From Burger Flipping to House Flipping: Mike Mannino's Journey to Real Estate Mastery

Ever found yourself at a crossroads between a day job and the daring dream of building an empire? Mike Mannino, once flipping burgers, now flips houses, and he's here to share the transformative tale of how he converted sweat and strategy into a sprawling real estate portfolio. In a frank and fascinating conversation, Mike breaks down his journey from humble beginnings to becoming a suburban Detroit real estate savant, mastering the art of the flip and managing a lucrative collection of rental homes. His clear-eyed approach to investment and avoidance of risk-heavy areas underscore a narrative of calculated triumph, tailored for anyone who's ever aspired to turn property into prosperity.

Picture this: battling Crohn's disease while trying to clinch financial freedom. For Mike, this wasn't a hypothetical scenario but a harsh reality that he flipped on its head with the help of Jack Canfield's teachings and the principles of "The Secret." His personal victory over health hurdles, paralleled by a revolution in his financial status, is nothing short of inspiring. Mike's journey underscores the undeniable link between wellness and wealth and serves as a testament to what's possible with a proactive mindset. Whether grappling with health issues or seeking financial autonomy, this episode serves up a potent dose of inspiration.

Ready to scale your real estate ventures? Mike lays out a blueprint for success that is as practical as it is profitable, from the art of delegation in house flipping to creating standardized pricing sheets for contractors. His insights into maintaining a lean operation, mastering the single-family home market before tackling multifamily properties, and the immeasurable value of mentorship and partnerships are nuggets of wisdom for the taking. So, whether you're a budding investor or a seasoned mogul, join us for an episode brimming with actionable advice that could very well pave your path to real estate royalty.
About Mike:
https://www.proliferationcapital.com/
Mike's Facebook:
https://www.facebook.com/MikeManninoII
Mike's Facebook Group
https://www.facebook.com/groups/realestatewealthbuildersgroup/

Link to WI home sales facts:
https://data.goupstate.com/real-estate-market-report/inventory/wisconsin/state-wi/

Chapter Timestamps

(00:03) - Real Estate Investment Strategies and Insights

(10:16) - From Crohn's Disease to Real Estate

(18:12) - House Flipping Success Strategies

(24:07) - Standardized Pricing Sheet for Contractors

(30:23) - Real Estate Scaling and Transitioning

(41:05) - Real Estate Investing Advice and Tips

Highlight Timestamps

(01:10 - 02:42) Journey to Real Estate Success (93 Seconds)

(06:34 - 07:15) Investing Based on Population Growth (41 Seconds)

(16:44 - 18:08) Real Estate Success Stories (85 Seconds)

(20:38 - 21:43) Scaling a Real Estate Business (65 Seconds)

(28:59 - 29:29) Commitment to Bidding Strategy (30 Seconds)

(31:49 - 32:28) Improving Efficiency in Project Estimation (39 Seconds)

(35:09 - 36:34) Wealth Building Through Real Estate Investment (85 Seconds)

(40:34 - 41:47) Investing (74 Seconds)

(43:57 - 45:21) Building Relationships Through Adding Value (84 Seconds)

Real Estate, Investment Strategies, Flipping Houses, Rental Properties, Financial Freedom, Property Investments, Suburbs, Metro Detroit, Single-Family Homes, Multifamily Properties, Mentorship, Partnerships, Holistic Health, Chronic Il

Transcript

Marcus: 0:03

Welcome back to this week's episode of the MVP real estate podcast, season four, episode five, with Mike Menino from, originally from Michigan, now living in South Carolina. Very impressive like resume if you'd call it that. Very impressive like resume if you'd call it that. Uh, decades of decade in real estate. Over a hundred properties flipped, over a hundred or 80 properties flipped and then over a hundred rental properties owned right now. But obviously that fluctuates as he buys and sells. But he kind of gets into the detail on all that which um man, he, uh, he understands his strengths and he maximizes them. Like that was the coolest thing that I got to see, and to learn it early on in the system that he was building was obviously proof to his success. So, let's bring him on the show, he can talk about it. So thanks for joining us, mike, happy to have you here. You've already rubbed it in our face that you're in a warm climate, so you'll get into where you are. But I always start off the show the same way Give us a background of where you came from or what you were doing. It could be personal business, but it sounds like it's been real estate from the jump with you.

Mike: 1:22

Thanks, man, for having me. I appreciate it and yeah, so it seems like that because I'm maybe like young and I've been doing it for a long time. But I tried like many different things in the beginning. Like you know, 16 years old, I was working at McDonald's and 17 on bus and tables 18. I'm waiting tables and I can talk about later, but I bought my first foreclosure house. I was trying to, you know, become wealthy any way I could. I had my life and health insurance license. I was studying for my securities license, I got my mortgage license, my real estate license. I was selling t-shirts online. I was doing all these different things and like, yeah, hustling, but you know, I'm doing all this up to I was 21 years old. So it seems like, you know, I've been doing real estate just one thing. But I tried a lot of things and then I realized, you know, 90% of millionaires are made through real estate. I mean, okay, I'm not that smart. I barely graduated high school, so maybe I'll just try the path of least resistance and just become rich this way, Right? So I started flipping houses. We flipped over 90 houses now since I went full-time in 2017. And I own over 109 apartments that pay us every single month, and that's where I'm at now. So right now I'm not selling t-shirts online anymore. I am just 100% committed to real estate.

Marcus: 2:43

The Shopify account has been shut down.

Mike: 2:47

You know it's funny, it's sad. If I looked at the stock price of the Shopify account back then I was like man.

