Episode 86 of the Diary of an Apartment Investor Podcast with Michael Becker and Brock Mergist, hosted by Brian Briscoe. Transcript by Otter.ai - please forgive any errors.
Brian Briscoe 00:00
That said, you know, Brock, we got Michael on the line, what do you want to ask him?
Brock Mergist 00:03
Just starting out, like how do you become relevant to brokers?
Michael Becker 00:08
it's getting on the list, making sure you download all the packages, making sure you reach out to them, you know, try to to work, try to get feedback, you got to look at, you know, numerous number of deals, make several offers come up short, you know, a few times. And eventually if you kind of in the mix a few times a broker, you know, starts to recognize you, you've been there you've been participate in the process and you've been making progress, you're gonna get a little bit of data every time you do that, and you start kind of making little adjustments to your, your offer process, your underwriting process, whatever, you start making little incremental differences along the way, and eventually you're gonna you're gonna get one so it's kind of a kind of a journey in the process.
Brian Briscoe 00:54
Welcome to the Diary of an Apartment Investor podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals the apartment investment fields to discuss various aspects of the apartment investing journey, with the sole purpose of educating listeners to make wise investment decisions. The Diary of an Apartment Investor podcast is sponsored by Four Oaks Capital, bringing you high yield returns through apartment complex investing. This is journal entry number 86. And part of our Ask the Expert series today we bring in an experienced investor and smartest man in the room, Michael Becker and aspiring investor rock merges. Keep listening for tips on how to build broker relationships as a newer investor and how to increase your deal flow. And now the show Welcome to the diamond apartment investor podcast. I'm your host Brian Briscoe with frogs capital. I'm super excited for today's show. It's one of our Ask the Expert episodes. We have two amazing people on line with us. We got a man with a ton of experience in real estate lending and investing Michael Becker and a very motivated and energetic aspiring investor Brock merges First of all, we'll introduce Michael he's the principal at SPI advisory and heads SPI in Dallas, Texas office. SPI advisory specializes in repositioning multifamily assets. Prior to forming SPI he was a 15 year veteran of commercial real estate banker and originated and manage numerous portfolios of permanent and bridge loans in all major asset classes. He's a lifelong resident of North Texas and a graduate of the University of North Texas with a bachelor's in finance. And under his leadership over the last eight years, SPI Advisory has acquired approximately 10,000 units in the Dallas Fort Worth and Austin markets. So that's super impressive. That said, Michael, welcome to the show.
Michael Becker 02:29
Yeah, thanks for having me. I'm excited to be here.
Brian Briscoe 02:31
Yeah, this is this is great. So I've been a fan of yours for quite a while now. As we just mentioned in your prior to recording. I've been listening to old capital podcast for a long time. You know, I think it's one of the better podcasts out there chock full of information every time understand you have a new podcast out now to write.
Michael Becker 02:48
Yeah, just start a new show called the multifamily investing show with Michael Becker. So excited about that to say we're doing it in studio. So a lot a lot of work actually go into the studio versus doing your office but we're really kind of getting some pretty high level guests. You know, folks have a lot of experience. brokers, owners, you know, people that do you know, billions of dollars of transactions and owners that have had, you know, 10s and 10s of 1000s of units. So pretty, pretty excited about it's kind of you know, there's a lot of freshmen or sophomore classes out there. It's kind of like graduate school a little bit, you know, what I'm trying to go for so excited you find that on a, you know, iTunes, Stitcher YouTube channel, or just our website, so it's just multifamily investing show.com No, the just www dot multifamily investing show.com so excited about that.
Brian Briscoe 03:32
Perfect, and I'll put a link to that in the show notes. And incidentally, if you can watch the videos live in studio and it's a little bit different it's kind of more of a high class you know, when you look at it so for me as a template Oprah you know, yeah, it's good. It's really good. And you know, the episode I listened to one episode, but it's I've subscribed now I'm going to listen to a whole bunch more, but he's right. It is graduate level and there's there's a lot of very high level guests. You're right on Michael Becker's level so perfect for that said podcasts aside, tell us a little bit about your background and history and what got you into active apartment investing?
