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HIGHLIGHTS FROM THE PODCAST With Michael Zuber:
1:20 - How Michael Zuber started in real estate 8:31 - Michael's outlook on keeping his day job and investing on the side 12:46 - Michael takes us through the journey of buying one property at a time. 22:30 - How Michael manages his portfolio 28:36 - Matthew and Michael discuss the two most important factors in real estate 30:35 - What a typical day looks like now for Michael 34:16 - Advice for Out-of-state investors
FULL TRANSCRIPT OF THE PODCAST AUDIO
Michael Zuber: The other thing that I think is true in real estate, especially with social media, is you can absolutely make a lot of income one or two years being a scumbag, but you won't be in this business long term. Spencer Sutton: All right, everybody, welcome back to another episode of the Atlanta Real Estate Investor Podcast. I am one of your hosts, Spencer Sutton, and as always, I have with me, Matthew Whitaker. Matthew Whitaker: Hey, what's up, everybody? Really excited to have this guest on here today because we were talking a little bit in the right before in the green room about his journey, and it sounds like something you and I should have learned a long time ago. Spencer Sutton: And I wish we would have. So, we're going to dive into that. Michael Zuber is with us, and he is the author of One Rental at a Time: The Journey to Financial Independence Through Real Estate. And this is really your story, so we're excited to dive in, Michael. Thanks for being with us. Michael Zuber: Spencer, Matthew, I appreciate it. Always enjoy talking about real estate, real estate investing, and really like to create belief and inspire people to take action because it all started with that first house on Norris Drive. And in my case, 15 years later, we were able to replace a couple of six figure incomes and be financially free, so it is certainly possible. Spencer Sutton: All right, good deal. So, let's dive right in. I mean, Michael, I know that we've got some questions for you. The first thing I think our audience wants to know is how did you get started in real estate? What was the impetus? What started it all for you? Michael Zuber: Yeah. So, it's amazing how things repeat or the rhythm of the market is. So, my journey starts with real estate right around my 30th birthday, so almost 18 years ago, and it was actually after a pretty significant stock market crash. I had spent the later part of my 20s turning seven grand into almost 200 grand just by day trading and stocks and all of that. And I subsequently lost about 80% of that seemingly overnight. Right? I was day trading stocks. I got the tax records to prove how good I was. Then the market changed, and I suddenly wasn't so good. Then I got out, I put my money in a couple of just donkey companies, one called Enron, the next one called WorldCom, which both turned out to be frauds, and little did I know, I was left for $40,000. Michael Zuber: I walked into a bookstore, they were actually physical bookstores back then, defeated, depressed, nervous, scared, and I found this purple book, purple happens to be my favorite color, called Rich Dad Poor Dad. And I go on to read that book 10 or 11 times in a row, and it changed how I thought right? It changed how I thought about money. It changed how I thought about cashflow. I came from very humble beginnings. High school graduates for parents, never made any money to speak of, never had any money to speak of. Money was a stressor in my childhood. And the book sets me on a journey, but what the book isn't, it's not a how-to book. Right? It talks about two condos. She bought a condo in Oregon, I think, and he bought a condo in Hawaii, and that was it. Michael Zuber: So, I just start falling forward. I start reading everything I can. I waste a year because every book I read after Rich Dad Poor Dad said invest 30 minutes from home. I happen to live in the Silicon Valley, and that's never worked. If you are going to be a cashflow investor, buying 30 minutes anywhere in the Silicon Valley doesn't work. It doesn't work today. Didn't work then. So, I had a choice. So, we pulled out a California map, and we started drawing circles, 30 minutes, 60 minutes, 90 minutes. And lo and behold, we find a market two and a half hours away from home driving, so it's a five-hour day to see one house. And that, for us, turned into be Fresno, California. And that's our journey. Michael Zuber: And I bring up the time because we had to make a choice. Clearly, the Silicon Valley wasn't going to work, but we had to choose. Do we go out of state, which is very common for folks, or do we find something in California? And I happened to have a career that already put me on a plane 100 nights a year so I had no interest in getting on a plane again for my investing, so I was comfortable driving. So, I get asked all the time, "Why not out of state? Why not