Michael Meade – 10 years to FIRE with real estate.
My next guest was a public accountant, who eventually moved over to a controller role, and then eventually worked his way up to CFO. However, he wasn’t totally satisfied with trading his time for money which is why he started investing in real estate at early as he could. In this episode, we talk about his 10-year timeline to achieving FIRE and we also talk about his company and what types of asset classes they invest in today. Please welcome Michael Meade.
Payback Time Podcast
A Podcast on Financial Independence. Hosted by Sean Tepper. If you want to learn how to escape the rat race, create passive income, or achieve financial freedom, you came to the right place
- (00:47) – Show intro and background history
- (02:45) – Deeper into his background history
- (03:35) – Understanding his real estate strategies
- (06:28) – Where are his properties located?
- (09:18) – Some numbers and revenue of his business model
- (11:34) – His thoughts about the real estate market today
- (19:43) – What opportunities is he looking for in the real estate market
- (21:00) – How someone can join and invest in his business model
- (21:47) – What are the return expectations
- (23:52) – Deeper into the real estate investment fund model
- (29:56) – Rapid fire round (personal questions)
- (31:30) – What is the worst and best advice he ever received
- (33:15) – Guest contacts
[00:00:04.730] – Intro
Hey, this is Sean Tepper, the host of Payback Time, an approachable and transparent podcast on financial independence. I like to bring on guests who hear authentic stories while giving you actionable takeaways you can use today. Let’s go. My next guest was a public accountant who eventually moved over to a controller role and then eventually worked his way up to CFO. However, he wasn’t totally satisfied with trading his time for money, which is why he started investing in real estate as early as he could. In this episode, we talk about his ten year timeline to achieving fire, and we also talk about his company and what types of asset classes they invest in today. Please welcome Michael Mead.
[00:00:47.300] – Sean
Michael, welcome to the show.
[00:00:48.780] – Michael
Hi, Sean. Thanks for having me.
[00:00:50.180] – Sean
Good to have you here. So why don’t you kick us off and tell us about your background?
[00:00:53.800] – Michael
Sure. I’ll start back in college. So I went to the University of Tennessee, and I got my accounting degree and then a master’s degree with a focus in taxation. And so shortly after college, I became a CPA. I was working at a top ten accounting firm as an auditor, really? Not necessarily a tax specialist, but those skills that I learned from taxes have benefited greatly, along with the auditing as well. But after about six years at public accounting, it was at Crow top ten accounting firm, I realized public Accounting really wasn’t for me. It wasn’t what I love to do. And so a similar path to a lot of CPAs. So I left Public Accounting. I became a controller of a company here in Nashville, Tennessee, which is where I live. They were office technology, or are an office technology company. So at the age of 29, I was their controller. And then by the age of 31, I was their chief financial officer. And so that’s pretty much the W two career for me. And actually, at the end of July of 22, I stepped down from that company and started focusing primarily on real estate and a business that I founded.
[00:01:53.190] – Michael
But all along that time, right after college, in 2014, almost a decade ago, I bought my first rental property. And so I’ve been investing in real estate for nearly a decade now. I’ve done everything from long term rentals to apartments to flips, some short term rentals, some land flips. We got a medical office in the portfolio now. And so just a number of different things, but primarily related to real estate. And so I had gotten to the point with my financial position that I had a little nest egg build up in cash. I had enough cash flow to pay all of my living expenses. And so it became a decision for me of my return of time. Where do I want to spend my time? And so the company I founded in December of 21 is called Ambition Capital. And I have ambitions to spend my life how I choose. And so that started this journey. And since then, we’ve helped 46 different investors to help get into real estate and earn some passive income and keep their taxes low.
[00:02:45.590] – Sean
Love the backstory there. Thanks for kind of laying out the timeline. Now it sounds like you invested for about ten years and then were able to say, hey, I don’t need my full time job. I can jump away because I’ve got enough passive income. Is that correct?
[00:02:59.790] – Michael
[00:03:01.020] – Sean
Great. That’s exactly the story a lot of our listeners are looking for, is how do they replicate what you just did? So you got into was it single family or multifamily?