Marcus: 2:52

if I would have put a couple thousand bucks in the stock I'd be sitting a lot prettier, I know, I know, but it sounds like you're sitting pretty good so far with everything you've done and that is like, how old are you right now?

Mike: 3:06

I'm 31 now.

Marcus: 3:07

Okay, so over a decade you've had about 109 rentals.

Mike: 3:12

Are you?

Marcus: 3:13

sure that number has fluctuated with rental properties.

Mike: 3:16

Yeah, yeah, I mean, like last month or two months ago, we just bought 44 apartment building in Kentucky, so it does fluctuate, right, and then we're selling a 17 unit, so it does fluctuate. I try not to sell my apartments as much as my houses, but yeah, we've done over 90 flips of houses, single family houses.

Marcus: 3:34

That's awesome and that was in the Midwest or Michigan area.

Mike: 3:38

Yeah, so I grew up in Michigan and that's where I started flipping, because it was like my own backyard, right.

Marcus: 3:46

So what part of.

Mike: 3:48

Michigan, metro, detroit, so in between all the cities that touch Detroit, not the city itself. We don't buy, invest in there. We leave that for the out of state investors who think it's a nice return. So we buy in the suburbs. Oh, I got questions on this, so we're touching on right um, but yeah, we flip in all the suburbs of uh metro detroit and we do the single family, first time home buyer homes a thousand to two thousand square feet. Um, we don't do any of the luxury stuff that's cool and I know that.

Marcus: 4:20

And the reason I asked what part of michigan is because I would be one of those outside investors looking in and I'm like how can there be a house for seven grand? Like that isn't real. But in the detroit market there are some pockets where you can pick up houses for like dirt cheap.

Mike: 4:37

I'm picturing the area would be like a cd area, but I don't know the area so I don't do out of state yet yeah, no, c, they got f's and that's in detroit. Um, well and like, and all jokes aside, I mean the reality of it, because I'm in these, my friends flip there and I have zero design. It's hard enough to make money flipping houses, yet just getting stolen all the time like um. So, uh, there is someone who is doing a flip. Their ac unit was stolen three times, even after they put the cage around it and everything right. So they spent you know ten, twelve thousand dollars in ac units for you know one ac unit. Um, you call the police, they don't show up. I mean, it's just kind, lawless. So there's a reason why it's cheap.

Marcus: 5:25

Yeah, I remember going to a RIA meeting. This was like when I I wasn't even started in real estate. I was like entertaining the idea. I was in my sell t-shirts online stage of like where do I want to go with this? And one guy was like, hey, the the Milwaukee Milwaukee UWM college market is very enticing because you can buy a cheap home. It'll cash flow. But your cash flow is only coming in if they pay. So you have to look at the clientele and then you have to look at the damage that's being done. Or like you're saying the crime and you're like is it worth it? Is that what you want to do?

Mike: 6:10

The damage. Like you said, like you know, a window cost me $650, no matter what if it's in a $7,000 house or if it's in a $300,000 house, the price to paint it is three bucks a square foot, almost now. You know, the cabinets cost the same, drywall repair costs the same, and then when they're damaging these properties, that's the thing you put in ten thousand dollars in a seven thousand dollar house. What is the house worth now? Eight thousand bucks, right, you just took a loss, so it's not worth it yeah, and that's and if I don't mind touching on it. So, for everyone listening this, what's the most important thing so why I moved to south carolina and why a lot of my investments are now in the south, is looking at the population growth. If you go on Google type in Detroit, population 1990, there was over a million people. Today there's only 660,000 people, right? So would you invest? It looks like this, it looks like it's like would you invest in a stock that does that for 30 years, just shrinking every single day, versus you type in places like Charlotte, north Carolina, you know, places like around Atlanta, georgia and Kentucky, you just see the opposite, where it's just continued growth. So what I love about real estate is you don't have to be like a rocket scientist. You just see the graphic. Okay, this isn't going to work out. Well, you know there's no businesses moving to Metro Detroit. They're leaving. If you look, um, you know, ford just built a power plant in kentucky to build electric cars. Um, you know, right here in blithewood, south carolina, we got volkswagen. Here near greenville we have a bmw. Um, that they're building. All these new plants would be all new jobs. It's funny. I left the Met, the motor city, and I feel like I moved to, like the new motor city, but so it's really important to look at where businesses are coming and investing in, versus like leaving and stagnant growth.

Marcus: 7:58

Yeah, and we had that big I mean opposite of motor city kind of shrinking in Detroit, Like when the Amazon plant came into Kenosha. That was like a big deal because like that's a lot of jobs that are needed and jobs mean people and people mean housing. So when you have a declining population, like Detroit did, when did Ford move out of Detroit? Was that late 90s?

Mike: 8:24

You know, I'm not sure when they moved out, but I know that they are. They still have like a presence and I'm not the greatest with these car companies, but I do know that my welder buddy from Michigan was in Kentucky for 12 months welding the new building in Kentucky. So as long as there's new like tax incentives and where people are going, like you know and was, apple just built a billion dollar plant in Raleigh, north Carolina as well.

Marcus: 8:53

So well, I didn't hear about that. Okay, so getting bigger down there.

Mike: 8:59

Yep, it's growing.

Marcus: 9:01

Yeah, and you were. You were about to touch on kind of your mindset of how you look at investing. So if we can jump into that, because you were like I followed the trends, it's all the neighbors game. It's not rocket science yeah there's a, there's a mentality. Uh, to your, your madness, I'll call it so there's nothing to it. What got you into like all right, I'm jumping into real estate? Yeah, I know Detroit is shrinking, it's not I'm. I don't know when you started if you knew Detroit wasn't your long term plan, but it sounds like your mentality kind of stayed the same. But then you found an end of the road in Detroit, so you went on to the next. You found an end of the road in Detroit, so you went on to the next, I guess growing population. So yeah, I would go back into your beginning, like your mentality has it changed? Like has it evolved? Or like how do you feel? Or what would you tell the audience? Like who was in your shoes, selling t shirts on Shopify and thinking about real estate?