out of state?" The fact is I already flew enough, and I hate flying. So, that's why we chose that. And again, the key about Fresno for us is, I didn't know anybody. I'd been to Fresno one time when I drove through on the way to Yosemite, which is a national park, but didn't know anybody. No network, didn't know the real estate, didn't know the rental market, nothing, but the house was cheap. It was 107 grand, rented for 1,100., and that starts our journey. So, yeah, it's awesome. Matthew Whitaker: There's so much to unpack here, Michael. Thank you for sharing that story. One of the things that we have in common that I didn't know is that we both read the book Rich Dad Poor Dad, and it set us off on our journey to where we are today. I actually, my dad gave it to me in high school, and I read it and I swore I was always going to be an entrepreneur and run a business. And so, I actually listened to it about a year ago, the Rich Dad Poor Dad book on... I was about to say on tape, which would also date all of us but- Michael Zuber: Yeah. I would know what you mean. The other people would be like, "What is he talking about, on tape?" Matthew Whitaker: Listen to it on audio, and I'm like, "Man, the mindset that they give you in the idea that you want to be on the owning a business and investing your time instead of trading time for money, I think is so important. Can you talk about how you've applied that to your business today? Michael Zuber: Yeah. So, there's so much in that book, you got to find your thing, right? I'm 30 years old, I have this book, I've now read it 10 or 11 times. This is where I come to. It's like, "Okay, I'm going to bust my butt during the day," because I loved my job and I was paid very well when I executed. Right? I was a commissioned sales person. So, when you're good at what you do, you can make a lot of money, right? So, I was going to bust my tail from 8:00 to 8:00, but what I was going to do on the side of that is, second, I was going to lower my expenses. Right? You tie Rich Dad Poor Dad in with the millionaire next door, and you start living below your means, you start to get a lot more money to invest, because I start my journey with $40,000. That's all I had after losing 160 grand in the market. Michael Zuber: Then, we jump in, we start reading, and we buy that first house. So, Rich Dad Poor Dad tells me about investing. I still need to do my day job because I'm not going to quit my job. I couldn't replace my income soon enough. I was already in the Silicon Valley. So, my monthly nut was eight figures because it's crazy expensive to live here. So, that's what I did. And I did not have financial freedom in mind when I started my journey. My number was 10. I thought if I can get to 10 properties in 10 years, I didn't know where that would take me, I just knew when I retired, I'd be okay. Right? I wouldn't have to rely on the government. I wouldn't have to rely on someone else. I'm like, "Hey, if I get 10 houses, one a year for 10 years, I think we're going to be okay. Right? My daughter can go to college. We can help her get her first place. I think I'll be okay." Michael Zuber: And then, you get into this and you get one deal and then two deals, and you learn more. Things start to grow, and then you move stuff right at the peak and you go to apartments and it'd go from eight to 80. When you really watch the market, you can learn, and I'm living proof of that. So, Rich Dad Poor Dad is certainly the start of the journey. Matthew Whitaker: And that's the great thing about real estate. I mean, it absolutely is a get rich, if you look over the course of time and see all the people that invested in real estate and gotten rich doing it, but it's not get rich quick. It's a slow build. It does have a exponential return at the end, a long tail to it. And one of the great things about doing this podcast is that we've gotten to talk to a number of people who have stuck with it. But one of the things, I think, is important that we always tell people when we talk to them on the phone or when they ask us, and the problem we've seen with a lot of newbie people that you didn't do is quit your day job. Matthew Whitaker: Everybody when they get into this business wants to be in it full-time because generally they have a passion for it, it seems fun, it seems sexy, but their day job just seems to get in the way of their investments. Spencer and I didn't do that, and we crashed really hard, but talk a little bit about the internal struggle. Because I know real estate, or at least it sounds like real estate's your passion, but talk about the internal struggle of you're on a plane, you don't want to be on a plane, but you know it's the right thing to do so that you can build your passive business. Michael Zuber: Yeah. So, the good thing I had is I never had the inclination to quit my job. I never had that inclination, even though I hated flying, I hated