Michael Becker 04:05
Yeah, as you mentioned, I come out of the baking business. That's really kind of where I learned the industry was a longtime commercial real estate lender. Last maybe five or six years of my professional career, I focused on multifamily lending, I did a lot of stuff kind of coming out of the Great Recession. And kind of through that process realizes on the wrong side of all those deals kind of bet me that the borrower, the lender, and get really, really started out like a lot of people in 2010 or 2011, started doing some little small single family houses kind of coming out of the Great Recession. But a foreclosure, renovated it, fix it up, leased it out and ended up doing 16 of those and just kind of realized it wasn't very scalable, and I realized I wasn't really utilizing all the resources and knowledge that I had at my disposal just from being a banker loaning on multifamily properties. So went out and started buying properties in 2013. I left the bank in 2014 and started SPI and You're over 10,000 units later, which has been a pretty good run, you know, based in Dallas, my partner, my business partner, Sean is based off since we have two offices. And those are the two primary markets that we focus on those two pretty high growth and attractive, attractive markets for the multifamily very, very competitive out there was more today than it was when we started. So it's kind of a, it's been, it's been a fun ride. And, you know, as we talked today, we have about a billion dollars of assets under management 6000 units, we sold off about 4000 over the years.
Brian Briscoe 05:33
Okay. Yeah, that's, that's significant, actually. I mean, probably the, as far as assets under management for the guests I've had, I think that puts you in the number one spot. So yeah, very, very impressive. So what was the transition, like from the lending side of the house to the purchasing and management part?
Michael Becker 05:52
Now, we had a lot a lot of transactional experiences by being being a banker, or at least part of the transaction, which, which is kind of one of the biggest parts which is doing through the debt. So we had a lot of experience from from that standpoint. So really, it was it was kind of transitioning and learning a lot of some of the other aspects of the business. And then once you get you bought the deals, you had to figure out how the heck to actually run and manage the savings and keep them together and execute your business plan. So it was it was pretty smooth, you know, I was pretty motivated when when we got going, which is why we've done so much business and kind of hit the ground running, you know, I was I was ready to not be an employee ready to go start kind of my own my own venture. And, you know, I've met my partner, Sean, when I was working at Wells Fargo, and he was working for a broker out of California. And so he was helping people buy properties in Texas, I made a loan to one of their clients, that's kind of how we got together. And he had some equity, we kind of understood that he had equity source, we kind of understood the debt, and we, you know, had a bunch of relationships and connections in town. And so we're able to kind of put the deal together, you know, the biggest challenge for me, Ryan was really getting the market's perception of Michael Becker from, you know, lender to being a principal. And that's really what I had to had to kind of overcome. And I found this relatively easy, all you got to do is one deal. And then everyone, everyone realizes you can do it, that's maybe a little easier said than done. But I guess kind of the point is going from zero to one is kind of kind of hard, it's really hard. And going from one to two is you know, exponentially easier, it's probably 10 times easier doing your second deal than is your first deal. So it was a it was a little bit, it's a different market at the time was 2013. So the deals were much easier to buy from the standpoint that wasn't as much competition. But the deals may be a little harder to do, because that was harder, equity is harder, and everyone was so scared that we're gonna bounce right back into the Great Recession. Oh, yeah. You know, obviously, you would have had a heck of a good run for, you know, many years now.
