you know, was there an epiphany, when you sold it what’s going through your head? You know, what am I going to do with my share, you know, blah, blah, blah.

Mikey
Okay. So what I left out, and I’ll just touch on it real quick, when I started investing in real estate while I was skating.

Rod
Oh, you did?

Mikey
I was investing in storage, but I was investing passively.

Rod
Self-storage as a Limited Partner.

Mikey
Correct.

Rod
Got it.

Mikey
LP in storage offerings. Fast forward to we sell the company and I basically maintained my past plan. I was just able to allocate larger dollars into it. So, you know, right when we sold, I invested you know, again, pretty heavy in storage.

Rod
A ton of money as an LP.

Mikey
Correct.

Rod
You know, operators you trusted and so on and so forth, right?

Mikey
Correct. But this time I hung on to a heavier cash position because I knew I was going to start another business.

Rod
You held on to cash, which, frankly, in this day and age is a really good idea as well.

Mikey
Right, correct. And so Saint Archer ends, no longer skating at that point. And I’m trying to figure out what to do. And this is my challenge. It’s kind of a gift and a curse. If I’m interested in something, I am all in. I’m nuke or nothing.

Rod
But you did, you didn’t know.

Mikey
But I have to be interested. I’ve never had the ability to say, oh, yeah, turn it on there. And all of a sudden, you get a monster out of me. If I’m not interested, I am the worst. If I’m interested, I’m the best. That’s my variance. And it took me a while to figure out what to do. I was struggling with that one.

Rod
Let me interject something.

Mikey
Go ahead.

Rod
I can’t speak for women, but I can speak to men in this regard. This is not an uncommon dynamic. You know, where you shift gears into something else– and it’s a very unsettling time. And it can be really fearful.

Mikey
Right.

Rod
You know, I’ve gone through it numerous times with all the businesses that I’ve done. But, you know, I coach people on that dynamic because what’s important there is just to really get clear on what it is that you want to do.

Mikey
Right.

Rod
And sometimes it’s hard to discover that, you have to try different things.

Mikey
That’s right.

Rod
But during that time, you’re not comfortable.

Mikey
Right.

Rod
It’s a very uncomfortable place. Even if you have money, would you agree with that?

Mikey
It was the most uncomfortable I have ever been in my entire life.

Rod
Yeah, there you go. Okay.

Mikey
It was a dark period for me. It wasn’t like, oh, I can’t wait to do it. It was brutal.

Rod
No, I got it. It can be very dark.

Mikey
Right.

Rod
And some people can even go into depression not realizing that’s a very common, very normal dynamic, especially for men. I can’t speak to women in this regard, but for men, it definitely is a very challenging, uncomfortable time. So anyways, so what happened?

Mikey
So basically– this will steer us off. So I want to be careful with not going too much into this unless you want to.

Rod
Oh, what was it? Yeah.

Mikey
The fear element or the depression, or the darkness, all of it was really wrapped around identity for me. Right, it was like identity purpose.

Rod
Definitely want to talk about this. This is hugely important.

Mikey
Okay. So, basically, what happened to me prior, and I didn’t realize it had happened, was all of my identity and purpose was actually in skateboarding.

Rod
Sure, of course, it was.

Mikey
Even when we did the brewery, it was still, I am a pro skateboarder, I’m a skater, to I am. When the brewery sold, skateboarding ended, I didn’t– one, know who I was anymore. And two, it was almost like I was looking at myself going, that’s not even me. Like how do I get back to the old me, right? And this actually becomes the biggest challenge that most athletes have.

Rod
Athletes, astronauts, you know, anybody that’s hit the moon, literally, like you did in your sport, it’s huge.

Mikey
Correct.

Rod
Yeah. It’s an identity crisis.

Mikey
Correct. So I had to, in my mind, fix that part first before I was able to start the next business. Because if I wouldn’t– in my mind, solve that first, I would have put myself at the same risk that I had with skateboarding, which was identity is coming from the new career. And if the new career or new business ends, I’m right back to the position I was, which is a loss of identity.

Rod
Yes. Let me interject something. Identity is probably the single most important thing to deal with in the human psyche. And what’s critical, and this is really important, guys, to– listen to this, is to not allow your vehicle to be your identity.

Mikey
Correct.

Rod
Okay? So you are not– you know, yes, you do multifamily, or you own this business, or you’re a skater. But if that fails, that’s not who you are. That’s the vehicle you’re using for success.

Mikey
Correct.

Rod
Okay. And, you know, at my boot camps, I have people create an identity statement because, you know, as we said, in the human psyche, there’s no greater power than the– really, it’s critical that we align with how we identify ourselves. And anything you put the words I am in front of is an identity statement. And you said I am a skater. Okay?

Mikey
Right.

Rod
And so, you know, like I said, it’s one of the things we do at our boot camp because it’s so freaking powerful. So I have I am statements. I’ll show you my exercise room downstairs. I probably have about eight of them on the wall.

Mikey
Right.

Rod
I am a business genius. I’m the world’s greatest husband. I’ve got one right here that when we put mirrors on the wall, I took it off the wall. I don’t know if you can see that. Can you see that on the screen? It says “I am Health and Energy”. Just happened to find a picture that actually looked like me at the time. But anyway, like I said, there’s no greater force in the human psyche than the need to remain consistent with that.

Mikey
Correct.

Rod
And when you have to change your identity, that’s a big deal.

Mikey
Correct.

Rod
So how did you do it?

Mikey
How?

Rod
Yeah.

Mikey
Okay. So everything ends. At this point, married. I have two kids and my wife looks at me and goes, I am absolutely miserable. This isn’t working. Right? We’ve been married for seven years. We’re at that pivotal– kind of if you’re married and you haven’t got to year seven, I don’t know why year seven seems to be a tough one. We’re at that pivotal point. She looks at me and says, I’m miserable. I’m blindsided by it. I’m like, babe, I’m trying to figure out who I am. I feel like everything’s falling apart, which is insane to say because, in theory, I was– how old was I? 34 years old, I was financially free.

Rod
Right.

Mikey
In theory, I have nothing to complain about. Right?

Rod
But you probably weren’t showing up in the relationship you needed to show up because you didn’t know what the hell you were doing.

Mikey
Correct.

Rod
Right.

Mikey
So she says that to me and I panic. I’m now very scared. Right?

Rod
Sure.

Mikey
And so I got to the point where I started trying to figure out anything I could do to find myself. And I don’t know why I had this idea, but I decided I was going to read the Bible.

Rod
Wow.

Mikey
Never read the Bible before.

Rod
Wow.

Mikey
I’m going to just read the Bible. I’m going to do it in a year. So my daily routine became you know, get up at five, go downstairs, read the Bible for 30 minutes, drink a coffee. You know, maybe I stretch for 30 minutes, then I’d wake up the kids, and that’s how I started each day. I didn’t even think anything was changing or happening, right, until four or five months later. I see my wife’s mom, maybe I’m picking up the kids, and I’m walking out. She just stops me as I’m walking out. Right? And she goes, I just want to tell you, you don’t look like the same person anymore. Who you are today is so different than who you were five months ago. She didn’t know I was doing anything. Right?

Rod
Wow.

Mikey
And that was the moment where I was like–

Rod
Visible change.