[00:03:11.810] – Michael
Single family at first. So I actually just sold my last single family probably less than a couple of months ago. But yeah, single family is where I started, and I was self managing those. I was the landlord, I was the property manager. After two of those, I decided I don’t want to do that any longer. And so that’s when professional management got involved. And then after that, once you realize that they’re handling most of the issues, then why not get more doors and go multifamily?
[00:03:36.010] – Sean
There you go. We’ve got a mutual friend that was on the show, Robin Binkley, and she talked about tenants and toilets were not her favorite.
[00:03:43.630] – Michael
Right, right, exactly.
[00:03:45.110] – Sean
Yeah. If you got to play landlord, you want to kind of graduate from that. You want the passive income, but you don’t want the headaches and the maintenance that come with real estate.
[00:03:54.150] – Michael
[00:03:54.940] – Sean
Talk about that transition. You moved from single family to multifamily. When I think of multifamily at the small end, I think of like four units or eight units. Is that where you jump to next?
[00:04:06.670] – Michael
That is my next jump. So right after those, actually, those first two single families I bought, I eventually sold and did a 1031 exchange into guess I’m jumping ahead of myself, but I bought a four unit. Quad was my first, I guess, technical multidoored property. But those two that I mentioned a moment ago, I rolled and did a 1031 exchange into an eight unit apartment. And once you hit five doors or more, that’s technically once you start getting into multifamily, where it’s deemed commercial type property and things change a little bit from a lending perspective and operationally. But I was able to do that tax free. And that’s one of the benefits why I love real estate.
[00:04:40.500] – Sean
Got you. And then what I’m thinking about is the number of doors you had to allow you to go full time. How many properties or how many doors.
[00:04:49.860] – Michael
So I think at the time, I should know that number. We were somewhere around 27 doors at the time.
[00:04:56.140] – Sean
[00:04:56.500] – Michael
And many of these, we got the properties at a really good steal, and we were buying properties. Right. And so I was buying for cash flow, and I still am to this day. And then I also had a short term rental that does very well out in the Smoky Mountains. It’s a beautiful destination type vacation spot that’s very popular. But I also live relatively within my means and I live in Nashville, Tennessee, so it’s relatively cheaper here compared to other places. So a lot of factors come into play. Unit count alone doesn’t necessarily mean much. I know people who are living or working or not working jobs anymore that have five properties. And so it all depends on how levered are you, how much is the property cash flow, and what’s your ultimate goal and lifestyle you want to live right on.
[00:05:35.790] – Sean
There’s a lot of factors. I’ve talked to quite a few real estate investors on the show and I always ask where are your properties located on a city level? And then we kind of drill in from there if it’s like more working class or is it college, university areas. Could you tell us about where are your properties located?
[00:05:52.930] – Michael
Sure. So I’ve got probably about 25% of my doors today are in a town called Clarksville, Tennessee, which is about an hour north of Nashville. And really that’s more close to where I live. I’ve got 48 doors in Hopkinsville, Kentucky, which is just another probably 25 minutes north of Clarksville. And then I’m a part of a GP team down in a deal we did a few months ago in Pinellas County, Florida, where we currently have seven properties, about 22 doors with that. And that’s where the medical office is I mentioned a moment ago. And Pinellas County is just west of Tampa. It’s. Where? St. Petersburg, Florida is. And that’s a little beautiful spot in Florida.
[00:06:28.020] – Sean
Got it. Now drilling into these areas, tell us about where the properties are located. Again, I was talking know, is it more working class? Is it near college and universities?
[00:06:38.870] – Michael
Sure. So the ones most other than Florida, I would say they’re all working class. And so both Clarksville and Hopkinsville are very close to Fort Campbell military base. There is some military there and it’s big presence. But those two markets, why I love them is there’s a lot of distribution centers out there? There is a university, Austin P University. There’s tons of manufacturing out there and then all the retail and services you can think of. And that area is within an hour’s drive to Nashville, Tennessee, and it’s still one of the most, which is a phenomenal real estate market, but many people are getting priced out and so Clarksville is an hour away. It’s kind of on probably a secondary market of Nashville. And so it’s still very affordable relative to Nashville. And they’re seeing a huge influx of people moving there. And so steady jobs, affordable housing, and a net inward migration of people are the criteria we look for in a market. And then down in Florida, I would say it’s a little more upscale. The fund we did is for it’s a mixed use of, like, longer term tenants and short term rentals and really 30 to 90 day type stay places.