Mike: 10:06

shoes, selling t-shirts on Shopify and thinking about real estate. Yeah, very good question. So, like I said, I started off like the biggest. All right, the biggest mindset shift I had in my life was actually way back when I was 13 years old. I was diagnosed with something called Crohn's disease, which is kind of like an ulcer in your stomach where it hurts to eat, go to the bathroom. I was on 16 pills a day and it's something. You have to go to the hospital once a month for IV drip and you know people get colonoscopy bags and they in hospitals and surgeries and life threatening as well. And that was the biggest blessing I've ever received in my life, because when you're a kid, that young, you don't think of life, as you know. You don't think of dying and death and the things that could go wrong. I mean because as a kid you could go like break your leg and then next week just go like run a marathon.

Marcus: 10:55

You're just like you're invincible, you recover very well.

Mike: 10:58

Yeah, right, like Wolverine, right. So that told me that life is like precious and that can be taken away at any time. So I really like I was like a stressed out kid, I was like a germaphobe and I was in all these school after school activities and then, like I really just focused on my health and I came across Jack Canfield's work who's chicken soup for this soul? There's a movie called the Secret and there's a book of it as well. I've seen the movie 18 times, from 13 to 16 years old. Okay, because there's a part in there where there's a lady who had breast cancer and they did an x ray and they could see the cancer in her breast and she just believed that she was healed. She ate right, exercise, watched comedy, relieved all stress, because a disease is your body that's not at ease or dis-ease. So she started focusing on healing herself, with no medications no, uh uh, no like treatment from doctors. I believe in six to nine months they did the x ray again and the cancer was gone and I was like, okay, so, like you know, I have nothing to lose, so let me try this Right. So, as I watched the movie so many times, I believe that was healed and I ate right, and that's why I'm like walking on treadmill desk with a 20 pound weight vest like to help my body and uh. So, going through that, from 13, 16, uh years old, I was taking 16 pills a day and then, 16 years old, I just like stopped cold turkey, which I don't recommend doing but I stopped, and I now I'm 31. So 15 years later, thank to god, I have not been a doctor's, I haven't taken medication, I haven't had any signs of, you know, struggles of my body, and I appreciate that a lot because I know that tomorrow could wake up and things would be completely different. That's the reality, right, that's the risk I took and, um, so that was the biggest mindset shift is like at a young age I learned that we don't have a lot of time and that you can do a lot. You can, you know, with your mind you can heal yourself, you can do whatever you want with if you put your mind to it.

Marcus: 13:22

Yeah, and I've read the secret. I have not watched the movie and I have not watched 18 times, but I've read the book. I know there's a series. There's like the secret, the power I thought there was two other ones, but so I read the secret after I read that book. Um, as you like, I always would do research on little things that caught my eye or you underline or highlight as you read, and I remember that was about the time that I started reading about dr sebi have you heard that name? No yeah he's a doctor. There's like a whole tinfoil hat conspiracy around him too, but he said that he would. He could cure cancer and that's basically what he got on trial for and they tried to discredit him. But all he was saying is like you can eliminate cancer or illness within inflammation everything is inflammation. What you eat and what you put in your body is causing inflammation, which will will present itself with this disease. So you eliminate inflammation, you eliminate disease. So, like eating better, exercising, doing all those things to eliminate the inflammation, will lead to a better, healthier he said something else about.

Dan: 14:32

He said saying something else about like reducing or trying to limit or remove, like the mucus within your body too, because that's what most of it binds to this is caused by inflammation.

Marcus: 14:41

Yeah, so like everything is mucus, but like it just ties in well with like you treat your body well and it will produce for you yeah so it's cool to see that at such a young age too yeah I was very blessed, like I said, so you know, going through that.

Mike: 14:58

So I took life like very like uh, you know serious, because I'm like I don. You know I met people who've passed away from it and you know I don't know what's to come. So I always live life like as if I'm gonna die tomorrow, but also if I'm like live to 100 years old, like. So I started working young because I wanted a car and you know I grew up middle class. My dad's a carpenter. So you know I want a car, a cell phone, anything I had to pay for. So I worked in the summer. 16 years old, I started working at McDonald's 20 hours a week, which is the legal limit you can at 16 years old, while going to school 35 hours so. I was just used to putting in the time. So I worked McDonald's busboy waiter, 19 years old. I actually bought a, which, if you're listening to this and you're young, you have young kids I highly recommend. I got an FHA loan, which is where you put three and a half percent down on a house. I only had $14,500 saved up, right, and I was able to put three and a half percent down on a foreclosed house back in 2012. So I bought this three bed, two bath house for $67,000 and, um, I moved in and I fixed it up and I did house hacking, which I didn't even know what it was, because there's I didn't. There was no podcast back then. It wasn't popular and um, and I did house hacking where I rented out the other two bedrooms that people was waiting tables with, so I just did like roommates. Yeah. And my mortgage was 600 bucks a month and they were paying 300 bucks a month each. And I was like, sweet, I got a free house, right, yeah, and I'm just paying a third of utilities going to community college waiting tables and and and so I did that. So about at 1922 I sold the house for$147,000. I was like, oh my god, which is so much money, because I had like $60,000 check I'm holding or something like that, and that's three years of waiting tables, like I was making 20,000 bucks a year, right. I'm like, oh my god, this is insane, right. So, um, I humbled myself, moved back home with mom and dad for another two years. So, even after having a house moved back home with mom dad within 30 days, I was like I'm gonna do this, I'm going all in. I bought another foreclosed house for 50,000 bucks and I fixed it up, sold that for 140, and and I was like, oh my gosh, this is so cool. And we just kept doing that over and, over and over again.