parts of it, I knew that I had to build my empire one brick at a time. And I could see how many bricks it was going to take, and it didn't matter if I quit my job, I wasn't going to be able to build any more bricks. Right? I wasn't going to be able to manufacture them. I was already investing in a market I didn't know anyone and couldn't do it in the Bay area, didn't want to move there. Right? There's some things we could have done to lower our monthly expenses, but my family at the time was entrenched here. My daughter was in school. We didn't want to move her. So, my eight figure monthly nut wasn't going to change. So, thankfully, I never had that. Michael Zuber: I actually think it is a mistake for most people. I think social media, the flashing of the checks, the stacks of paper, the bands, whatever you want to call it, is a disservice. I tell people, you need to bust your ass from 8:00 to 8:00. You don't have to love it, but somebody's paying you to do that. And then, you need to sacrifice other things in your life, especially if you're going to be a buy and hold investor. Right? If you're going to be a flipper or a wholesaler, you can live on ramen noodles for a couple of years, go for it. You got to remember, I start this journey at 30, that means I already have a mortgage payment, or that means I have a daughter that... She was probably eight or nine at the time. Right? We already have a couple of car payments. We already have monthly expenses, and what, we had 40 grand, right? So, I could have lived four months without a paycheck. I mean, that would have been crazy. Michael Zuber: So, I think most people quitting, their jobs are hurting themselves. They are putting too much pressure. They are not allowing themselves to learn a market. They are about to turn real estate from fun and exciting and too stressful and dangerous. There's very, very, very, very little upside to just quit your job on a whim. However, I am living proof. If you get to the end of the day and you have enough and you walk into work one day and something has changed, you can quit. I had planned to quit when I was 50. Again, I was in sales, as I mentioned earlier, and that meant every year you get a new team, you get a new quota, and potentially a new leader. Michael Zuber: I walked in after a year. My year ended January 31st. I think February 1st was a holiday or a weekend. So. I go to the office February 3rd, realize that I just got dealt the worst hand I would ever want, and in about 15 or 20 seconds, I decided to quit because I have a very tense conversation with my new boss, who I did not trust or respect. And to be fair, he did not trust or respect me, so it was mutual hatred. And I'm like, "Dude, I'm out. Give me a package. I'm done." So, I texted my wife saying, "I'm coming home. I quit." She goes, "You just told me you were excited about the year. What happened?" I'm like, "Honey, I'm done. I'm done." Michael Zuber: So, when you get there, when you live... Again, live below your means. These people flashed in Ferrari's and Lambos and champagnes and all of that. You don't need that stress. Right? My monthly nut has gone down, not up since retiring. Right? It's nice to live comfortable. Spencer Sutton: So, how long was that? How long ago was that that you quit your job? Michael Zuber: February 3rd of 2018, so two and a half years. Spencer Sutton: Okay. Michael Zuber: Yeah. Matthew Whitaker: That's awesome. Michael Zuber: Two years, seven months. Matthew Whitaker: And I always tell Spencer to quit taking those pictures in front of his Lamborghini. I'm tired of looking at them. Spencer Sutton: It's your Lamborghini. I'm just taking pictures. Michael Zuber: Yeah, that's just right. He's just posing. Spencer Sutton: I just rented the Lamborghini. Matthew Whitaker: Well, one of the things that I think you mentioned, which I have personally experienced is how you tied sleep and cashflow directly together. I would tell our audience, it is so important that you create margin with your cash flow versus living on your cashflow, because you want to talk about a lot of sleepless nights, back when Spencer and I used to live deal to deal to deal, I think Spencer and I found maybe equal bad investments in the fact that we invested in our own companies that we were flipping houses, as your Enron and WorldCom stock. Our stock was about worth the same thing around 2007, 2008. Matthew Whitaker: But it's very important to create margin and not try to push this thing because cashflow and lack thereof does absolutely affect your sleep. So, one of the things I want you to do is take us on this journey of buying one at a time and how... When I think about this, it brings to mind the book Good to Great and the flywheel, and it probably feels like you were just building... that it was a slow build at first. And as you get going, the flywheel gets faster and faster and faster. Can you tell us in your