[00:07:42.680] – Michael
And so with that one, we’re actually targeting kind of the snowbirds or people that just want to get down to Florida for X amount of months out of the year. And so it’s a little different, but we’re buying, I guess, that question. It’s not so much working class down there, it’s more travelers or temporary transit type housing.
[00:07:58.210] – Sean
That makes sense. Here where I’m at in Wisconsin, I do know people and their parents, especially my friends, their parents are thinking, like, why am I dealing with winter? And they’re finding a place to know three, four months of the year down in Florida or Arizona. All right, so let’s drill into the numbers a little char. What’s, like a minimum threshold for rent that you like to oh, I would.
[00:08:25.670] – Michael
Say that’s very market specific. Well, I’ll say it this way. I don’t want to go to a market to where the average household income is less than, say, $50,000. And then you want that’s probably a little less. I can’t do the math off top of my head. It’s about four grand a month in income. And so I want rent to be no more than one third of somebody’s income. And so one third of four grand is roughly $1,300.
[00:08:52.400] – Sean
There you go.
[00:08:53.040] – Michael
That’s just rough math. Now, I say that we do have some where we’renting units for $800, but again, it’s tactical because I know the market and confident in that asset. Those are just general rules of thumb. I mentioned it earlier, former CPA, so to me, it’s all about the numbers. And so ideally, you want 1300, but if the numbers still make sense at 800, then just be sure you’re comfortable with the asset and you can move forward.
[00:09:17.520] – Sean
Right. And then how much I’m thinking about when you buy a property, how much are you putting down after the first one, you’re probably thinking about that 20%, right? At least.
[00:09:29.160] – Michael
Right? Well, that has changed dramatically over the past twelve months, let’s say 24 months ago. Yes, you’re looking at 20% to 25% down right now. The assets that we’re targeting, you’re probably closer to 30% to 35%.
[00:09:43.000] – Sean
[00:09:43.610] – Michael
What banks are willing to lend on has changed dramatically. And so that’s caused some stress. Right now, I say that though. But we are also looking at doing some ground up construction right now. And the loans we’re discussing with the lenders are 10% loan to cost. And so from a valuation perspective, the loan to value appraised value at exit will probably be about that 70%. And so as far as the equity we’ll have in, it’ll be close to 30. But if you’re going to buy an existing asset today, I would say most, unless you can assume the existing loan, which we have done, probably looking at bringing 30% down at a minimum.
[00:10:18.830] – Sean
Got you. Yeah. What you think about there is if you don’t go or you don’t put a high enough percentage down, then you’re dealing with a higher mortgage and then you apply the math against that per month. Then your passive income isn’t we could go from like, let’s say you take 1300 in half and in that case it’s 650. So then you’re not taking 650. You cut that down even more. Right. Because you got your taxes, you got your mortgage insurance.
[00:10:48.110] – Michael
Absolutely. And so that’s from a return perspective, you’re absolutely right. But one of the biggest things that we’re seeing right now is because interest rates have moved so rapidly, sellers have not moved so rapidly, and so they are still expecting a higher price. And the only way that the lenders will lend is if you bring more to the table because they’re worried about their debt or your debt service coverage ratio, DSCR people call it, that needs to be at least a 1.21.25. And that’s really bottom of the rung is where you want to be. You’d like to be higher than that. And so the interest rate is really what’s driving interest rate and purchase price is what’s driving that additional amount of capital down on top of lenders. Just hesitancy right now to lend, especially in the commercial space, there’s some things that are going sour right now.
[00:11:34.220] – Sean
Right, we were talking about that offline real briefly right now with the stock market. That’s where we and the Tykr team, we spend all of our time with our customers. We are letting people know that we’re moving into some positive territory because last summer, June of 2022, we’re at 9%, then down to 6% in January, February, now down to four. So the Fed did not have to increase interest rates anymore to continue driving down inflation. We could see another hike here soon, but it probably won’t be significant. So the stock market’s looking like it’s in a really good spot. I know that certain news outlets out there may say otherwise, but you look at history, it’s like we’re moving in the exact right direction we need to go. When it comes to real estate, where are things going from here?