Mikey
I was like, holy crap, that was insane. I come home, I tell my wife, I’m like, babe, you’re never going to believe what your mom said. And what I didn’t know is things were happening in my wife’s life because of what I was doing that I wasn’t even aware of, right?

Rod
Positive things or negative?

Mikey
Positive things.

Rod
Positive things, okay.

Mikey
And really, what it became in our household is she never felt comfortable with me being the leader because my whole life was spent skateboarding. And skateboarding was number one, and her and the kids were a distant number two, like very, very distant number two, right?

Rod
Oh, wow.

Mikey
So I started showing up as the man that I think she always hoped I would become. Or at least I was showing signs of who that person was going to be. And then all of a sudden, the comfort level on her end started changing because now she started feeling more comfortable and more connected with the man that she hoped I was. And then things started changing. And then at that point is when I got a random phone call from a friend of mine who was a pro skateboarder. And he called me just to check in because he felt like I just disappeared off the face of the earth. And the questions he was asking me were, how are you doing this? How are you making money? How was Jen? How was the house? And I kept trying to take him back to the emotional stuff, dude, I’m figuring out who I am, right over his head, right?

Rod
Really.

Mikey
And that was the moment that hit me, which was four athletes. And then it turned into just people in general. We are so scared of what life looks like after our sport, right, that we’re so focused on the financial element that it feels as if we’re in survival mode, right? If you’re in survival mode, you don’t always get the luxury of trying to figure out the identity or purpose stuff. You’re trying to scramble. And that was the thing that he was hanging on to. How did you do that? Right? And when he said that, I hung up the phone and, you know, I’m thinking about like, man, how did I do this? And I went all the way back to my mom saying, you need to go to college. Okay, fine. You’re going to go connect with this guy. And then all of the years of him working with me and learning the discipline and starting to invest, it was at that point 14 years of somebody helping me learn, create discipline, and then action that put me into this situation. Then I had the idea, oh, my gosh, how do I replicate what happened to me for my community? I originally started my business for skaters. right? And so, when I came up with the idea, it was there has to be an educational component because I had somebody that actually spent time with me. Two, I want there to be an investment vehicle, but I wanted it to be different than what Saint Archer was. Because Saint Archer was, we’re either, you know, 10 to 15X’in your money or we’re losing it all. And chances are we’re losing it all. I wanted to have some type of investment that they could count on being there that solved the rare goal that we have as skaters, which is almost like a Benjamin button effect, we’re at the age where we’re trying to grow our wealth. We’re young. This is like 19 to 30. But we need cash flow. Like cash flow is our lifeblood to figure out what’s next and to ultimately take control away from our sponsor or employer at that point. And I looked at real estate and said, that’s where the majority of my money is. That’s the one that shows up for me. Most of my investments, it was distributed quarterly, shows up for me quarterly. And that’s the amount of wealth that I built over the 14 years at that point.

Rod
Yeah.

Mikey
And so, I landed on, we’re going to do real estate. That’s how it started. I was stuck on doing a fund. I don’t know why I wanted to do a fund back then. I had no idea how–

Rod
Did you actually do a fund back then?

Mikey
I did.

Rod
Did it fail or did it go?

Mikey
We did well.

Rod
You did well. But you know why you did well? Because you had a following. Now, I’m going to tell you guys, don’t start with a fund if you don’t have a track record or have a following because you won’t make it. You need to do deal-specific syndications to start. Okay?

Mikey
Funds are brutal in some regard. They’re awesome in some. They’re very challenging in others. I didn’t know this. What I knew was I know how to build a business and I know how to raise capital. So I built out my business plan and I had one page and it just said fund management question mark. And I called Randy, the guy, my mentor because Randy’s brother ran a storage portfolio and Randy’s brother who I was investing with.

Rod
Yeah. Right.

Mikey
And I called him. I was like, hey, sat with him, I need you to do what you did for me with Saint Archer. Here’s my business plan. Can you educate me on this component? How does this work and who do I need to bring on to my team to achieve this?

Rod
Right.

Mikey
And he’s asking me questions, right? He’s doing his thing. And then he goes, you know what? Let’s meet next week. It’s very cool. I meet with him next week. And it’s him. His brother, his dad.

Rod
He had a nice self-storage portfolio. You’d invested with him. You trusted him because you were getting your quarterly distribution.

Mikey
Correct.

Rod
Things looked great. Okay.

Mikey
Correct. So I meet with their whole family and they basically pitched me on the idea of what it looked like to start a business together. Right?

Rod
With them?

Mikey
With them.

Rod
Yeah. And guys, I’m going to tell you, when you first get into this business, you will very likely need what he did, which is a sponsor. You’ll need someone that’s got some experience. Maybe you didn’t need these two components in your case, which is liquidity and net worth, but you need that as well if you don’t have that. You know, the beautiful thing about self-storage and multifamily is it’s a team sport. So, you know, you can satisfy all three of those requirements with one person you bring on, or it’s the team’s experience, it’s the team’s net worth, and it’s the team’s liquidity. So I’m assuming you did it.

Mikey
I did do it.

Rod
Yeah.

Mikey
I’ll say this, even to this point I’m at now, I will never start a company by myself, even where I’m at now.

Rod
Smart.

Mikey
I do well surrounding myself with great people, ultimately. And so we end up starting the company together. And I’ll try to not go too much into the weeds, but basically, how funds work, you have a management company and that management company manages the fund. The fund isn’t owned by the business, it’s owned by the investors. So they had their storage portfolio, they had a management company. We then started a new management company together and then we started a new portfolio. And I loved storage for the investment that it was. But storage didn’t pick off a need that I had, which was I needed it to be more creative. I’m a creative person and storage is phenomenal as an investment is a little bit more boring on the creative side.

Rod
It’s pretty vanilla.

Mikey
Right.

Rod
I mean, it’s a great return. I’ve got students that have you know tens of thousands of units. I know you’re up to almost 10,000 yourself. And it’s a fantastic vehicle but–

Mikey
It’s a little boring, right? I’m not going to lie, it’s a little boring.

Rod
Yeah. No, I love that. And again, you’re the artist.

Mikey
Yeah.

Rod
Remember in that archetype, artist, entrepreneur, manager, leader, you’re definitely the artist, which is the creator.

Mikey
Correct.

Rod
Okay.

Mikey
So I wasn’t investing in multifamily at this point. That’s why I was telling you when you know, six years ago, I’m trying to consume everything I can on multifamily. That’s how I originally discovered the podcast.

Rod
No kidding.

Mikey
And what I liked about multifamily was it checked off a lot of the needs that I wanted for an investment. I want something that performs well during a recession, and I have to have something that is valued based on business. I can’t do comps. I need to have something where the better we do, the higher the value.

Rod
Let me explain what he just said. So, okay, in the residential space, the value is based on comparable sales, comps. Okay? And so, you know, if you buy a duplex, triplex, fourplex, it’s a great way to start, especially if you’re going to live in it and house hack, but you’re not going to be able to force the appreciation like you can with a commercial multifamily, which is five units plus. In the commercial world, the value is based on a multiple of the net income. It’s called the NOI, the net operating income. And any increase in that net income is an exponential increase to the value. And I’ll give you a quick example. We have a 296-unit asset in San Antonio. We decided to paint the parking spots. We said, hey, for 25 bucks, you can park right next to your units. It’s 25 bucks a month. And we had over 100 people take it. That alone was an 800,000 instant increase in value. That’s why we love this freaking business, okay because you’re able to do that.