own words how it feels to build that? Michael Zuber: Yeah. So, in the book that you referenced, One Rental at a Time, I broke it into four phases, because you're right, it is that flywheel... Good to Great was the framework for it. So, the first what I call first phase or stage, I forget what I called that, I think I called it phase, was just getting started. And for me, that was really two parts of it. Part A was, how did I invest the 40 grand? Well, step one, I put 20% down on my first rental because I didn't know any different. You got to put 20% down. I didn't know. So, boom, half my money's gone, that's Norse Drive. Then I realized, "You know what? I can get what's called an 80/10/10," so 80%,first, 10% second, 10,000 down if it's a 100K purchase. So, boom, house number two, house number three. Money's gone. Michael Zuber: What's not said in that story is that took almost two years. Right? Because I would only do good or great deals. One of the things that I take immense credit for now that I didn't realize I was doing then is I looked at my market every day. I still look at my market every day. I have probably missed less than 20 days in 20 years of looking at my market. And what that allows you to do is you can figure out what's going on in your market, you know what's going on before agents, you can see what's priced low or high. So, again, I look at my market every day for about two years, and I get three deals. But I'm out of money. Good news is, this is pre crash, lending is pretty loose, I go out and do a cash out refi of house number one, Norse Drive, which I reference. Michael Zuber: I, again, make a mistake. I assume that banks are conservative. Again, I'm an idiot. They allow me to take out as much cash as I want. So, I didn't realize, I didn't run the numbers, I signed the paperwork because I was probably in another country when I signed it. And I get the first mortgage payment, and I'm like, "What the hell?" Mortgage payment, plus taxes and insurance, which I chose to impound, was like 1,250 or 1,275 or something. The problem was my rent was 1,095. So, before I pay property manager, before I do any margin for reserves or bad debt or capital, I'm already negative. Hence, the only picture in the book is something I call them No Alligators, which a friend of mine drew for me after I retired. Basically an alligator eating bags of money. So, A, never assume a bank is going to be conservative. They won't. Never create or buy a negative cashflow property because, again, we talked earlier about margin, Matthew. Let's just say, when it's negative, it only gets worse. Right? It was a horrible experience. Michael Zuber: But again, I take out a pile of cash. I take that pile of cash, I go buy two more. That takes me about another year. Two more cash out refis on the first three properties, so all three of them get cashed out refied in about a two year period. I ended up with eight houses. So, now, we're at the peak, or what I don't know is the peak, but turns out to be the peak. And I'm struggling to get house number nine because my accounting and analytical brain will not let me create another negative cashflow property. For example, that first house I bought at 107 is now where 264. Problem is it rents for the same. Right? The cashflow is great at 1,095. Doesn't cashflow so well at 264. And I'm struggling, struggling, struggling. Michael Zuber: I go to a real estate meetup, and the speaker talks about small multi-families. I never looked at them I didn't know anybody that owned them. I assumed you had to be a multimillionaire to own an apartment. What did I know? Right? Rich Dad Poor Dad didn't talk about apartments. It talked about a couple of condos, right? What do I know? And lo and behold, he introduces me to the concept. I quickly go and look at my market and realize that there's a five unit building that I could buy. It's five one unit one baths for 223. It rents for 600 each, so three grand. And I go, "Huh, that's not bad." So, I do a 1031 exchange, I 1031 out of Norse Drive, sell it 264, take all the equity, put it on the 223 commercial building, and my cashflow goes up immensely, obviously. No new cash invested. Michael Zuber: So, I am a very simple person. If it works once I'm going to do it again. So, I ended up 1031-ing wanting out of all of my houses into 80 units, so I go from eight houses to 80 units all small apartments. So, that's step two. Big flywheel, right? And lo and behold, I just complete my last 1031 exchange and the market falls apart. That first house I sold for 264 retrades at 75 four years after I sold it. Right? So, big crash. I'm sitting in apartments, so yeah, my net worth takes a hit, but again, my cashflow is through the roof. Right? Michael Zuber: And that's the first big learning learning for me, is if you want to overpay for something I own, I'll sell it. I've sold houses when they were high, and in 2019, I sold