[00:12:23.760] – Michael
That’s a loaded question. I would say it depends on your asset class. So let’s talk commercial real estate. Single family homes are a little different to where most people are locked into long term fixed debt. We’re not in the situation we were in eight with adjustable rate mortgages for the most part. However, commercial is kind of the opposite. So most people over the past few years, well, first of all, most commercial debt period is typically on a five year loan term. And so it might be amortizing over 20, 25, 30 years. But you have to renew that loan every five years. And so that’s just normal operations. And on top of that, many people over the last several years as interest rates were really cheap and asset prices went up, the only way that they could get into these assets was to use bridge debt, especially in the multifamily and apartment space. And so bridge debt is a short term loan or they’ll get a loan with what’s called a rate cap. So it also thinks of call it insurance on your interest rate for a period of time. Both those scenarios you’re locked into a lower interest rate environment.
[00:13:20.920] – Michael
However, those things expire and so your loan matures or that interest rate cap expires and all of a sudden your interest payment goes through the roof. And so there’s many people in office right now that are very worried, especially with the work from home environment. I’m sure everyone’s seen it on the news. There’s some people calling for a huge collapse in office space. We’ll see multifamily space. We’ve already seen some of this blow up, BlackRock’s lost property. There’s a huge deal down in Houston that went south a couple of months ago and we’re in a tough spot. However, as you mentioned a moment ago, the Fed did pause. And so history says this is just history, this time might be different, but from the first rate pause to the first rate cut on average about twelve months. And so that’s just a feather you keep in your cap and you say, okay, we might be in a declining rate environment twelve months from now. We don’t know. There might be a couple more rate hikes, but we do think we’re towards the top of those rate hikes. And so if you’re in a position to where you can get into real estate today where the interest rate makes sense, everyone, I’m sure people have heard this phrase, is you buy the property and you date the debt.
[00:14:26.270] – Michael
And so you might be in 24, 36 months from now you’re able to refinance out of the existing debt at 7%. That seems outrageous to some people in today’s time. But all that being said, there will be opportunity. And so Warren Buffett says when other people are fearful, you need to be greedy. And so now could be that time. I’m sure there’s people, oh heck, you guys probably know that more than I do. Warren Buffett stocks. And so there’s opportunities you just want to make. You really need to be prudent about what you invest in right now and be very confident in your case.
[00:14:55.950] – Sean
Now, going back to Warren Buffett’s comment, we use that all the time with the stock market. And our big buying opportunity was really between November of 21 through probably the first quarter of this year. So almost a year and a half. We’re saying like, now is the time to buy, really. We use the phrase stockpiling. You want to put as much as you can into the market. So now we’re at a point where you keep buying, but you still want to put some cash away in your brokerage, but that’s more in the stock market world. So in real estate, would you say now do you tell people, yeah, like, you should be getting in now, or do you tell people, maybe wait a little bit?
[00:15:31.040] – Michael
If I had to pick between those two, I would say maybe wait a little bit. I think there’s going to be better opportunity. There’ll be more opportunities, I think, in the next 18 months. And so it’s not as maybe in the stock market, you might miss a move. I don’t think real estate is going to move that drastically in the next 18 months. If you see an opportunity, go for it, but better safe than sorry, wait a little bit. And other Warren Buffett saying that being used a lot in real estate right now is you’re seeing who swam naked the past few years as the tide is going out. And so if I had a dollar for every time I’ve heard that phrase past six know I’d be a rich man. Maybe as rich as Warren at this time. He knows what he’s talking about. But if I had to choose between those two options, I’d say now’s the time to wait. Get ready.
[00:16:11.220] – Sean
[00:16:13.750] – Michael
What I’ve done personally with my portfolio, a year ago, everyone that I listened to and respect was saying get dry powder, get dry powder. And so we were still at a time where asset prices were huge, the return on your equity was relatively low. And so in the real estate, I sold several of my properties other than ones I wanted to hold long. And that’s why I mentioned I got a single family. To me, it just made the most sense at that time. So we’re sitting on a lot of dry powder right now. We’re looking for those opportunities and we’re trying to get in position for that.