Marcus: 17:28

Nice. Your story reminds me of David Green because he always talks about his start and how he was a waiter and he would like mathematically find out what would be the best times to work, what would be the best tables. Like he had everything down to the dollars and hours and it was all to pump back into real estate. And then, obviously, as that took over, he stopped doing the waiter and then he became a police officer. And then he found out he could pick up extra shifts in overtime and all of it was just moving into this career real estate, overtime and all of it was just moving into this career real estate which it sounds like you're doing.

Mike: 18:08

Yeah, so I did that and you know, in between that was like trying to do financial planning and selling t-shirts. But you know I'm not as smart as David Green. I just went like I don't like having a job and I'm willing to work my face off. So you know, if I can, you know, work 70 hours a week and make a hundred grand a year without a job, without a boss, and flip houses, like I am set, like life is, like I've made it a pinnacle, right. So that was like my goal back then.

Marcus: 18:38

Yeah, and you? How old were you when you bought first house and second house? Was it 16, 17,?

Mike: 18:44

19, 19?. I was 19 years old when I bought my first house okay, and I sold it at like 22 years old and I bought my first flip okay so as a 19 22 year old range guy.

Marcus: 18:58

You're buying these houses. Are you fixing them yourself? Are you going to get general contractors and good question.

Mike: 19:05

So the first one I did myself. It took me six weeks to tile the bathroom my personal house. I hated every minute of it and it looked like crap and I was like I would fire myself if it took six weeks to tile a bathroom, like it was just so painful because I'm on youtube like how to tile and um so good question no, held up, it looks great. I just no, I mean it looks great, but it I realized I was like, okay, this isn't scalable with me doing it, this isn't my superpower, like I like looking at deals and analyzing and underwriting and hey, what's the value of the property? Um, I like doing that, like being business owner, not so much like the operator of it and like the implementer. So the first one I did myself. The second one, I bought the house. This is really funny. So I bought the house for 50 grand and I had $60,000 check. So I have 10 grand in my name and I own this house, this foreclosed house again. And I'm like dad, how about? Cause he was in construction, he had two, three guys working for him. So how about you have your guys go in there? They fix it up? You finance the rehab of 30 grand I already own the house and then we split it 50 50. I already took all the risk of buying this thing, yeah, and he's okay, cool. So then that's how we did it. He had his guys go in there, they fixed it up, um, and I was still not helping a little bit, but a lot less, yeah, and then it probably took me to like my fourth or fifth house when I was like, all right, I'm done, I'm not touching these houses. Like I was like mowing the lawn to save a couple bucks and, like you know, showing up all the time. And then I got to a point where I'm like, all right, this isn't scalable. You know, I hired a mentor, um, who flipped a hundred homes. He's like I don't see them in person and life is great. I chased my wife around the house all day and I listened to a podcast with that and I was like what, this guy's a liar because I'm doing one house. Yeah, I'm at Home Depot three times a day. Like I have no time, this is impossible. So then I learned like how to turn into a business instead of like a hobby, instead of like me doing all the work, but how to actually like you know, we have employees now and subcontractors and have the contractors and our standardized pricing sheet for the materials and and our lenders like how to actually make this a real business. So it's predictable and scalable instead of a one-off. We do one or two a year, um, we do about 20 houses a year, um.

Marcus: 21:23

Last year's a little slower, we think we did like 14 um, but yeah, that's where our business is at today okay, um, because I'm picturing, like me at 19 to 21, trying to vet contractors out like that's a scary because you don't know what you don't know and you already said, like that's not my superpower and that's not where your focus was going to be. So for for you to scale, there comes a certain amount of delegation and you're delegating to people that you don't know from adam you're just like trusting you with this, this, like I don't know why, I didn't know what a house was made of, I didn't know what was behind drywall I literally I was like I didn't know.

Mike: 22:02

It was studs 16 inches apart, insulation, so you know, wires and plumbing. Like I really had no idea. And like I remember I hired my first like this landscaper guy and I got you know. So, okay, and this is the thing you're gonna get, like taken advantage of. You're gonna hire the wrong person. That's okay, just realize it, it's gonna happen. Happens to me today. I'm not. I try really, really hard to vet new contractors, but it's just going to happen. And it's just like riding a bike or anything After a while. And what I did too, is I partnered up with my dad, who was a construction guy, so then he was dealing with the contractors. So I delegated that task to him, to someone else who was more experienced, who was older, not some 19 year old kid talking to contractors, right, and I was like, okay, I'll do all the other work find houses, raise the money, do the closings, list the properties. I got my real estate license. You just deal with the contractors and make sure we're not getting taken advantage of. And that's how we started the company. Um, so if you're new, you know, um, I recommend like I actually have a student right now and I'm just working on his first house and he's partnering with his contractor and they're splitting the equity on the property and so now the contractor is incentivized to perform because that's how he's going to get paid. Um, so there's ways to, like you said, delegate right.