apartments when they were high. I'm not tied to anything. I buy things intending to own forever, but I watch my market every day and when stuff gets stupid, I sell. I either sell for cash or 1031 to something else. So, that's another lesson that people need to realize. If I would have just held those first eight houses, I might have 12 or 13 houses today, but I wouldn't be financially free. Right? So, this buy and hold forever doesn't always work. Right? If it's overpriced, sell it, do something else. Go ahead. Matthew Whitaker: I was just going to say, there's so many lessons in here. I think you're undervaluing all the lessons. I was just writing them down as you were talking. I think the first one is very Charlie Munger, Warren Buffet approach to investing, in that I'm only buying great deals. I'm only going to go buy... They always talk about the punch card method of investing. Hey, if you could only invest in, just to translate it into our business, in 20 real estate deals, you would be very discerning on using one of your punch cards. And it sounds like you've really dived to that. Michael Zuber: I think that strategy I preface it before when I teach, and that's the whole thing about learning a market. I look at my market every day because every market has an average deal point. There's either you go find average and it takes a while. That's what people hate. "Oh my God, it takes me forever." Well, it takes you forever timeline, but it's like 15 minutes a day. You can learn your market in 15 minutes a day when you tighten the scope, you get focused, and you get repetitive. But you have to do it over years. Matthew Whitaker: And it's funny that you say that because that reminds me, again, of Charlie Munger and Warren Buffet because they read voraciously four or five hours a day, so they're studying their market, but they only do one to two deals a year. And so, they're just waiting on deals to, which gets into another lesson I think you've shared with us is, the buy box, right? They're waiting for deals to basically slip into their buy box, and they're patiently waiting for that. Michael Zuber: And then when it comes, boom. Matthew Whitaker: And that's what they say is, "Hey, when it falls into our buy box, we're going to bet big on that deal," and it sounds exactly like that you've taken that same approach. Michael Zuber: Yep. I'm a Warren Buffet fan. Spencer Sutton: We did not have that approach, Matthew. I don't even know what a price we had. We had the Lamborghini and Ferrari throwing dollars out the window approach. Spencer Sutton: I mean, Michael, I remember buying houses, and we were wholesaling houses. Matthew and I both were doing that. And if I couldn't wholesale it, I stuck it in a rental portfolio. That was the worst... It was a horrible approach. Matthew Whitaker: I'm going to keep all the sucky deals that I've done in my portfolio and sell the good ones to everybody else. Spencer Sutton: But all we saw was the market doing this. Like timing is a big part of your story. I mean, timing of... Well, it was the discipline to say, "Hey, I'm willing to sell it this and go find this," but you did it at the right time. Michael Zuber: Twice now, twice now. Yeah. Spencer Sutton: Yeah. Michael Zuber: And you got to watch every day, and then again, I really believe it, when the market's overpriced or somebody is willing to overpay for any of my assets, I will happily sell. It was houses in '07/'08, and it was apartments in late 2019. And again, when you watch every day, it's not subtle. It'll smack you in the face. It's like, "Okay, pay attention." Matthew Whitaker: I'm still not done with all your lessons. I've wrote down another one. That leverage can expand your gains, but it can also expand your losses, too. Being cognizant of that. You sound like you expanded your gains. Spencer and I did a great job back in '07/'08 of expanding our losses. Then the last thing, because I'd love to know what a day looks like. It sounds like you're constantly thinking about your portfolio, which you talked about, "Hey, somebody's willing to over pay me for it." Talk about how you think about your portfolio. Do you have a spreadsheet? Mechanically, how's that get done? Michael Zuber: Yeah. So, I look at my market every day, still. I happen to be a morning person. My wife's a night owl. So, I always get about three hours in the morning where I'm up and she's asleep, frankly. So, that's what I do. All of my work. Even today, right? Both of us being financially free and all of that. So, I spend three hours in my business in the morning looking for more deals because you never stop, right? I believe the deal of the year... I call it the deal of the decade comes around every year, but you got to be looking for it. Right? So, I'm always looking. So, that's where I start. It's always with acquisition. Michael Zuber: And then, I figure out what's going on my market. For example, clean