Mikey
Right.

Rod
So you recognize that early on. Good for you.

Mikey
So I had to have that. Then moving into the creative side, I wanted something where I felt like we could control experience and vibe and in my perspective–

Rod
Experience at the asset.

Mikey
Yes.

Rod
Oh, I love it. Love it.

Mikey
Yes. And, you know, home is that’s the number one.

Rod
Sure.

Mikey
Right? And so, you know, in the areas in which we are investing, it was kind of targeted toward a younger demographic. And so the original outlook was, let’s create apartments that offer, from every aspect, an opportunity for somebody to create content around, right? Like murals and not just like the random murals. We have really cool New York respected artists doing huge murals on the walls, right?

Rod
No kidding. No, very cool.

Mikey
Yeah. So I really wanted it to be where anyone could take out a phone and create content at the apartment, right?

Rod
Okay. So I’m sorry. Do a selfie when you’ve got cool stuff behind them. Got it. Now I understand what you meant. I was thinking maybe you did a hub room where you had computer monitors and desks for people to sit at to do that.

Mikey
We got to that.

Rod
Okay.

Mikey
But in the beginning, it wasn’t that.

Rod
Oh, that’s cool.

Mikey
It was just like, let’s make this place look rad.

Rod
Cool.

Mikey
And so that was the launch of the multifamily portfolio. And then on the business side of it, we took a very similar approach that we used with Saint Archer, which was how do you create value beyond the product itself? Right? If you look at our beer, our liquid was as good as everyone else. That wasn’t why we were successful. We were successful because we did all of the things on top of the liquid. So when we looked at the actual business, you know, I was looking that all of my competitors were really trying to separate themselves based on return. Right? But in the most part, everyone’s return was somewhat around market value, right? If you were doing big value add, you were going to see somewhere between a 15% and 20% IRR. Right? Well, what is the real difference between a 15% and a 16? Right? I wanted something beyond that. So we really took the approach of trying to bridge the gap with the younger generation to make real estate investing look cool and hip and something that they–

Rod
Do you mean to attract passive investors or what?

Mikey
Actually, not in the beginning.

Rod
Okay.

Mikey
In the beginning, it was more of maybe an impact driver, where I was looking at the youth and at least my view of what they assumed real estate investing, at least at the commercial level was–

Rod
So to help educate.

Mikey
Yes.

Rod
Okay. Love it.

Mikey
And it just seemed boring to me. When I looked at the people running investment firms, there was nothing cool about it. It seemed stale.

Rod
Right.

Mikey
And so we tried to build a business that was more speaking to the youth.

Rod
Love it. How did you accomplish– I mean, give me some strategies.

Mikey
Okay. So for example, like, you know, one of the things would be our website.

Rod
Okay.

Mikey
We designed our website to look more like a clothing brand in Los Angeles than we did a private equity real estate firm.

Rod
Interesting.

Mikey
When you looked at the website, we looked at the website and said, okay, this is a website that probably no one’s going to go to.

Rod
Right.

Mikey
The new website is social media, and that’s going to be Instagram. So Instagram will be our business card. And then we’re going to have all the other platforms that we’re really trying to drive attention to. Right? So it was YouTube, Facebook, Instagram, TikTok.

Rod
Well, you kill it on Instagram. You’re like eight or nine hundred thousand there.

Mikey
Right.

Rod
And you had a big following somewhere else, too. Where was it? TikTok.

Mikey
Tiktok. Right.

Rod
Huge following there. Yeah.

Mikey
Right. So basically, we tried to create cool-looking content that was engaging and educational.

Rod
To what end, though? To what end?

Mikey
What type of content?

Rod
No, to what end did you want to create? Was it to build reach so that you could ultimately raise money?

Mikey
Twofold.

Rod
Okay.

Mikey
The answer is going to be yes to all of it.

Rod
Okay.

Mikey
But basically, I wanted to educate, I wanted brand exposure. I wanted people to invest with us. So I wanted leads out of that, and I wanted to separate us from everyone else. So I would say those were the four kickers.

Rod
Love it. Those are all critical. I mean, there’s so much noise out there trying to raise money. We’re doing the same thing ourselves.

Mikey
Right.

Rod
In fact, we’re revamping our website as we speak here. And I just shot videos right here in this studio last week for that because you got to separate yourself. I mean, the investors out there are hearing it from every operator in the country to try to raise money.

Mikey
Correct.

Rod
Well, very cool. So those things, again, we’re brand awareness, separate yourself from the competition, of course, raise money, and educate.

Mikey
Correct.

Rod
And that educate piece is so critical. We are in an education-based marketing world right now.

Mikey
Right.

Rod
And, you know, I tell people, I just did a course called Crushing It in Social Media. And the key piece there is to add value and to be consistent.

Mikey
Correct.

Rod
That’s it. But if you add value, you don’t have to have the tens of thousands of people following us like you and I do. If you have a few hundred, you can raise tens of millions of dollars. That’s all it takes.

Mikey
Correct.

Rod
But you add value, you educate them, they start to trust you. And then you know, when you need something, boom, it’s done.

Mikey
Correct.

Rod
Okay. Yeah.

Mikey
So that was basically the approach we took.

Rod
Love it.

Mikey
And what happened was, like really early on, we started getting– we had brokers that we had no relationship with that were showing us off-market deals as if we had been working with them for decades.

Rod
Really?

Mikey
We had investors starting to come in. Right? So now we had investors, we had lenders, we had all of this attention coming on to the business. And my partners in their past funds, which performed incredibly, experienced as high as it gets. Right? They had the metrics that were competitive. They weren’t getting the attention this new one was getting.

Rod
Wow.

Mikey
And so after a few years of us doing it, they presented the idea of us potentially merging our companies together. And so about three years ago, we ended up merging the two management companies together. And then, you know, what was two portfolios here, one portfolio here became one company.

Rod
Nice.

Mikey
So then we had three different offerings. They all took the brand that we had started called Commune Capital. And then from that point, we’ve done two additional funds, a handful of syndications, and then we’re about to launch, or most likely fund six, will come out this year.

Rod
And in the funds, is it primarily self-storage? Are you doing multifamily as well?

Mikey
Really good question. So we have two debt funds.

Rod
You’re buying debt?

Mikey
We lend.

Rod
Oh, lend. Got you.

Mikey
So we do bridge–

Rod
Got you. Got you.

Mikey
We do bridge debt on storage and multifamily.

Rod
Okay.

Mikey
We have one storage portfolio and then we have two multifamily portfolios.

Rod
Fantastic.

Mikey
Yeah.

Rod
Now, I know you had given me some counts here. You’re in about, I think we came up with 180 doors on the multifamily side. And that’s right, it was about 8,000 in the storage, which is fantastic. Have you done a value add play where you’ve gone in and repositioned something?

Mikey
Yeah. So that’s all we do.

Rod
Okay.

Mikey
Well, let me take a step back.

Rod
No, you’re developing as well. You’re building.

Mikey
So twofold.

Rod
Okay.