Marcus: 23:26

You know, it's kind of like work on your strengths and outsource your weaknesses, yeah, so and that that caught my ear when you were talking about, like you knew from beginning on where your superpower was and you're like, all right, if this is going to go, this is where I have to stay, just so I don't clog the wheel up Like you want to create good, nice, well-greased wheels so that this thing can take off and if you realize that you are the dirt in your gear 100% bottleneck in your business. You got to step aside. Get somebody in that role to actually take it, and if that's their superpower, it's only gonna make it all better, and that's it.

Mike: 24:07

Like my contractors, like they hate doing the paperwork. So that's why I created this standardized pricing sheet where I have the material and labor broken down for 350 items we do to a house, down to the doorknobs, right. So there's no bidding. They know that they will show up, they do work here. Show up, they do work, here's the products. They make money. They love that. I make their job so easy because good contractors just want to do good work. They don't want to go do bids. Bid too much, they don't get the job. Bid too little, they lose money. That's not fun. Good contractors just want to show up and do good work and that's a. You know I'm I like doing that. I'm a very organized person, so like I use my superpower to help them. I'm always like how can I help make everyone else's job easier? And how much is it for that sheet?

Marcus: 24:53

I was going to dive into that one that sounds like super cool. So you use. You've got your Rolodex of that was a nineties reference. You've got your Rolodex of contractors that you use. Oh my God, what. Your contact list, your contacts 90s reference.

Dan: 25:06

You've got your rolodex of contractors that you use. Oh my god, what your contact list, your contacts?

Marcus: 25:09

that rolodex yeah, I remember the rolodex.

Mike: 25:12

Yeah, I know it's an old reference.

Marcus: 25:13

Everybody knows the rolodex yeah you're like you're working with those same those same contractors. So when you contact your electrician you're like hey, here's the scope of work. They can reference the page that you built like each outlet is going to be twenty dollars each yes, light is going to be fifty dollars. They know what they have to do, so they know what they're going to be billed. Yes, they don't have to come out and walk through the property. You can just give them the sheet. That's your price.

Mike: 25:40

That's what it is so, yes, so, uh, for 95 of the house it's uh, like it's in there. Uh, like you said, light switches, lights, uh, plumbing handles, doors, trim, price per square foot of paint, flooring, etc. Um, you know, there's things that's not in there, like you know. Like swapping out a electrical panel, I mean, I know it's going to cost me like about 2,500 bucks, but that's not in there because the price kind of fluctuates a little bit with material and labor on that. But everything else I can buy from Home Depot, like, cause all of our houses are Home Depot houses, like we have all the products just listed out the toilets and Vandy's and faucets and everything, and then I have the labor for each thing. So this helped us a ton because we were paying our guys at first like hourly, and when you're paying your guys hourly they're incentivized to work slower to do the job. They make more money. And so I flipped the script Now they're incentivized to work quicker so that they'll make more money. Right, it's like a commission base, almost that's how we do it. We pay 50 of labor for uh for each cabinet and in a house with, let's say, 12 cabinets, that's 600 bucks. How long is it gonna take you to hang six uh, cat or 12 cabinets oh, I mean another guy four hours, right, you want to make 600 bucks in four hours? Cool, go do that, right. So it's taken our rehab down time down from six weeks to four weeks, which saves us money on overhead of property taxes, insurance, cost of money, all those, all the overhead. And then they work quicker, so they get a job quicker and then they can work on the next project quicker and they make more money. They show up earlier, stay later and we don't have to babysit them as much because they know they get paid per task. That's done.

Marcus: 27:28

Right, and I'm imagining you don't have many subcontractors pushing back on that form.

Mike: 27:33

No, we've had three crews since I've almost started. We've only had one leave for six months because I can go make more money elsewhere. Because you know, ours is like a volume game 's like, oh, I get paid a higher like dollar per hour somewhere else. Okay, cool, comes back six months later. He's like, oh, my god, they didn't pay me their dicks. You know all these different things right, and all these change orders. I'm like, yeah, like we have no change orders, we're super easy to work with. We give them coffee and donuts, we give them chris, we do christmas parties at pop golf, we we give them birthday presents. We treat them like family and so they do a lot more for us.

Marcus: 28:08

When you help other people like that, yeah, and for contractors to delineate between, I'll say, a customer facing, where they have to go out and bid. Joe's bathroom. That takes all this time you have to pay out the job, uh, and then, like you said, are they going to pay? Like do we have to put a lien on this?

Mike: 28:31

like there's a lot of stuff on time I have another contractor who's been with us since 2017, where it really first started, and he used to do that work and he hated it and he has not looked back his employees like hey, we should do, because once in a while do some customers bathroom or something he's like no, he's like I hate that work because again, all those things do they pay, change orders, you know their quality, all these different things. And bidding too much don't get the job, bidding too little, um. So he's like so committed to us. It's awesome and it's cool to see like someone who used to do that line of work for like a decade before he started working with us and now he's like so committed to us.

Marcus: 29:10

He's like only wants to work on our projects because it's so easy for him yeah, and I mean I would have to say you are probably one in uh, one in few that actually offer a good as an investor, a good return or a good process for a sub, because you talk to subs now and they're kind of 50-50. They don't like the negatives of working with customers but they don't like working with investors because of this, and usually it's because like, oh, investors are trying to go cheap, you'll get work and you'll be busy, but you won't make a lot of profit because everybody's working on a budget and everybody's going to be super constrained. So they feel like, all right if I work with investors, only we'll be super busy throughout the year and we'll look super busy, but we're not going to be profitable.