[00:16:40.160] – Sean
What let’s dive into that. What are you looking for specifically?
[00:16:43.180] – Michael
So we want to be in I mentioned earlier, we want to be in markets that have a net income migration. And not to get political, but we want to be in places that are landlord friendly.
[00:16:51.630] – Sean
[00:16:51.890] – Michael
So there’s certain states that you can’t that fit that criteria and there’s others that don’t. But at the end of the day, I’m a cash flow buyer. And so I want it to cash flow from day one. It’s similar to anyone here, I would imagine, your audience. I want dividend paying stocks. I don’t want to just bet on prices going up. I want this thing to pay me like a real asset should, in my opinion, every month like clockwork. So I’m buying for cash flow. And so if we see an opportunity to cash flow today and there’s also the potential to increase the property in value through typically expanding the net operating income, then that’s what we’re interested in. And so it’s very market specific. It’s very specific from a returns perspective. Right now, if you can get 5% in Treasuries, I’m looking for situations to where I think I can get 8% to 9% cash on cash. I don’t want to get six because the risk adjusted rate of return isn’t that great when I can park it somewhere and get five. There’s inflation to consider, but that’s a different story. So that’s kind of what we’re looking for.
[00:17:47.860] – Michael
And we’re also looking at some other asset I kind of spring this one on you here, but we’re looking at a couple of different asset classes outside of real estate. And so we’re looking at some businesses that still have attractive equity, multiples upon entry and exit, and have tremendous cash flow and high tax benefits. That’s one of the things I love, or businesses, but real estate as well, but the ability to control your taxable income. And so we’re looking at businesses today that have a high level of equipment, high cash flow. So one of them, for instance, is a laundry mat. No one thinks that’s sexy, but they spit out a lot of cash. And it’s all equipment for the most part, equipment and building, which is probably leasehold improvements, which you can write off on taxes pretty substantially right now. And so you can set yourself up in a situation to create tax free income for several years if you know what you’re doing. And so those are the kind of things we’re looking for.
[00:18:36.010] – Sean
Let’s take a quick commercial break. Investing in the stock market. I’m sure the top questions that come to mind include how risky is it? And can I actually make money? Everyday? People like you or I or otherwise known as retail investors, are flooding to the stock market because a friend told them, or maybe they saw something on YouTube, heard something on a podcast, or maybe read something on Reddit or Twitter. Really, the list goes on. There is one big problem that new investors face. In most cases, it can be hard to know the difference between a good stock and a bad stock. And when they finally buy a stock, they feel anxious, hoping they don’t lose money. Fortunately, there’s a solution that can help you reduce and even remove the anxiety and fear of investing. I would like to introduce you to Tykr, a platform that makes investing easy for anyone, especially beginners. It literally does all the hard work for you. It helps you find safe stocks, and more importantly, it steers you away from risky stocks. We do offer a free trial. Go ahead and visit Tykr.com. That’s tykr.com again, Tykr.com. All right, back to the show.
[00:19:43.950] – Sean
Let’s keep going. You mentioned laundry. Matt, I will say this. I like your comment there about it not being sexy. We like when we look at this, gives you perspective on what Tykr looks for, the non glamorous, the non sexy businesses. And that’s what Warren Buffett invests in, right? But he wants businesses that are producing ongoing cash flow, right? These are stable businesses, multiple streams of revenue. We like those types of businesses. Okay, so you got the Laundromat. What other opportunities are you looking at?
[00:20:13.570] – Michael
Another one that’s caught my eye is car washes. Very similar. There’s a lot of recurring revenue with certain car wash models. There’s membership models. I went to an investor tour in Columbia, South Carolina, a couple months ago now, but very impressive on some of the returns that car washes offer, the multiples that you can exit at and the cash flow while you’re holding. Again, it’s odly enough. A car wash isn’t deemed a building, depending on how it’s structured. Most of the tunnel car washes, you may see, a lot of the franchises you might see that’s mostly deemed to be equipment. And so you can expense that equipment on your tax return much faster than you could a building. And so again, you can set yourself up to either offset current income that you have with those tax losses or set yourself up for a situation where you have tax free income for several years.