Mikey
On the storage side, it’s primarily all repurposing. So we buy big box retail, KMarts, Walmarts, Bed Bath & Beyonds, and then we scrape the inside from the storage.

Rod
Oh, wow. Okay.

Mikey
So storage is primarily repurposing.

Rod
Okay.

Mikey
We have developed two of the assets.

Rod
Okay.

Mikey
Multifamily is primarily redevelopment.

Rod
Okay.

Mikey
We have bought–

Rod
So when you say redevelopment, you’ll buying urban–

Mikey
Buying something and scrape.

Rod
Oh, you scrape it and rebuild it. Got it. So you’ve got an infill location, the place where you can put some units in, zoned correctly, and you’ll go and scrape and put it in.

Mikey
Or we’ll go through a re-zone process. Yeah.

Rod
Wow. Okay.

Mikey
And it’s all California, which sounds crazy. With all the apartments in California.

Rod
Yeah, I cringed when you told me that you know because just the regulations are just so onerous. And, you know– do you have rent control where you’re at as well?

Mikey
We do. Statewide rent control.

Rod
Wow, yeah, so let’s shift gears a little bit because you know you’re super successful. You’ve got a family. You seem happy as hell right now.

Mikey
I’m enjoying it.

Rod
Yeah, you are. You know, what’s the why that has driven you this whole time? You know, what makes Mikey Taylor jump out of freaking bed to keep doing this because you’ve achieved financial success. You likely don’t have to work. Obviously, you want. You’re young.

Mikey
Right.

Rod
But what’s the driver, buddy?

Mikey
Yeah, it’s a good question. It’s changed over the years. But I would say–

Rod
It does. It evolves for sure.

Mikey
Right. I would say right now is probably the most healthy this outlook has ever been, which makes me think it’s the right one.

Rod
Do you mean your outlook?

Mikey
My outlook.

Rod
Got you.

Mikey
The outlook that I’ve landed on now is, I think, correct where in the past it wasn’t, even though I was successful before. When we were talking about identity and we’re talking about purpose, right? Who am I? Why am I here?

Rod
Right.

Mikey
Through that journey where I really started honing in was God gave me certain talents to be used. And I believe that those talents are to be used to glorify him. And so my outlook each day is how do I use what he gave me to the best of my ability?

Rod
Wow.

Mikey
That would be one. To couple that with my natural personality, I really like challenges. I enjoy the process truly. Once a business gets to the point where it’s just operating without me, I kind of lose interest, right? That is my time to move to the next thing.

Rod
By the way, that is your entrepreneurial side, by the way. That’s what an entrepreneur does. They get it going, then they want out. You actually have both hats. You’re an artist and an entrepreneur.

Mikey
Correct. When I said I’ll never start a company by myself, I won’t because I’m not an operator. I am not operations.

Rod
Got you.

Mikey
COO is the very first person I go and find.

Rod
Right.

Mikey
Now when I wake up, I have this outlook of how do I do my best, and then I enjoy that process. I’m kind of in a sweet spot there. Then I move on to the fact that I am a husband and a father, and now a father of four. And so, that, I think is probably the hardest dynamic for me is to make sure I’m really showing up in all aspects. But I mean, gosh, more than anything, I want to be the view to my daughters of what a husband and father should look like. And I want the view for my son to be what a man should grow into, what a boy should grow into a man. And so, you know, I wake up every morning primarily with my wife, and we do a devotional together. And then we kind of set the stage of what the day is going to look like. And I feel like we’re in a good zone right now. Now, there will be seasons to it, and I’ll be through the challenge again. But right now, we’re in a pretty fun stage.

Rod
Very cool. Very, very cool. Yeah, you know, the fact that you’re aligned with your bride and that why of being that masculine man that your daughters will emulate when they go out and find a man. And then you know, showing the masculine qualities for your son as well is just freaking awesome. Good for you, brother. That’s awesome.

Mikey
Thank you.

Rod
Well, you know, everything that happens to us brings us to where we are today. Yeah? I mean, I know I’ve had some major, major upsets and I wouldn’t be where I’m at today if it hadn’t happened. Do you agree?

Mikey
I’m a big believer in the refining fire. Really, really big believer in it. Yeah.

Rod
Refining fire. I’ve not heard that expression.

Mikey
Yeah. So basically– I’ll give you a quick story to illustrate it. Skateboarding hands, I’m in this dark point, and it’s bad. It was the hardest I’ve ever been on. It brought me to my knees.

Rod
Sure.

Mikey
I get a call from a friend of mine, and he was trying to be encouraging and he actually was totally right about this. I just hated hearing it. And he says, dude, you’re going to look back at this moment that you’re in and you’re going to eventually think the place that you’re in. You’ll look back at this as being a blessing in your life, not a negative, right? I remember hearing that going, You have no idea how painful this is. Why would you tell me this would be a blessing? I was pissed. Right?

Rod
Right.

Mikey
Hang up the phone. Then I go through what would become the hardest year of my life. So pain. Right? Then you look at the following year and now I’m starting to become more than I was before the pain. Right? And even if you look at the relationship with my wife and I think this is probably the best example. We got to a point where we are in a true winter. This was a very dark time in our marriage to the point where my wife even said, maybe we talk about divorce. Right? And so we’re at rock bottom there. Then we go through a year of, you know, I’m trying to work on myself as we’re working on our relationship. We’re going to marriage counseling. We went to a marriage retreat. The following year, we go back to the same marriage retreat, right? And the first one, two were in winter. The second year now, and we’re like in spring. Things are pretty good again.

Rod
You’re starting to see that light.

Mikey
Yes. Then the next year, we’re firing. We’re in summer. Right? And it was probably the most encouraging moment for both of our marriages which was if we are willing to work through the crap, right, the blessing that we get on the other side was more impactful and better than what we had prior. And now, my wife and I are about to celebrate our 13th year of being married. This is the closest we’ve ever been. And we would not have become this close if we weren’t going through those challenges together. So I’m a really big believer in the challenge brings you to more of your full potential.

Rod
No question.

Mikey
Where if you’re never challenged, you’re never growing.

Rod
That’s– what you just said that last piece was the most important piece. If you’re not having challenges and not getting your nose bloodied and getting your butt kicked on occasion, you’re really not trying and you’re certainly not growing. And happiness never comes from the goal. It comes from the growth.

Mikey
Right.

Rod
And you’ve got to have that continual growth. And, you know, one of the things that I do at my boot camp, but you can also go to “RodsLinks.com” at the bottom, I’ve got my goal-setting workshop. I do it every year around New Year’s. I did it on January 2nd this year. But at the end of that, I do a weekly planning process, and it’s how I manage two large companies at the same time. And one of the pieces of that is to acknowledge anything you did the previous week. So you’re patting yourself on the back consciously because are you going to have a delay? Are you going to have setbacks? Are you going to get your nose bloody? Yeah. But if you’re growing, you’re happy. And what’s the purpose of life? To be happy, right?

Mikey
That’s right.

Rod
No, that’s really cool. And like I say, the fact that you’re doing all that with your wife, that’s just awesome. And, you know, I’m 13 years– same, same. I’ve been married for 13 years. You asked my wife what Rod’s purpose in life is, she will tell you to make her happy. And that’s the truth. Absolutely the truth. I live to serve her, and she lives to serve me as well. And that is a world-class freaking relationship you know when you adopt it like that.