Brian Briscoe 07:50
Yeah, you know, a couple of points there. And I think a lot of people, when they're transitioning into this business, come up with the same problem, they hit the same problem, they have this this image in everybody else's mind. You know, I remember the first raise we did, I'd call all the people that I knew, and I'm active duty Marine Corps. And when I tell people I was, you know, trying to purchase an apartment building looking for investors, the most common question I got was, aren't you a marine? Or did you retire already, or something like that? So I think that's a very common trend among among people who are transitioning into the business, you know, fortunately for you, it's seems like it was more of a sidestep than a full stop and and go a different direction. But
Michael Becker 08:32
yeah, I've watched a lot of relevant experience where most people who start this business where a marine or an engineer or a salesperson, whatever they are, so my experience is extremely relevant, transferable. So it I certainly had a shortcut, I guess, compared to a lot of people. And that doesn't really my thing, I wasn't utilizing all the knowledge and relationships I had, and the most effective way. And that's really kind of what I needed to take the leap and go out and do.
Brian Briscoe 08:59
Now the you talked about some of the smaller stuff you did individually, but once you get your partner, what was your first deal like, you know, larger apartments?
Michael Becker 09:07
Sure. first deal ever bought was 120 units and garland Texas was built in the mid 70s. So it was kind of a see property and see location, and we think we paid 3.8 or $3.9 million. And wow, you know that for about two and a half years. We just renovations that raise 1,000,002, which was kind of scary. But you know, fortunately, my partner had equity sorcery to kind of get that done. We sold within about two and a half years sold it for I don't remember six and a half million dollars. No, it sold two years later after that for about $10 million. It was probably worth $12 million today. I don't know you know, we sold everything too soon, I think is the moral of the story.
Brian Briscoe 09:47
Well, yeah, I don't know. I mean, depends on what you do with the profits if you if you roll it into something larger, you know, maybe maybe it's not too soon, but you know where you guys are at in the market cycle I think was a perfect time to begin. You know, I I started my real estate adventures in multifamily, you know two years ago towards the top of the cycle I mean, you know, you never know when you hit the top or you never you know if we're at the top going back down right now but once it's in the rearview mirror, it's easier to see but i think i think you timed it well and the economic upturn the real estate cycle and you hit the the upswing, so, you know, kudos to you.
Michael Becker 10:19
Yeah, no, no question. And I mean, a couple couple thoughts. I mean, I was really intentional when I saw these deals kind of start I saw the bottom because I was pulling in money or working problem loans out one of the one of the twos I was working problem loans out when I saw the bottom, I kind of saw the upswing. We started loaning money again, it started getting a little bit a little bit easier. And I kind of thought I thought we had a pretty good, pretty good way, I didn't think it'd be quite as quite as large as what is what it turned out to be obviously, I had no idea was going to be quite this But to your point. Yeah, I mean, I I kind of have kid but I, we did. So a lot of stuff probably too soon, we probably could have refinanced or kept some more. But by being able to sell these early deals, that gave us a track record, we kind of got proof of concept going full cycle. And we've sold Jeez, what 2020 years deals, I think in my career now refinance, eight or nine, so come full cycle on, you know, many, many deals, so that now allows me to attract capital much, much greater an easier way than what it was when you first kind of starting out because that, you know, proof of concept, you know, repeatedly. And we did buy bigger, nicer, better stuff. So I don't have too many regrets. But I you know, I didn't quite realize when we're buying properties where that eight, eight and a half cap that, you know, we had 20% upside of rants and they weren't billing back water and sewer. So maybe another 10 or 15% upside in income. And when the cap rates went to about a six cap we sold I don't know they're gonna go like four and a half and Dallas was turning into a new Los Angeles, basically. But it's been Yeah, it's been a heck of a good run.
Brian Briscoe 11:46
Yeah, report last week said Dallas is the new New York, you know, and replaced New York is that the top spot for investments, so a lot of good stuff going on in Dallas and couldn't have timed it better. So along those lines, I mean, you've got a lot more experience than than I do. Definitely. Where do you think we are in the market cycle right now?