Mike: 30:00

Yeah, yeah, no, I know I get that and that's why we only stick to about 20 houses a year. We only buy deals that fit in our buy box, Like we are very conservative, so that everyone makes money, so that we make money. At the end, our contractors make money and that's why I don't want to grow to like a hundred houses a year because I know my margins are going to have to shrink. My overhead's going to go up. So I really like where our business is at. We have a very small team, the overhead is not too crazy and it's profitable, which is I met people who they do a hundred houses a year and I look at their numbers versus mine and we make the same amount of money, or I make more sometimes because they have so much more overhead. So they look like, oh my God, look how successful they are. But they're like their business is basically on fire and it's like insane. So I've thankfully met and learned from people who have those types of businesses and I realized like, hey, at what scale do I want to be Like, how big do I want to grow this thing? And I really like where our business is at.

Marcus: 30:59

Yeah, it sounds like it's doing really well and that pricing sheet is such a good idea, like I know just from speaking to subs. If we had that up here, that would be that would alleviate a lot of tension from some.

Mike: 31:13

I have spent thousands of hours putting that together and three developers, tens of thousands of dollars putting it together. It took years, but I knew because I learned it on my second flip. Like god love my dad, but it helped me learn real quick. On the second flip I'm like, hey, uh, it was like a 14 square house, how much is it going to cost to rehab this house? He just walks in, he's like, all right, 14,000 bucks. And I'm new, I'm like, okay, or 15,000. And I was like, okay, all right. So here's the number I plug in my calculator 15,000. Boom, we can buy the house. It works. I'm like sweet. And then like the end of it it costs 45 000 to rehab. I'm like dude what the heck you can't like he's like I'm sorry, I messed up, like that's all the profit. We literally we made nine thousand dollars on our second flip and I was like, oh my god, like what the heck? I couldn't work at mcdonald's and made more money, and I hate working for free. So I was like, all right, how can we like fix this so that we don't just walk in and like maybe it's this right and just throw a ballpark number? No, but actually you can even fill out the sheet beforehand and, uh, get to 90 accuracy before you can start the project because you're plugging everything in. I mean, there's, of course, the things you rip something out, there's mold or you know rotted boards sure, there's always that.

Marcus: 32:21

But you can get like really, really close instead of just walking and throwing a pie in the sky number yeah, yeah, and it makes the process so much easier and I imagine, as you're going through your flips, you probably have that form like making notes of what all needs to happen yeah.

Mike: 32:38

So you know, at this point, like I said, our contract has been with us for so long. They we just give them an address and we show up. I have my actually partner drove down here from Michigan here and he goes there once a week checks on the guys. But they know exactly everything to do because they've been with us so long. So he does walk through it like hey, we're going to do this, we're going to add a bedroom over here, we're going to do whatnot, and then they know all the materials to do. And then it's cool, like so I built this out for the flips and then, in 2020, started buying apartment buildings and I've used the same thing for apartments, because apartments is the same process of finding a deal, rehabbing it, managing it, raising capital um, it's just more zeros at the end. So I'm making 35 000 per flip on a house. You make like 700 000 on apartment building and we use the same pricing sheet. Like I'm. I'm actually going up to north carolina in two hours to go check my 19 unit. We're ripping apart right now for this contractor I found. I showed him the sheet. He's like oh my god, this is the coolest thing I've ever seen. I was like I know, um, and it's working with him and they're actually putting a cabinets in five of the units right now. We just bought a 44 unit in Kentucky and, doing the same exact thing, I just sent the scope of work to our property management company yesterday Cause we're going to be rehabbing units over there. And it's cool Cause, like all the work I did in the single family space, you can just move it to the multifamilyfamily space and so it's like transferable, like all the same skills I learned yeah in like this pricing sheet yeah, and now that you've been doing flips for so long, now you go into the buy and hold uh, investment style.

Marcus: 34:20

Do you like that style? Is that why you went there? Or was that just something new? You wanted to like try and flex a new muscle and see if you could take it somewhere? Good question.

Mike: 34:32

So a little bit of everything. Like you said, flex a new muscle. I didn't buy my first rental until 40 houses. I did 40 flips. So I meet a lot of new investors. Like I'm going to wholesale, I'm going to flip, I'm going to do some burrs, I'm going to do all these different things and you're not going to be extremely successful at any of them unless you focus. So I became the best. Like I created that pricing sheet. I put all the systems that's just one of the things in our business All the systems and processes in place before I could take my eye off the ball and focus on a rental, because it's different. I was looking to build a cash producing machine and then, once I got to a point where I was working only about like five to 10 hours per week on the flipping business because I hired someone else, olivia, who's my office manager, takes over my day-to-day operations and she's underwriting deals, submitting offers, title companies, lenders Then I could like, okay, flex a new muscle, try something new. Right, like I'm kind of bored in this because I've created a really good system, which is good, and then there's also more benefits. I can make more money. Flipping is our first. One is a 16 apartment building. And then also the cash passive cash flow. And then I've learned you always have a money problem. Did you know that you always have a money problem? yes because when you're poor, you have a money problem right, and when you're wealthy, uncle sam wants half of it you have a money problem. You have a new money problem yes and uh, the beautiful thing with real estate like how like Trump and all these rich people like really mitigate their taxes is buying commercial real estate. There's a lot of depreciation you can actually use to offset your active income of flipping houses. So it's just nice. There's a lot of tax benefits. And to everyone listening, I'm not a tax advisor, CPA. Talk to someone else. I barely graduated high school.

Marcus: 36:29

Don't listen to me it's a good disclaimer right there just for entertainment purposes, but it is true. So you kind of moved into rental um one because it was kind of an easy transition.