Mikey
That’s right.

Rod
So let me ask you this. You know, I’ve got a lot of listeners that are young and they’ve got blood dripping from their teeth and they want this so freaking bad. And maybe out of fear or limiting beliefs, they haven’t done anything yet. You know, fear of failure, fear of rejection, whatever it is. Or maybe they’re comfortable and maybe they’re not even young. Maybe they’re in the 30s, 40s, 50s, doesn’t matter. But they haven’t taken action on whatever side hustle they want to go after. What would you say to those people?

Mikey
I’ll tell you what works for me.

Rod
Okay.

Mikey
Especially at those points where I needed to do something and I was scared, I would lie to myself.

Rod
Really?

Mikey
Oh, yeah. I would lie to myself and tell myself I could do it. Even if I question it, I would just tell myself over and over, you can do this. You can do this.

Rod
That’s an affirmation, by the way.

Mikey
I know. But it was–

Rod
It was very powerful.

Mikey
But it was at odds with what I believed. Right? You get to the point where you realize that in a lot of ways your reality becomes what you tell it it is.

Rod
Yeah.

Mikey
And my reality was that I had a limit on certain things. Right? I would just tell myself, You could do this. You could do this. Before you know it, I just somehow believed it, and then I would do, right?

Rod
As you say it, so shall it be.

Mikey
Right. And so, that’s an interesting part. One thing I heard that was actually really good in this regard, if you look at anxiety or fear of the future, right, you know, there’s a study done where they you know talked about all the fears that people were potentially scared of happening. And they brought it down all the way to the percentage of times that those fears actually come true. Right? And it’s like less than one 1%.

Rod
Right.

Mikey
It’s like half of a half of a point.

Rod
Yeah.

Mikey
Right? And so then they you know, couple that on all of the time and energy that’s being spent on the thing that never happens. And so it’s really interesting to look at it like that, that you’re allowing yourself to lose out on something great because you’re scared of something that’s never going to happen.

Rod
Right.

Mikey
That’s one part. The second part, if it does happen, the thing that you’re so scared of, this is what happened to me all the time in skateboarding, I would be so scared to get hurt, or I’d be so scared to fall that I wouldn’t try something. And then all of a sudden I would fall. I would do the thing I was scared to do. And I lay on the ground and go, that wasn’t that bad. And all of a sudden it was like, wow, I made this thing up to be worse than it was. Once you experience that, the fail actually isn’t that bad, it’s pretty encouraging that you can now go do it. And so what I would say, tell yourself over and over that you can do it. Start there.

Rod
Yeah.

Mikey
The second, what I typically do is I start telling people around me so that I feel as if people are counting on me and I’m not able to turn around.

Rod
You get some accountability.

Mikey
I do that.

Rod
Okay.

Mikey
That’s been big for me as well. And that also becomes the scariest part. And then third, go fail a little bit.

Rod
Yeah.

Mikey
Just go do it. It is not as bad as you think.

Rod
We failed our way to success.

Mikey
Right.

Rod
You know, I was mentioning– did I mention Sara Blakely, Spanx?

Mikey
Yeah.

Rod
And one of the things she told me, and she was just at this Grant Cardone thing, her and Jesse, her husband were both there.

Mikey
I saw that. Yeah.

Rod
It was really cool to see her there. But she had told me in another Mastermind that we were both in, that her dad used to ask her and her brother once a week, what have you failed at this week? What an awesome freaking question to ask your kids so they don’t fear failure. Guys, fear regret. Don’t fear failure. Fear being in the same place you are right now, a year from now or two years from now, unless you freaking love where you are right now. Right?

Mikey
Right.

Rod
So take freaking action. Go do it. I don’t care what it is. I think there are going to be incredible opportunities buying businesses these next few years. There are a lot of baby boomers that are retiring that have to sell a business. That’s a great opportunity. You could do single-family, you know, multifamily. Obviously, get your butt to my boot camp. But you could do self-storage. You know, that’s a great vehicle. Mobile home park is a great vehicle. Pick your vehicle and don’t let it become your identity. Alright? Don’t let your vehicle become your identity. You know, so that if it fails, it didn’t– so what if it fails? At least you fr***ing tried, but if it fails, you didn’t fail. The vehicle failed, and that’s super important. So let me ask you this, and maybe you’ve already answered this, forgive me, but maybe something pops in your head with this question I like to ask. Were there any epiphanies in this journey of yours? Any of it’s like, okay, now I freaking get it moments?

Mikey
Like specifically multifamily or the business?

Rod
Probably plenty but anything, it doesn’t matter. Anything. It could be your relationship. It could be anything. It doesn’t matter.

Mikey
Yeah, I could think of two specifically, one with relationship, and one with business. And you actually touched on it, which I think is interesting.

Rod
Okay.

Mikey
The first time I ever raised money, two and a half million bucks. That was out of this world.

Rod
Right.

Mikey
Right? The next time we did it was after that business with our first department, right? Because the hard part is, you have a chicken and the egg scenario. If you’re not doing a fund– well, if you’re doing a fund, it’s either find the deal or raise the money. If you’re doing syndications, it’s finding the deal, then raise the money. The first deal we found, we had to basically put it in a contract, then go raise the money. And we had to raise–

Rod
Don’t do that, guys. Please do not do that. Start raising the money or at least building the relationships right out of the gate. Sorry. Yeah,

Mikey
It’s okay. Building the relationships. But what I will say is it’s very, very difficult to raise capital without a deal in our perspective. We can do it. If we have a deal, it’s much, much easier.

Rod
Absolutely.

Mikey
So now where I totally agree with you is start building out your network and get a realistic gage on what you can grab if you get a deal.

Rod
Soft commitments.

Mikey
That is huge. For us, we got the deal under contract. Right? And what I’ll also say is the money that went hard was our money at the point in which it went hard. And that was on us. It was on our investor.

Rod
That means non-refundable for you brand newbies. Okay.

Mikey
Right. So basically, we have to raise– we raised three and a half million bucks for the first project we did. We had 45 days to raise it. So now I’m going, oh, my gosh, I’ve got to raise 3.5 million in 45 days. I’ve never been on the clock like that.

Rod
Or lose.

Mikey
Right.

Rod
Your hard-earned money.

Mikey
Yeah, I think we had a few hundred grand, right?

Rod
Yeah.

Mikey
And so raised it and I was like, oh, my gosh, we did it. Right? We raised three and a half million dollars. And then all of a sudden you have ten million dollars raise that you do in 45 days. I just raised ten million dollars. Right? Fast forward to today, we do 75 million dollar raises now.

Rod
75 million. Holy crap.

Mikey
And so if you look back, we started the brewery, what, 11, 12 years ago? Two and a half million dollars was out of this world. Now 75 feels like that two and a half. We’re pushing ourselves. It’s like, oh, my gosh, can we do this? The point is, what you think is capable, it’s actually far, far below what actually is. And I still have to push myself on that today, where a lot of people are going to hear this and go, 75 million. This is astronomical. Right? Grant looks at me and goes, 75 million big dog? Catch up.

Rod
Right.

Mikey
So I think that’s a pretty interesting for our business.

Rod
Well, it is because we all have these mental limits we place on ourselves, this box.

Mikey
Right.