properties are being sold for ridiculous prices today. So, I happen to take a fixer upper that I purchased here recently, fix it up nice for an FHA buyer, put it out on the market because people were overbidding, and they raised the price by 10%. I'll take that fat profit. I think there's a little room for FHA buyers for the next six to 12 months, so I'll take that profit. Michael Zuber: The other thing I did this year, because residential lending is pretty easy, as I found my worst performing small multi-family, happened to be a triplex, so I put that on the market. So, I take the opportunity to manage it. But as far as actively working in my portfolio, you'd probably be shocked. I spend less than two hours on it a month because I have a system. I don't live in my market. I have a property management team. I've worked very hard for processes and procedures and exceptions. Most of my time is about growing the portfolio. I occasionally approve expenses if it's above a threshold. I occasionally approve applicant if there's a question mark. But for the most part, my active portfolio is not taken up a lot of time. Matthew Whitaker: You mentioned your property manager. I'd be curious what you look for in a property manager. Michael Zuber: Well, that's taken me a while, right? So, the first thing that's in the book is I fired my first five, which for the most part probably- Spencer Sutton: I knew that was coming. Michael Zuber: Yeah. Which probably was my fault. I didn't know what to do. I didn't know anybody in Fresno, so I said yes to the first three that were there. Right? I didn't even interview them. That's how stupid I was. Well, what I look for in a property manager is communication and speed and then processes. Communication's number one, especially since I'm out of market. The reason I fired the first five is at some point, because again I'm lucky, I could drive there so it's not a plane ticket and nights in hotels, I would tell them I'm coming one Saturday or Sunday, I'd come do a walkthrough. Right? And then, I'd go back the very next Saturday or Sunday and not tell them I'm coming. It was amazing what happened in a week. That's not okay. So, those are things. Michael Zuber: So, communication is key. Processes. So, we have a checkpoint every Monday and Friday for usually five to 10 minutes. If it needs to be longer, it's longer. I get my reports when I ask for them the way I like them. Again, time doesn't, in real estate, just like when I was selling, bad information doesn't get better with time. If something bad is going on, I expect a phone call. I don't care if it's 11:00 o'clock at night. If I don't want to pick up my phone, I won't pick up my phone, but leave a message, "Hey, it's 11:15, I'm standing in front of your house. It's on fire." I've had one of those calls. It happens. I don't want to hear about it in the local paper or something. "Hey, is that my house they took a picture of?" Right? That would not be good. So, yeah, communication is the number one thing. Michael Zuber: The one thing I didn't appreciate the first five years of real estate, I thought the answer lived in my computer. Right? Excel or looking at Google maps or Realtor or whatever it would be today. Real estate is a people business. Even if you're an out of state investor, real estate's a people business. And not only is it who do you know, but who in the market knows you? The only deals I've been able to do in this crazy market with less than one month of inventory is from people I've worked with over the last couple of decades. I said, "Hey, you did me right last time. I got a pocket listing. It's what you buy. Are you interested? Simple yes/no answer. Michael Zuber: So, you really need to look at this, is how many people in the market know you? Right? if you're in Atlanta or Birmingham or that's where you're investing, but you live in New York or Texas or California, or any other state, how many people can you say that know you, they know what you're looking for? Get off your ass and get on some local real estate meetups and introduce yourself. Don't say, "Hey..." This is what I hate. "Hi, my name is Michael Zuber. I invest in Atlanta. Call me when you have a deal." What? How do you know what a deal... That's insulting. Because if I ever find a deal at my market, trust me, I'll find a way to get it done. Michael Zuber: So, you should say, "Hi, my name is Michael Zuber. I invest Atlanta. I invest in this zip code or that zip code. Three bedroom, four bedroom houses between this and this, above this freeway, below that freeway." I don't know what that is in Atlanta, but some criteria. Get focused, get specific. And again, it all ties back to learning your market, whatever you're doing to learn or watch your market, you should tell people, because you never know when that off-market deal could come your way, when somebody's next door neighbor's mother passed away and they