Mike: 36:40

But also in the game of chess that's kind of like the next move where so in two and I met my buddy and you know I was so like like my first mentor is Justin Williams, the guy who flipped a bunch of houses. I went and learned from him. And then I met someone else who, which is great, like that's a great business. But then I met someone else who my my partner, adam. Now I'm very blessed to call my partner. He had like like 55 units, he owned himself, self-managed it and everything, and him and his family go to Hawaii for four months a year and he's from Michigan and he leaves Christmas day. After Christmas, december 26 comes back, you know, middle of April and uh great time to be out of the Midwest, yeah he times it perfectly. Yeah, um, and his kids are homeschooled and I see his life, I'm like, wow, like you know, he's like, he's showing me the numbers. He's making almost twenty thousand dollars a month because he's managing it and it doesn't take a lot of time. He's got a maintenance guy and he's just like living life. You know, I call him at two o'clock on a tuesday. What are you doing? I'm taking the goat to the vet. When you're taking the goat to the, I mean like he just does whatever the hell he wants. So, uh, so, like you know, flipping houses is like hairs on fire. I feel like all the time it's like, ah, you like you make a lot of money. But then I also wanted, like the long-term thing. Like I know, social security is not going to be there the day you stop flipping houses, the day your paychecks turn off. Um, with buying, you know, apartments, you can, uh, it's. It's amazing too. You know what's crazy. So I have this 16 unit apartment building in north carolina, beautiful brick building. Uh, all the units are two bed, one and a half bath, townhome style, hardwood floors, gorgeous, on two acres. I mean, it's my retirement plan, it's a beautiful neighborhood and it was built in 1965 and I and I'm like, how much was this thing built for 1965? How much do you think a 16,000 square foot brick apartment building, 16 units, was built for 1965?

Marcus: 38:50

37,000 this is in.

Mike: 38:53

North Carolina, near Greensboro, I would say $37,000 to $45,000.

Marcus: 39:00

I want to go to $70,000 to $80,000.

Mike: 39:03

Wow, all right. Well, I was way off. You guys are very conservative, but that's good. So it was about. So I looked, the average house price in 1965 was built for $16,500. So I'm not good at math, so I'm going to round it up to 20,000, cut it in half, because for a unit so it might've cost about 160,000, maybe you know a little bit less, 120,. Whatever it was to build this apartment building it just appraised two months ago for $1.7 million. Wow, right, that is a thousand percent return. It's a 10x in 60 years and the tenants paid it off 30 years ago yeah right. So my goals, my goals like to own. Like my first goals, I was like I want to own 10 of these 160 units. You know we make 3,500 a month on this thing. We just cash out refi. We got all of our money back. Own 10 of them, that's $35,000 a month. My tenants pay it down, the cashflow goes up. We just bumped from 925 to 975. We just signed two leases. That's 50 bucks a month. Each time. 16 units is 800 bucks a month. I can get a new car every single for the rest of my life, right, uh. And then the appreciation goes up, the debt goes down, the cash flow goes up, um. So it's a very long-term play, um. But my goal right now is to really stack them and not sell them for until I'm very old or pass them down to my kids yeah, no, that's cool.

Marcus: 40:34

And are you, now that you've dabbled with both and you've been successful in both, do you like the path that you took? Or if there was an investor coming in saying like, hey Mike, where should I start? Do I start in single family? Should I start with the fourplex? Should I go big, go with an apartment complex? Like you, having a very good mindset in a viewpoint that not many people would have, what would you suggest with somebody that's trying to get in?

Mike: 41:01

Great question. So I honestly liked the path I took. I know a lot of people say, just go straight to multifamily, grant Cardone, all those big things. But I have friends who right now started in multifamily. They're engineers and doctors and had good hearts. They started in 2020 and they're getting wrecked because they like it's okay to mess up the rehab on a thousand square foot house right on a hundred thousand dollar house. You mess it up a little bit, you can survive, but you mess up the rehab on a two, three hundred unit apartment building and you get that number wrong. You're talking about millions of dollars when you know. So I suggest everyone to go cut your teeth in the single family. Go make mistakes, cause you're going to make mistakes. You don't know what you don't know and, like I said, the same skills are transferable, like learning how to do a purchase agreement. Do you want to learn how to do a purchase agreement on a $10 million property or an a hundred thousand dollar house? Right? Learn how to rehab and estimate repairs and get insurance and taxes and do the whole closing process and working with contractors and then doing it over and over and over again. Like I said, flexing that muscle. You said that a few times. I love that and it's just building the skillset. So I don't recommend just going into this like just go to the apartments, buy something big and then hold on to it and whatever and hope it works out, because you don't know what. You don't know which is like the biggest. I mean like you can get sideswiped. I have friends right now they're losing their apartments because they started off in that industry and they just thought it was easy money and they were buying on variable rate debt and now interest rates tripled and now the deal doesn't make sense anymore. They estimated construction costs wrong, you know, by a few million dollars, because it's a tens of millions dollar apartment building and now they're losing the properties. So I recommend getting started in the single family, get really good at it and then even partnering. That's like what I did. I partnered with my partner Adam. He had 40 something units and I partnered with him on the six unit. I found the deal. This is great. This is like the best way to get started. I found a six unit apartment building on Facebook marketplace. I negotiated seller financing and so we had to put like 65 000 down on. There's purchase price was like 225 or 205. And so I told my partner, adam. I was like hey, I don't know what the heck I'm doing, I don't want to mess this up. I've never collected rents before, I don't know the laws of leases and deposits and all that stuff. So I found this deal uh, let's go in together. I'll give you majority of the equity Just make sure I don't mess up and I'll manage the entire rehab. So then he's like oh, I made it so easy for him to say yes. Cause he's like oh, mike already found a deal, negotiated seller financing. He's going to do the construction part. I already managed my apartments. I can manage six more units. Okay, cool, right. And then, um, and then we just started like that's how we built that relationship, but adding value to people, like who you want to be like. Like, if you want to be like a flipper, go find someone and add value to them. Like, go find them a deal and say like, hey, I found you a deal, because that's what I need. Like, as a flipper, I need another house to flip. Go find a deal. You want to learn how to flip houses? Go find me a deal, I'll pay you for the deal. And then I'm like hey, you want to see what it's like walking with contractors before the beginning, the middle and the after and learn the entire process. I think that's a great way to get started.