[00:21:00.080] – Sean
Gotcha. Now let’s talk about this from the perspective of somebody who may be interested in investing in your firm. Now. It’s Ambition. If you could give me the name here real quick.
[00:21:10.360] – Michael
Ambition capital group.
[00:21:11.980] – Sean
Right on. So minimum investment size, if somebody’s interested.
[00:21:17.270] – Michael
That varies from project to project, but typically our minimum is 50,000. We might do 100,000 in some scenarios, but typically 50.
[00:21:24.360] – Sean
Right on. And that’s accredited investors only, is that correct?
[00:21:28.540] – Michael
We take Accredited and non accredited. However, in order for non accredited to join us, we just have to have a preexisting relationship. And so not the plug here, but if someone can go on the website Ambitioncapital.com and just schedule a call and we need to get to know one another and show that we do have a relationship and then relatively simple after that.
[00:21:47.200] – Sean
Now, talking to other businesses or business leaders like yourself, or typical expectations, about 10% return per year. Is that what you tell your customers?
[00:21:58.810] – Michael
I hate to keep saying it depends, but it does depend. And so for the laundry mats, for instance, we think we’re going to do better than that from just a cash on cash return. However, with real estate, the monthly I mentioned it as dividend earlier the monthly or quarterly cash flow in most instances might be 6%. But a lot of real estate, it’s a windfall type event. You’re really driving up the value of the property. And so the real estate piece is kind of a combination of both. And so there’s cash flow and there’s equity appreciation down the line. And then odly enough. That deal I mentioned we did down in Florida, we plan to long term hold that property, all those properties. And so our plan with that one is really an infinite return. We plan to fix those properties up and refinance and return all investor capital back out to them and then hold the property really indefinitely. We don’t have a timeline to sell and so that one we’re trying to set up pretty much a lifetime annuity stream in those properties while also increasing the value.
[00:22:54.040] – Sean
[00:22:54.310] – Michael
So it really depends. They’re all very project specific and investor specific. Some investors want the cash flow, some really don’t need it. Some are looking to replace their W Two income. Some are trying to protect their wealth more so than grow it or just reduce taxes. And so we try to offer a number of different scenarios that fit what investors are looking for.
[00:23:16.190] – Sean
I’ll briefly talk about Tykr here and tie it back to your model. We talk about four pillars here at Tykr of Money Management. Pillar one would be debt removal. Pillar two would be increasing income. Pillar three would be increasing wealth. That’s really where investing in the stock market works best. And then pillar four is protecting wealth. And that’s what you just touched on there. And I talked to people in our community that we’ve had a few people, they sold a business or they sold real estate and now they’re facing a big tax event from Uncle Sam. Well, what can you do? They can go to somebody like you and reduce the taxes and at the same time create a passive income stream. So that’s why I really like these syndicate, these well established real estate investment funds that in some of your biggest buildings or structures, you must have, I’m assuming several hundred rental properties in one unit, is that correct?
[00:24:14.770] – Michael
Our biggest property we have today is a 48 unit apartment building.
[00:24:18.530] – Sean
[00:24:20.210] – Michael
I added it up recently. I think we currently only have about 20 properties and it’s close to 86 stores. So we’re relatively, again, we reshuffled the portfolio.
[00:24:29.050] – Sean
[00:24:29.420] – Michael
And so we’re looking for opportunities. Right now we’re kind of light on assets and high on dry powder. We’re getting ready. But one thing, the four pillars you mentioned, I wholeheartedly agree those are the same reasons we love real estate. The only one I would add, and it’s not just real estate, all businesses for that matter. But if you can use debt and leverage, you effectively get to short the dollar. And so a lot of people are like, what the heck does that mean? But the dollar has lost 97% of its value since it was created. And so if you’re able to borrow someone else’s money to make you money, you’re shorting the dollar in that instance. And so it’s just one more way and it’s kind of tied with the protect your wealth. You don’t want to just hold it in cash because ultimately your purchasing power and your wealth will diminish the longer you have it sitting in a bank account.