can sell it to you. It's all about not only who you know, which too many people talk about, but how many people in Atlanta know you if you are an out of state investor? That's key. Matthew Whitaker: I totally agree. I've been talking to even my team lately about how important... Real estate, to me, is two things. It's about meeting a lot of people... Because it's very much is a relationship networking business. Everybody wants to know everybody in the real estate business. I don't know if that's true in other businesses. I hadn't really honestly been at a bunch of other businesses. And then, it's all about reputation after that. So, once you start to build the network, then it's about making sure you secure your reputation. Of course, that I know, crosses all sorts of industry lines, but real estate, to me, is so easy to network. Why don't more people do it? Michael Zuber: Well, there's two things in that statement. Again, just to quote Warren Buffett and Munger again, just because we're on a roll, Warren Buffett talks about it taking a decade to build a reputation and five minutes to ruin it. That is very true in real estate. The other thing that I think is true in real estate, especially with social media, is you can absolutely make a lot of income one or two years being a scumbag, but you won't be in this business longterm. You burn a couple of bridges, you take advantage of a couple of people just to make a buck, I hope you enjoy doing something else because it won't be real estate for the longterm. Matthew Whitaker: And real estate is a very small world. I think everybody thinks that it's this huge world, but because it has so many niche pieces to it, that each little niche area of real estate is a very small world. Even if you're talking about, I would imagine, New York or Northern California, everybody knows everybody in that little niche piece of the world. So, if you're talking about single family houses or small multi-family, there's not a ton of people there, and everybody knows everybody. That's why it's so easy to get to know everybody. Michael Zuber: Absolutely. Matthew Whitaker: But it's also so easy to ruin a reputation really fast. Michael Zuber: Amen. Yeah. Don't sacrifice reputation ever. If you want to do this longterm, never sacrifice reputation. Matthew Whitaker: So, when you were thinking about becoming financially free and you did that a couple or three years ago, talk a little bit about a day in your life now in terms of... You don't have to get up. I know you do get up and you still run your business, but I mean, what are some things that that's afforded you because you had the discipline for 18 years to build this business? I'd be curious about what those rewards look like. Michael Zuber: Yeah. So, actually, nobody ever asks that kind of question. That's a good one. So, my day in the life is pretty easy. I tell everybody every day is Friday to meet, or everyday is Saturday, whatever you want, because it all blends together for me. Seven days a week... I mean, what is today? Tuesday, I think. Spencer Sutton: It's Saturday. Michael Zuber: It's Saturday. I don't know. Spencer Sutton: It's Tuesday. It's Tuesday. It's Tuesday. Michael Zuber: I have no idea. Spencer Sutton: I know- Matthew Whitaker: I know very well. Of course, I've got school aged kids, too, so they constantly reminded me what day it is. Michael Zuber: There you go. There you go. I don't have that. My daughter's already out of the house. So, yeah. So, I get up by 6:30 every day without an alarm clock. I haven't had an alarm clock wake me up in 15 or 16 years. It's just my body's up at that time. I spend the first hour of the day reading about what's going on in the financial world, CNBC, Bloomberg, Wall Street Journal, Seeking Alpha, whatever crosses my plate. Because I think, again, part of being a real estate investor is you have to know what's going on with the consumer. Why? The consumer is my number one competitor. They're my number one customer, my number one competitor. Michael Zuber: And then, I'm trying to figure out what's going on with cost of capital because that's the biggest expense I have in my business. So, cost to capital is going to be really easy for the next couple of years, is going to be cheap, but you got to figure out what's going on with the customer, both from rental and consumers. Right now, you're seeing spaces good. You're seeing urban flight. Right? These are all things that we would not be talking about in January or February. Michael Zuber: Then I have to ask myself, "Well, what does that mean? What does it mean for my business? What does it mean? How can I use this to make money?" Right? There's all kinds of things you can do, but again, I had been doing this for 20 years every morning. I mean, like Christmas morning, Father's Day morning, birthdays, same deal. Right? Always. And that allows you to make decisions. Right? I decided to sell