Rod
And of course, Grant’s the epiphany– the epitome rather of someone that has no limitations.

Mikey
Right.

Rod
I mean, it’s insane what that guy did this. Love him or hate him. I mean, he truly has no limitations.

Mikey
Right.

Rod
But okay, and what about the personal one?

Mikey
I think that’s interesting, though.

Rod
Yeah, for sure.

Mikey
Yeah. The second one, I would say, probably falls right in line with what you just said.

Rod
Which was?

Mikey
Which is a leader is more of a servant than anything.

Rod
Yeah.

Mikey
That one, whether it’s my relationship with my wife, whether it’s my relationship with the kids, or even it’s my role as a leader with the business, the top-down idea that I had is not correct. The true leader builds up those around him to actually be bigger than he or she is.

Rod
Beautiful.

Mikey
That one was massive for me. Yeah.

Rod
Beautiful. You know, it’s funny. I went to a Tony Robbins event in Fiji 20 years ago. It was called Life and Enterprise Management, and it was all CEOs of some of the very large companies. They divided us into groups of ten, and we competed against each other. And it was freaking kill or be killed. Okay?

Mikey
Right.

Rod
But what’s fascinating was to study different leadership. And that’s when I saw that top-down, aggressive, do what I say leadership versus the servant push from behind, build the team up leadership. And it was just a fascinating study and just that triggered my mind.

Mikey
Yes, I have to learn that one.

Rod
Yeah, same here, man. I used to make people cry at my companies. And it was like, Good Lord.

Mikey
Yeah.

Rod
So I have to ask you this because I do ask this a lot, and I’m sure you’ve been asked it before. But if you could go back and tell 18-year-old, Mikey, something, knowing what you know now, business-related, or even personal, too. I’ve never asked it that way, but we’ve gone down that road quite a bit. Is there anything you do differently?

Mikey
There are definitely things I would have done differently back then.

Rod
Okay.

Mikey
And this one applies to both personal and business. And this is going to be specific to potentially the ones whose love language is words of affirmation.

Rod
Okay. Yeah.

Mikey
But it does apply to everyone.

Rod
Right.

Mikey
For those whose love language is words of affirmation, which is mine, we are driven, or we feel filled up or good about ourselves when people are telling us cool things about us, praise. Right?

Rod
Of course.

Mikey
The challenge with that is it’s very easy for us to be you know, one thing to one person and then something totally different to the other because you’re just chasing the praise. Right? What I would have changed when I was young, which was being totally comfortable with who I am, and if people don’t like me, that is okay. Because I’d rather have people like me for who I actually am than who I’m pretending to be. And that actually crosses over with business as well. When you’re– I mean, look, business is making money. You got to make money to have a business, right? And it’s really easy to look at people and go, just I need revenue, I need a purchase, I need an investment. And all of a sudden you find yourself in that same situation where you don’t even have an identity and you’re not holding true to who you are.

Rod
Right.

Mikey
Be okay with being yourself. And I actually think that would have, one, brought more joy to me. And two, I actually think I would have got to where I got in a fraction of the time.

Rod
Interesting. So just be authentic, be you.

Mikey
Yeah, like the closest– I would say the best example, and this is going to be a hot topic, but let’s say you wanted to talk about something that you know is going to divide people. Right? Let’s say you have your audience right now–

Rod
We almost went there before we started recording. Politics.

Mikey
Right. Politics is probably the easiest one. Right?

Rod
Right.

Mikey
Okay, so let’s say just from a lead standpoint, let’s say you get 100 leads that come in and maybe five of them act. Right? But your net is wide. It’s everyone you could get.

Rod
Right.

Mikey
Okay, well, let’s just say you now go down like the political world and you go hard blue or hard red. Right? You just made your 100 leads turn into 50, right?

Rod
Right.

Mikey
Half the leads are gone. But you have a strong argument that the five people that converted will now actually be ten to 15, right? Because now they’re resonating and connecting with the true you that actually goes beyond the product or the service, right?

Rod
Interesting.

Mikey
Now, a lot of people get stuck on that, yeah, but you just lost 50 leads. Right? But it was leads that weren’t acting anyway, so you didn’t. The better way to look at it is now I’m being myself where people are actually connecting with me. Half the people are not going to ride with me, but now I’m actually connecting with way more in the beginning. Right? Now, the politics is probably an extreme example but you could–

Rod
Well, it’s a pretty real example, I got to tell you. And you’re resonating with me, brother, in a big way, I got to tell you.

Mikey
Right.

Rod
I actually carry some guilt around the fact that I have not been more vocal about how I really feel out of that fear that you just described candidly. And I have guilt around it, I’ll be honest. That really resonates with me.

Mikey
So you go politics, you can go faith, you can go anything, right?

Rod
Of course. Of course.

Mikey
It’s just be you. Be you.

Rod
Yeah.

Mikey
Seriously, we are challenged by that because we want our businesses to succeed, you know.

Rod
Wow. Well, this is a lot of fun, brother. I got to tell you, a couple more questions. I hate to end this thing. This is the longest interview I’ve ever done.

Mikey
Great. We’re doing good then.

Rod
Yeah, this is the longest one I’ve ever done.

Mikey
I think it works, the fact that we didn’t know each other. And now this is a good time for us to get together.

Rod
I have to agree. Now I feel bad because your love language is words of affirmation that I didn’t like oh, dude, it’s freaking Mikey Taylor.

Mikey
No, no, no. No, no, no. That is my love language, but I’ve had a lot of growing to know that it’s not about me.

Rod
Yeah. By the way, guys, I had that author of that book on the show. If you haven’t read that “Five Languages of Love” and you love anybody, go read the freaking book. Okay? Trust me on that. Do you have any favorite quotes or people that really inspire you? And you can answer one or both those questions. Any quotes that you live by or that you have hanging on your wall or you could speak to who inspires you or both?

Mikey
That’s a good question. I don’t have quotes on the walls.

Rod
Okay.

Mikey
I have people that I look up to for different things. Look, I’m an Elon Musk fan.

Rod
Oh, me too. Huge. Huge.

Mikey
Yeah. But why I’m an Elon Musk fan is not because I’m into everything he does. Like I don’t like the combination of tech and person or the transhuman. I don’t like that. He’s about that. But what I really like about Elon is, one, he seems to succeed where everything is stacked against him. And two, he’s able to run you know, industry-changing companies at scale.

Rod
Three of them. Same time.

Mikey
Correct. That I think his ability of time management in my perspective is incredible, right? So I look up to him.

Rod
Or he surrounds himself with the best of the best.

Mikey
Correct.

Rod
And he’s able to do that. And I would love to know more about that particular topic because, I mean, my God, he’s got to be the best in the world at it.

Mikey
Correct.

Rod
Yeah.

Mikey
So, you know, I look up to him for that.

Rod
Right.

Mikey
You know, there’s an aspect of Grant that I look up to, which is his ability to create awareness is unbelievable.

Rod
It’s unsurpassed.

Mikey
It’s unbelievable.

Rod
Yeah, I mean, you know, he’s been on the show twice. He talks about other people’s stages, like you’re on my stage right now, you know, virtually. He talks about that. And that’s one I’ve really taken to heart, you know. And I saw the different things he was doing. I had no idea all the stuff he’s doing. My God. So again, you’re right. He’s very admirable.