[00:25:13.160] – Sean
Yeah, absolutely agree. I mean, I know people, they just sit on savings year after year after year. It’s like inflation. Is beating you. You got to figure out a way. So if you don’t go into stocks well, I should say this. I like the stock market, again, for building wealth, but if you go into ETFs or index funds, that’s more wealth protection. But going back to what I just mentioned, if, again, you sold a business or sold real estate, it’s a great place to go. And there are other people out there, too. This is something to think about, the baby boomer generation. I’m reaching the point in my life not to turn this down a dark road, but some of my friends, their grandparents are passing away and they’re passing on wealth. Where do you put it? And I’ve had a few friends come to me recently, and I’m like, well, you probably want to protect this. You don’t have to be investing into the apples and Teslas and whatnot. Put it in ETF or index fund, or they can come to you again. You kind of kill multiple birds with 1 st. It’s that tax protection.
[00:26:13.610] – Sean
You’re creating passive income. And if that building were to sell, at some point somebody comes to you and says, hey, we want to buy this. There could be a nice payout for everybody invested in the property.
[00:26:23.500] – Michael
Absolutely. As long as you’re partnered with somebody that knows what you’re doing, like you do as well, you’re in good hands, I would say.
[00:26:29.720] – Sean
Right, I want to zoom out here for a second because we got a good idea of the different classes or asset classes you invest in as well as what you’re really focused on most, which, again, is real estate. You do have the Laundromats and the car wash. I love that model as a not to segue here, but we’ve got a chain here in the Milwaukee area called Jilly’s, and it’s a subscription based model, and you pay like, three or four different options based on what you get. And it’s just brilliant.
[00:27:02.470] – Michael
It’s fantastic when you peel back the returns that the owner of those car washes get as well. And so we got to dive in behind the numbers of the one we went and looked. And then I actually know a local banker here in Nashville that he works with a car wash, and he was telling me just you wouldn’t believe the amount of revenue. And they’re high margin business as well.
[00:27:21.260] – Sean
Yeah. As long as the machinery right. Isn’t breaking down and causing you maintenance costs.
[00:27:26.100] – Michael
Exactly, yeah, maintenance costs and downtime. Yeah. You don’t want that.
[00:27:29.280] – Sean
Yeah. I tell you what. In winter, you get like a sunny day in winter. And the line you see behind that.
[00:27:37.730] – Michael
Well, the great thing about that model, especially the subscription, is even on those 20 days of snow when no one leaves the house, subscription model, you’re still earning money.
[00:27:46.100] – Sean
That’s it. We tell people, if they have a service business, if you can figure out a way to put your customers on some kind of monthly plan and provide them an ongoing value, that’s the way to go. I learned that lesson back in my 20s. This was the 2000s where I had an agency. It was project based. You sell a project, you fulfill the project, then your revenue stream from that project ends. You got to go get more work. Rinse and repeat. It was pain in the butt.
[00:28:14.270] – Michael
[00:28:14.930] – Sean
So you’re in a good spot here. But now, coming back to you and your timeline, there’s a valuable lesson here, and it sounds like you worked full time job at different businesses over ten years, and you probably took everything you made from real estate and put it right back into real estate you weren’t actually paying yourself. Is that accurate?
[00:28:35.800] – Michael
Oh, yeah, that’s very much so. So we rolled as much as we could, and I lived off the part of the salary, but then any excess that I had that didn’t pay my living expenses, it went into real estate. Wow. And then any of the cash flow the real estate earned or the cash out refinances I was able to deal to do that bought more real estate. And so that has been the plan for a number of years now, and it’s worked out all right.
[00:28:58.200] – Sean
Yeah. I’ve talked to a few people on or our customers. In fact. This is really motivating a few 18 year olds that they’re not friends with each other. It’s just this is the way people are thinking. They’re like, just getting a job. I’m going right to the workforce. No full time or no four year degree, which I think is smart, depending what you get into. And then buy real estate because they’re thinking ahead, like, ten years. If I can get my first property and then my second property and my fourth, am I 6th? Just doing the math there. Or only pay yourself from your job and keep taking the revenue from the real estate. Put it right back into it. It’s like, let’s say you go up to 28 or 30 or 32. It’s like, oh, my gosh.
[00:29:43.860] – Michael
Yeah. I mean, it compounds as you know. You’re reinvesting those dividends over and over, and it grows.