Michael Becker 12:03
Well, I mean, I think it kind of depends where, where you're located or where your real estate is located. I mean, for my wife, I sit in the view I look at, I mean, we sat at home last year for three months and kind of total her thumbs a little bit and we got right back out in July hit and was like, Let's go again. And then yeah, pricing is higher than it was kind of pre COVID I mean, we've had a little bit of disruption in operations. So historically, my portfolio by successive units, you know, historically would have about 1% of our scheduled rents either be delinquent or not collected and you know, we got to about three three and a half percent for most of the latter part of 2020 and kind of in December, the most recent full month that we have we were probably close to 5% delinquencies I think people kind of prioritize paying paying for Christmas gifts for the kids versus paying their rent a little bit and then now we're kind of in 2021 we'll see kind of kind of where this goes though eviction moratorium got a you know as we record this extended to the end of July this new administration coming in so I'm assuming this can be extended again, but there was some rental assistance so it was kind of unsure exactly how that's gonna roll out but I think we'll we're gonna be okay and then you know, pricing the cap rates are compressing We own a Dallas has gotten extremely expensive in the eight years I've been owning I mean, generally speaking, what I like to say is the years I've owned and the workforce housing space in particular, rents have doubled and prices have tripled and in my my career and if you go to Austin I mean it's almost I say impossible it's very hard to find hardly anything that has a cap rate the stars north of a four I mean we're in the three threes down in Austin now which is which is crazy but you look at it I mean Tesla Oracle and all these major tech companies are moving their sauce is turning into the new Silicon Valley and you know, they're everyone's expecting a yield dramatic rental rate growth and and so they're kind of paying paying up today because expect to get you know, great rental rate growth so I think if you're in Texas, you're in Phoenix or in Atlanta, you're in the Carolinas you're in Florida, I think everything's you know, really bright and I think there's a lot of rental rate growth and population growth and job growth I think those are you know, good future I think if you're in California I think if you're in New York, you're in Detroit or some of these other markets I don't know you know so there's this this markets gonna be tale of two cities for sure kind of that concept where yet you're on markets and you're off market so it'll be very desperate. And how long does that go? I don't know. I mean, there might be some some opportunity to go buy a Manhattan if you think about it. Right now as we record this, you could buy a generic at suburban multifamily property in Dallas. Whatever just random suburb Do you want to say the garland like the property which garland if anyone knows, remember that TV show king of the hill that was based off of garland texted the golden darlin but as nothing fancy, the cap rate in Garland, Texas Right now as we talk is lower than the cap rate in Manhattan with drops, one has that ever been a thing? Yeah. You know, that just tells you how different the markets are reacting right now.
Brian Briscoe 15:11
Yeah. You know, I was looking at a report from Marcus and Millichap the other day where each city was in a specific cycle. And I can imagine, you know, a couple, I don't know how long but deals in a bigger cities are going to come around. I think New York is going to recover, you know, the the some of the bigger cities are going to recover. I live in DC and you know, DC is taken, you know, a little bit of a hit, too. But yeah, I think I'm excited to hear would you say we were investing in the Carolinas and Georgia, those are areas that we're we're very bullish on we're very optimistic about so.
Michael Becker 15:45
Yeah, solo jobs, and people follow jobs, and you'll get lower regulated lower text areas. And that's been the economic migration pattern that I've observed for the last 20 years and COVID is just the accelerator this making go quicker? Yeah. So what what was already happening is just accelerating. So I think you buy suburban Charlotte or suburban Atlanta, I think you're going to just find,
Brian Briscoe 16:06
yeah, yeah, I grew up in in Utah, and six months from now, we're going to be moving to Idaho. I've been kind of tracking the markets there. And what's not every year it's on fire. And everybody's talking about the California money. Everybody's leaving California, California, money's pushing prices up. And they are on fire. Because you know, people are leaving California. And you know, companies are leaving California, you know, and you're right. I mean, there, there's been reports of big companies saying, Hey, I'm tired of the California taxes. I'm tired of the California restrictions. And Texas, here we come. You know, and the southeast is the recipient of a lot of a lot of that as well, more from the northeast on this coast. But yeah, I think that's that's the demographic shift. It's been there for a while. And you're absolutely right. COVID when people have started to realize that they don't have to live where they work anymore. I think that's going to well, it has and it will continue to change the landscape of real estate. You know, you don't have to pay New York prices to work in a New York company and get a new york salary. That's right. Oh, yeah. Bingo winner. So well, that said, One question I like to ask everybody is what is your big burning? Why? What's your motivation for investing in apartments?