Mikey
I look at him in that regard. As I mentioned to you in the beginning that I just stepped into local politics.

Rod
Wow.

Mikey
And so there are people in my community that now I’m looking up to on how they navigate through making decisions for the city, knowing that it’s going to be controversial.

Rod
What city?

Mikey
Thousand Oaks. I’m a city council member for Thousand Oaks. Yeah.

Rod
Wow, very cool.

Mikey
So 125,000 residents.

Rod
Okay.

Mikey
And you make decisions and you know that you’re making a decision that’s going to be hard for a large amount of people. So there are people that I’m looking up to locally where I’m seeing how they handle themselves in those situations. So I would say I have a roster of people that I admire, look up to for certain things.

Rod
Got you. Got you. Was there a question I haven’t asked that I should have that you could feel you could add value with?

Mikey
Well, I’ll tell you the truth, I had a lot of fun here. So I think you– at least for my enjoyment, this was really–

Rod
Well, listen, brother, this was a lot of fun for me. And we went to different places that I certainly didn’t anticipate going. And, you know, you have this vision of a skater and you’re thinking, okay, dude, what’s happening, dude? And you’re a hell of a lot more than that, man.

Mikey
Thank you. I appreciate that.

Rod
No, really, seriously, you’re a very astute businessman, and certainly a pleasure to meet you and I appreciate you coming.

Mikey
You know I appreciate it. Do you know what I’m going to say? Only because we didn’t touch that much, which is totally fine in real estate. What I would probably leave everyone with, and I’m doing this because I got comments about this on a recent video I posted.

Rod
Okay.

Mikey
There are a lot of people that feel like they missed the window to invest in real estate because of the uncertainty that’s happening right now. Right? They look at 2009 to 2021 was the golden years, and we’re never going to see that again. Right? How I’ve been responding to them, I think it’s really important for people who want to get started. In 2009, the same exact stuff was said. It’s over. You just missed the golden era. Right?

Rod
We may be here another 30 minutes, brother, because I’m going to tell you right now, I think the opportunity of a lifetime could be upon us.

Mikey
Correct.

Rod
Okay.

Mikey
So everyone, everyone needs to hear this. Real estate is cyclical. It will always have cycles in my perspective.

Rod
We’re in winter.

Mikey
Correct. But like you just said, there’s an opportunity in winter, right?

Rod
Exponential.

Mikey
Correct. So basically, let’s leave everyone with this. There are going to be some kind of somewhat tactical as well. In winter is when deal flow increases and it’s when capital dries up.

Rod
Right.

Mikey
In summer, it’s when the capital is there and deal flow dries up, right?

Rod
That’s where we’ve been.

Mikey
Correct. So you have been challenged on both extremes. And then somewhere in the middle is maybe where it’s a little bit easier in some regard. But position yourself so that you can go after opportunity when it presents itself and you remain disciplined on the greed side because the fear side tends to get you to act. The greed side tends to get you to stay doing something that you potentially shouldn’t. And in my perspective, if you can always succeed in real estate and manage the discipline on good and bad or summer and winter, you’re going to have a phenomenal career. And real estate is long-term. It will be here tomorrow, so don’t feel like you’ve missed it.

Rod
You know, we talked a lot about seasons, seasons in your relationship, you know, seasons in your life personally. And real estate is the same thing in seasons. I mean, I would say we’re fall, almost winter right now, and winter is coming.

Mikey
Correct.

Rod
And with crisis comes opportunity. And if it gets bad, I’m a bear. I think it’s going to get bad. I don’t think you are. But I really believe it’s going to get ugly. And if it does, there will be an incredible opportunity. There’ll be a pain but there’ll be an opportunity. And so, you know, I’m gearing up for that. And so I would just leave you guys with this. And I think I mentioned this earlier, actually, so maybe it’s redundant, but decide how you’re going to capitalize on it if it happens, right? Decide right now. Because if you’re trying to learn it, once we’re in the thick of it, it’s going to be too late. So you agree?

Mikey
Bingo.

Rod
Okay. You asked me what I’m doing to prep for winter. I’m in a lot of cash. I’m prepping my investors to not be as fearful, you know, that there’s an exponential opportunity when things get rough with the right operator, you know. To not be aggressive right now, to be super conservative, you know, raising additional operating funds, long-term fixed rate debt. And even if it’s not as bad as we think, I really believe there’s going to be significant pain in the bridge market.

Mikey
The bridge market is– correct.

Rod
Yeah. I mean, I met a big operator at GrowthCon last week. I mean, somebody I really admire, you’d know the name, really big in the Texas market, and he was freaking out. He’s got ten deals that are bridge debt. He’s like, I can’t sleep at night.

Mikey
He’s on the equity side using bridge debt.

Rod
Yes.

Mikey
Yeah, that’s the refi risk is the risk right now.

Rod
Right. You can’t refi. If you got debt coming due, we’re looking at an asset in San Antonio where the reserve payment to the bridge lender went from 8,000 to 80,000 a month.

Mikey
Right, correct. That’s the risk.

Rod
I’ve got another operator who believes he has to raise two million just to satisfy a reserve requirement for one deal. And so I think there’s going to be a lot of pain there. Now, again, back to preparation. It’s getting into cash as much as possible or access to cash. I’ve put a kick-ass team together. We have– sorry about the profanity. I didn’t realize how religious you were. Forgive me but–

Mikey
No, no, no, no, no, no, no, no. No apologies. No.

Rod
Okay. You know, put a great team together, you know, I’ve got about ten people, and they’re all over the country. You know, I’ve got regionals handling different markets. We’ve got a lot of deals we’re looking at right now, but I have to remind myself to be super conservative right now. And, you know, a lot of people are smarter than us. Elon Musk, for example, says it’s going to be ugly. He says if they continue to raise the rates, it’s going to be a severe recession.

Mikey
Correct.

Rod
That’s a quote from him. You know, Trump, same thing. Jamie Diamond said it’s going to be a severe recession, you know. So who knows? But I’m trying to be optimistic about it because I’m dragging around that bag of what happened to me in 2008 and ’09. Do you know my story?

Mikey
I do.

Rod
Yeah.

Mikey
All the single-family.

Rod
Yeah, I lost my ass. You know, 800 houses went down the tubes and pulled my multifamily down too because I was cross-collateralized with it. So I carry around that pain.

Mikey
I get it.

Rod
And so I’m super conservative you know, to a fault, honestly. But, you know, I think that’ll serve us well in what’s coming. But I put together a great team. That’s how I’m getting ready, getting in a lot of cash. How about you?

Mikey
So we’re sitting on a lot of cash and storage already. And storage is– we’re in that moment where we’re not seeing the deals, but we have the cash.

Rod
Right.

Mikey
Multifamily, we’re taking a little bit of a different approach. And, you know, you touched on California, which I totally get why so many investors do not mess with it because it’s difficult.

Rod
Right.

Mikey
We’ve been investing in California so long, we kind of, in some regard, enjoy that it’s difficult because it keeps a lot of the competition out.

Rod
Interesting.

Mikey
And also, we’re so undersupplied. Even me sitting on the city council right now, there’s so much pressure from the state because our cities have been primarily controlled by city councils that are no growth. And so the supply is so underserved on demand that it’s an issue. It’s a full-blown issue.