[00:29:48.910] – Sean
Yeah. Smart place to be. Well, is there anything else you’d like to share with the audience before we jump into the rapid fire round?
[00:29:56.950] – Michael
No, I think I’m ready for the rapid fire.
[00:29:58.860] – Sean
Ready to dive in. Okay. This is the part of the episode where we get to find out who Michael really is. If you can, try to answer each question in 15 seconds or less. You ready?
[00:30:09.910] – Michael
All right, let’s go.
[00:30:11.110] – Sean
All right, what is your favorite podcast?
[00:30:13.340] – Michael
Probably rebel capitalist by George Gammon. I’ve become a macroeconomics nerd, and he’s fantastic with it.
[00:30:20.730] – Sean
Nice. All right, what’s a recent book you read and would recommend? Can I say two, please.
[00:30:27.480] – Michael
All right. Atlas Shrugged by Ayn Rand, and then ten x is easier than two X.
[00:30:33.080] – Sean
Who wrote that?
[00:30:34.330] – Michael
Ten X is Dan Sullivan and Dr. Benjamin Hardy. It’s the same two authors that wrote who not how. And the gap in the game. I’ve read who not how. And it’s fantastic. I need to read The Gap in the Game, but Ten X is easier than Two X. I went through it and was highlighting and highlighting and circling as I went. It’s a phenomenal book.
[00:30:54.230] – Sean
I had somebody in passing mention this, and I didn’t question who wrote it, and I didn’t get the title right. So thank you. I’m literally on Amazon right now adding to cart.
[00:31:06.550] – Michael
You won’t regret it, I promise you.
[00:31:08.740] – Sean
Nice. All right, we got a movie question here. What is your favorite movie?
[00:31:13.030] – Michael
As much as I am an economics nerd and a bean counter, I’m also kind of a jokester. And so my favorite is actually a comedy, and it’s Forgetting Sarah Marshall. Really? I can’t watch it and not laugh.
[00:31:24.530] – Sean
All right, that’s going back to the 2000. Yes, I remember that movie vividly.
[00:31:29.490] – Michael
It’s a good one.
[00:31:30.460] – Sean
Yeah. All right, a few business questions here. What is the worst advice you ever received?
[00:31:37.790] – Michael
This might be a cop out here, but I don’t have any specific advice, like direct advice. But what I will say is I no longer take advice from people that aren’t where I want to be. And so I only take to heart advice by people that I respect and who are where I want to go. And so in my life, there’s people that say, hey, why are you quitting your job? Isn’t that risky? Why are you getting to real estate? Isn’t that risky? And oftentimes they’re projecting from their experiences, and their experiences aren’t where I want to go. And so I want to listen to people who have done what I want to do and are where I want to be. And so that’s kind of just like a new life change that I’ve had, is only listen to take the advice from people that their advice is worth taking.
[00:32:17.740] – Sean
Right. That really covers both. Checkboxes there. The worst advice and best advice.
[00:32:24.830] – Michael
[00:32:26.110] – Sean
Good one. Good one. All right, last question. Here is a time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?
[00:32:35.600] – Michael
I would probably visit not too long ago, probably around maybe 2017, back when I was afraid to ask for help. And so I would tell myself again, kind of in the same vein as surround your people, surround yourself with people who have done what you want to do. Ask questions. There’s so many people out there that are more than willing to help, and they actually enjoy helping. And so don’t be afraid to ask why. Don’t be afraid to ask how. They say you’re the average of the five most people you spend the most time with get around those people. Surround yourself with the people that are where you want to.
[00:33:13.950] – Sean
Great, great advice. And where can the audience reach you?
[00:33:18.160] – Michael
LinkedIn’s. The best. Michael Mead. Also ambitioncapitalgroup.com, and we can schedule a call there to get on the horn and just chat.
[00:33:26.570] – Sean
Sounds good. All right, Michael, thank you so much for your time.
[00:33:29.140] – Michael
All right. Thanks, Sean. It was a pleasure.
[00:33:30.520] – Sean
We’ll see you.
[00:33:31.160] – Michael
[00:33:33.410] – Sean
Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing, if you do hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buy or sell decision based solely on what you hear. All right, thanks for your time. We’ll talk to you later. See ya.