a single family home that would have been a great rental for a higher price because FHA buyers are the only lending market working, and I can make a quick extra 20 grand. Okay. I'll take the profit if you're going to artificially give me a bump. So, that's my morning. Michael Zuber: So, by 7:30 or... Yeah, usually by 7:30, I record my daily financial news. Like I said, I've been doing this for 20 years. Because I'm retired now, I actually record a daily financial news episode at 7:30 every morning, live, on my YouTube channel, which is called One Rental at a Time. Then I usually do an interview with another expert around 8:00. So, usually by 9:00, 9:30, I'm having breakfast. I'm working out by 11:00. Showering, whatnot by 1:00. And then, the rest of the day is whenever Olivia and I want to do. It's a pretty nice life. Spencer Sutton: That's nice. Matthew Whitaker: It sounds very Gary Keller-like. Gary Keller, his... I listen to a podcast with him and Tim Ferriss, and he talks about his morning. He gets everything done in the morning, and then that allows him, after lunch, just essentially be at the mercy of his family, at the mercy of maybe people in his business are driving him to do things. But it's all about getting the one most important thing done, which for you is your study time, your investment time, making sure that there's no deals that have slid into your buy box that morning. Michael Zuber: Yep. Spencer Sutton: Yeah. That's some good stuff. Michael, we've got a lot of investors that call us, they're asking about Atlanta, they're asking about the market. I know that you invested two and a half hours away from your house. What kind of advice, though, would you have for someone who is looking to invest from out of state? So, we talked with a lot of people from California who are looking at Birmingham or Atlanta or whatever, so what's your advice to those people? Michael Zuber: Well, there's a couple of things. First and foremost, I talked to those people all the time. Right? Talk to me physically or communicate via one of the many messaging platforms. Too many of you, meaning the out-of-state investors, are focused on cheap. I promise you, you can go broke with cheap. Right? Yes. Palo Alto, California has a median home price of $2.4 million. That is freaking stupid. And then you go to Detroit and you think you can buy, "Oh, I'll buy five houses for 20 grand each." Well, you want to light 100 grand on fire? Right? Because that's maybe what you do. Right? So, don't get enamored with cheap. That's my first advice. I would say seven out of 10 out-of-state investors that I communicate have had horrible experiences, horrible, because they focused on cheap. So, that's the first thing. Michael Zuber: Second thing is I would never ask an investor to invest in a market they're not willing to go to. Right? I still have people calling me up saying, I'm not going to name cities, but, "I'm going to invest in city X." I go, "Great. When are you planning to go there?" And they almost turn their nose at me like, "Oh, I'm never going there." I'm sorry, if you're not willing to go there, why is your money then? I mean, that's just dumb. That's stupid. Michael Zuber: And then, lastly, I think what we're seeing now in this environment is clearly the United States is tilting. Red state South, lower taxes. So, Georgia's looking pretty good on the map, Texas, Nevada. That is a investible trend. I think it helps with appreciation. I think it helps with rental growth. I just think generally speaking, you're seeing the numbers, right? New York and California are seeing exit. Ask a deeper question if I miss something. Matthew Whitaker: No, I think it's great. I also agree that people are moving to the South, too. We have offices all across the Southeast, and we've just seen a big increase in occupancy lately. And we just feel like people are moving South, people are moving, like you say, out of urban areas and wanting more space. My father-in-law would tell you the invent of the air conditioner has also helped people move further South. Michael Zuber: Yeah. The AC and Zoom. Matthew Whitaker: That's right. Well, I can't tell you how many nuggets... This has been great. I really appreciate you getting on with us. If somebody didn't get at least one piece of advice they can take away and apply to their business, they weren't really listening. So, thank you so much for your time, and thank you for doing this for everyone. Michael Zuber: You got it. Enjoy, guys. Spencer Sutton: All right, everybody. Listen, if you want to learn more about Michael and his business, checkout One Rental at a Time. He's got a YouTube page. His book, you can buy it on Amazon. His website is onerentalatatime.com. So, I would encourage you to check him out. And then, if you enjoyed this episode, be sure to leave us a review, give us a five star review. And we look forward to seeing you on the next episode.