Rod
Yeah.

Mikey
So our outlook is, because we do a lot of building, if we’re building in areas that are under-supplied, that we know we’ll have demand for in ten years. That’s really what we want. Can we get the cash flows that we want and we’ll have demand for ten years? We’re less concerned about what the cap rate is doing in the interim, but the bridge debt is the concern. So basically what we’re doing now is we do either CPays or mini permed debt and we’re coming in with, I mean, in some cases, 60% equity to qualify where you know, if you asked me four years or three years ago, we’d come in with 30% equity.

Rod
Or less.

Mikey
Correct.

Rod
Yeah.

Mikey
So now, because of that, our investor expectations we’ve had to work on, we are not looking at the same returns.

Rod
No. No, way.

Mikey
But in our perspective, what we’re doing is, one, we are able to go after the opportunity and we’re hedging against the refi risk, right? But this is at least how we’re looking at California. If interest rates are going to keep climbing. That’s basically going to be because–

Rod
Oh, they said they are.

Mikey
Right. But that is because inflation is stickier than they think, right? So inflation becomes the concern for interest rates to rise. And then that potentially changes the Fed’s outlook of bringing rates back down in 2024. And that’s the conundrum that we’ve been in. Right? Even if you look at people buying stabilize assets where the cap rates below the interest rate, they’re doing so because they just assume that they’re not buying on current rents, they’re going to buy on future rents, and they’re willing to pay the cash to get there.

Rod
That’s Grant, by the way.

Mikey
We are not there. But what we recognize is if we’re not building today because we’re waiting for cap rates to rise to potentially build in two years. Right? We’re looking at what the cost of construction is going to do if inflation becomes the risk. And in most outlooks that we look at, if we begin to build in two years to today, there’s a number in which the price, even dropping, let’s say, 50%, still is more beneficial if we build today than in two years if inflation is the risk and interest rates still becomes the concern. We’re just doing so that if interest rates do rise in the next four years, we don’t have to worry about a refi.

Rod
Well, if you do a mini-perm, I mean, you’re fine but–

Mikey
Even the CPays, you’re talking 20, 25-year debt.

Rod
Wow. Yeah. I’m not familiar with that model, but– at all. What does that stand for, CPays?

Mikey
CPays is now it’s awesome. And then there’s somewhat of a challenge. It’s technically a tax lien. And so what a lot of people do is they’ll do CPays and then put debt behind it. But what’s challenging about it is, let’s say the bank, the bank is almost a first position, but it’s not. It’s technically a second position.

Rod
Not if it’s behind the tax.

Mikey
Correct.

Rod
Right.

Mikey
And so most banks don’t like being in that position.

Rod
Right.

Mikey
So it takes out a lot of players. But if you just do something like CPays, your property tax pays it back, but it’s low leverage. You’re typically not going over 40%.

Rod
Oh, wow.

Mikey
So that’s why we brought down our–

Rod
Yeah, hard to have returns– you know, the same returns you’ve had, right?

Mikey
Correct. So return expectations went down. On our storage portfolio, we’re sitting on almost $20 million of cash right now.

Rod
Good for you.

Mikey
Yeah, but we’re just not finding the deal. It’s just the deals, that’s the challenge.

Rod
Well, right now it’s the people that want to sell. At some point, it’s going to be people in the need to sell.

Mikey
Correct.

Rod
And if you’ve got storage, I don’t know how much bridge debt was used for storage. Is that a common dynamic in the storage industry?

Mikey
Bridge debt is hard in the storage industry because storage takes a lot longer to get to stabilization than multifamily. So in a lot of storage situations, you’re almost going bridge to bridge, then to permanent.

Rod
So there is bridge debt, though?

Mikey
Yes.

Rod
Okay.

Mikey
It’s just hard to get. But for us, why our debt fund– I mean, we’re–

Rod
The reason I bring it up is there may be deals there coming if people can’t refi.

Mikey
Okay, so this is what we’re seeing right now.

Rod
Okay.

Mikey
Myself, my partners, our inboxes are, if not filled, very close–

Rod
Broker deals.

Mikey
To developers who need equity. Right?

Rod
Oh, developers who need equity. Okay.

Mikey
Right? I have this project, I’m 50% through. You’re starting to see this. I need equity.

Rod
I am seeing some of that, too. Yeah.

Mikey
I think that’s a potential sign for there may be a liquidity crisis, which means there could be deals.

Rod
Well, there’s definitely a liquidity crisis, buddy. I mean, I know people are trying to raise money. I just got brought a deal. They need six million. They’ll give me half the GP on a deal.

Mikey
Correct.

Rod
You know, in Texas.

Mikey
Correct. Then on the debt side, two years ago, we were looking at winding down our first debt fund. It just couldn’t be competitive. Now all of a sudden you’re cutting loans by 11, 12, 13%?

Rod
What amount of value do you look for?

Mikey
We typically go about 68%.

Rod
Wow. That’s pushing the envelope.

Mikey
Well, this is our outlook. We only lend on multifamily and storage.

Rod
Okay.

Mikey
These are two assets that we are very comfortable with. And when we underwrite it, we’re underwriting it from an equity position. If we have to take this thing over, if the lender doesn’t perform, is this something–

Rod
Do you mean the operator?

Mikey
The operator. If the operator doesn’t perform, is this something that we’re okay owning? If the answer is yes, then we could typically get pretty comfortable with lending on it.

Rod
Okay, that makes sense. That makes sense.

Mikey
That’s our outlook.

Rod
Yeah. Well, I got to tell you, if bridge is used for self-storage, I think you’re going to see an opportunity.

Mikey
I do, too.

Rod
Yeah. And of course, in multifamily you are but–

Mikey
Yeah, that’s right. Rod, this is a pleasure, man.

Rod
No, likewise, brother.

Outro
So one other quick thing. We encounter so many people that are frankly frustrated. They’re looking in the mirror and they’re frustrated that they haven’t been able to escape the rat race. They haven’t been able to build cash flow to the point where they’re able to have financial and time freedom with their families. And maybe they see other people buying real estate and creating incredible cash flow and they think well, it’s just scary. Buying apartments is intimidating. And I get it. See, that’s why we created our Warrior Mentorship Program. They’re our coaching students and they’ve had extraordinary results. My students, I’ve been teaching about five years and they’ve gone upwards of 140,000 units now that we know of, right? And we feel like it’s just getting going. Now, we’re looking to grow this group and really take it to the next level and honestly believe that the greatest transfer of wealth could be upon us right now with this current economic environment, everything is going on sale. So we’re looking for people who want to follow a proven framework, really like a blueprint or a map, literally step by step. And then they’re able to leverage our systems and our incredible network to raise money and equity, to find deals and close those deals and build partnerships, really nationwide. So if you’re interested in finding out more about how you can become more in our incredible network and take advantage of the unbelievable opportunities that are upon us, you can apply to my Warrior Mentorship Program by texting the word “CRUSH” to “72345”. Or you can go to “MentorWithRod.com” and what we’ll do is we’ll set up a call so you can check us out and we can check you out and see if it’s a fit. Now, again, you can go to “MentorWithRod.com” or text the word “CRUSH” to “72345” to apply, and we will speak soon.