Marcus: 44:27

Yeah, I mean you basically just assume the JV role on that one and like built in a very good educational piece to it and you chalk up like who knows how much money you would have lost on an error, like if you would have messed up and done it yourself, thinking like all right, I'll take all the profit, this is going to be our good one, and you make a twenty thousand dollar error like if you could have been the jv, paid this guy 15 grand. Let's just say to be like your mentor through it exactly majority. I mean you save money and you learn the correct way to do it so you don't upset contractors or upset the municipality when you're doing permits or like all the toes you can step on exactly because you don't know, you don't know and like even one thing I learned from uh, my multi-family mentor, is environmental reports.

Mike: 45:18

Like, did you, do you know what environmental report is A? Phase one environment. Okay, so in commercial we don't have this in residential. You're supposed to get a phase one environmental report. Because if there's an old oil tank in the ground or there's like the soil is contaminated, it's the, it's your's, your problem if you own the property. Even if that issue happened like, oh no, someone else did it 50 years ago, it's your problem. Now you got the epa to deal with and the you know fees and fines and for them to do it's gonna be hundreds of thousands of dollars to rectify it, right? So my sixth unit that we bought was actually it was like in the downtown right next to it was a little oil change shop and I got on seller financing so I didn't have a bank saying "'Hey, mike, you should do a phase one environmental". But I hired someone to teach me that so that I can sleep at night. Cause, like if I didn't know, like "'Oh, my gosh, you'll be checking for phase one". And there's an old building and there's an old house cut up into a six unit so there could have been oil tanks in the ground. It's next to oil change um facility and to someone the untrained eye wouldn't see that as risk factors, right, because you don't know. Yeah, but I saw those risk factors. But I got a phase one is all good. And then, when I was able to sell it, they're like oh, we need to do a phase one environmental report the banks are asking for. I'm like, oh, I did one two years ago, here you go, right. And then, instead of me like freaking out like, oh my gosh, like what is this, like, what does this mean? And then I'm stuck with a potential big problem, right?

Marcus: 46:46

so and I I on the agent side I've only had to deal with that once, but I didn't. I wasn't hands-on. There was a buyer who was buying vacant land to put up storage units and they had to do the environmental test. So I dipped my toe in the water but I was not hands-on in what is all needed for that one. But yeah, there are some things in the commercial space and that's the other thing. With residential and maybe this is just a personal thing I feel like it's a lot more organized in what you need, um, or it's more familiar. But when you get into commercial space, I always think about it like the wild west, like there are so many more things. There's all the testing you need. The permits are different, uh. Your licenses are different, uh, you have to apply to like, uh, ada yeah, you have to need surveys and yeah, it's a lot more much more involved in it that if you were going to go jump into commercial to assume the jv role on at least one or two or five deals, yeah, know that you're going to like touch all your bases and know what you have to do is a, a big, just like a I don't know bit of advice if you're going to jump off yes, exactly no um, but I know we are, excuse me, we are out of time. You've got some work to do here on a friday, so we'll let you jump off. Um, I appreciate your time. I'm hoping we can connect with you later because I want to see where this multifamily takes you as well. I know your flips are going to jump to thousands by the next time we talk to you, but I like rentals. That's where my heart is, so I'm going to keep track and keep tabs on you to see what your rental market does.

Mike: 48:33

I love it, man. Thank you very much for having me. Marcus and Dan, I just threw in my Facebook profile in the chat. Follow me on there. I try to be very active on Facebook. I try to post once a day inside of my Facebook group called Real Estate Wealth Builders. I have like 13,000 followers on Facebook. My name is Mike Manino. It's a black and white photo and I highly recommend joining our free Facebook group called Real Estate Wealth Builders, where I'm actually jumping off to do a free training right now on this real estate. It's a real estate investor CRM, so I make a point to post inside there every single day. We have 1400 members inside of that group right now. So that's like the best way if you want to get in touch with me is go to Facebook real estate wealth builders, or you go to our website, rewbuilderscom. That's rewbuilderscom and there's like free resources. I got how to flip houses, how to wholesale apartments, make $175,000 wholesale fee and how to join our free Facebook group.

Marcus: 49:34

That's awesome. We will put all those links in the show notes. So if you're listening to the show, go to the show notes. All that'll be attached there. But amazing information and thanks, man. That's on getting there. You built something super cool, so congrats.

Mike: 49:49

Appreciate it. Thank you, guys. I hope I added value to you and your audience today and I'm looking forward to our next conversation sometime soon absolutely, absolutely.

Marcus: 49:59

How many miles do you get to during the show?

Mike: 50:03

let's see a good question. Let's see, that's my last question of the day yeah for the people that aren't watching the show.

Marcus: 50:10

He's been on a treadmill with the weighted vest this whole show. Breathing has been just flat.

Mike: 50:16

Like you, couldn't even tell well the 20 pound weight vest. I've done two miles.

Marcus: 50:20

I've done 4 400 steps that's a productive show, educating people getting healthy. I like it love it, man. All right guys I'll see you awesome, have a good weekend.