Michael Becker 17:18
Yeah, you know, for me, I just wanted to get out of being a banker. I didn't want to work for myself. I mean, I, someone asked me a similar question, and not too long ago is reflecting back when you know, I'm in my early 40s, I'm 42. And so I remember I was working for working when I was going finishing up college for IBM and 911 happened and I kind of over like a two or three year period as I kind of finished up college. So I worked with the night school, I had, like several rounds of layoffs, I survived going through from right after 911. Yeah. And then I got back into the banking business. And I did that in 2008 happened and my bank got purchased by I was with a regional bank were purchased by Wells Fargo, that didn't happen, we would have failed. And then even at Wells Fargo, I think there was like one or two rounds of layoffs that I survived. And so I really kind of ingrained into me that even if you think you have a secure, safe job, and a really large company like IBM or Wells Fargo, they don't, you know, it's not I mean, they, they, you know, they need to improve the bottom line, there's some disruption in the business, you know, that you're gonna you're going to, you know, hit the hit the street, so really, really kind of shifted my mentality, my mindset that, you know, working for somebody else is riskier than, you know, kind of trying to control my own destiny, at least from this kind of maybe a little counterintuitive thinking, but that's kind of where my mind went kind of living through that. And then, when I was at the bank, I was a really successful lender I made, you know, you know, lots and lots of loans on multifamily. And, you know, it was really well known and in my market, and they kept trying to promote me and I didn't, you know, I always look at my boss, and I look at my boss's boss, their boss, and they're kind of like my career trajectory, and I just got depressed, I didn't want to do what they did for a living and just didn't make gibby excited. So I was about 35 when I when I left and so kind of like the fork in the road for me, kind of metaphorically, but if that felt real, that I you know, every year I stayed was gonna be that much harder, you know, you're gonna get that much more stock options or that much more older you kids, you know, your wife, and kids and all that all these responsibilities. So it was kind of my moment in time. And the market timing I thought was really attractive, as we kind of previously discussed. So it was really, really that and then kind of now what we do is, you know, trying to take this company that we now build, we got a we got got a lot on our plates, and how do you scale it and systematize it and keep it all keep it all good. And take this away from you know, the bigger we get, the less this company needs to be about Michael Becker, the more it needs to be about our SPI and our culture and kind of build a perpetual company that can can go on for years and years. That's kind of what we're what we're kind of working on now. So it's a little bit interesting because I was always the guy that did live deals and now you know, how do you how do you run and manage a company that's kind of the more interesting part of it for me
Brian Briscoe 20:00
Yeah, I think I think from your your story that there's a lot of common trends there, you know, a lot of people suddenly wake up and think that this the secure job safe and secure job they have is actually not security. And I'm glad you said that. I mean, it is very risky to have a single income and something else. I mean, I'm in the same position right now, where I started looking at, you know, where I am in the military has a very rigid hierarchy and rank structure, you know, looking at where I am on the totem pole right now, and I'm looking at one level up, and the jobs they have, and it's like, I don't want to do what he's doing. I don't want to do what he's doing. I don't want to do what she's doing, you know, and that's, that's, that's where I'm sitting right now, too. And, quite frankly, that's why I'm running podcasts on my days off. So there we go. But well, good. I mean, that's a lot of a lot of meet a lot of goodness there. What's next for you.
Michael Becker 20:49
We're excited about 2021 kind of more of the same and we're going to continue to grow we have two deals actually we're working on right now nice. an escrow kind of raising money for so that's, that's exciting. We last year, we were in 2020 repositions, sold off most of the remaining work 4000 we have, we have just a couple deals left and continue to buy nicer stuff. I think eventually, I don't know if this year might be the year we try to get a third market, we're kind of circling San Antonio for us, which is kind of the next logical market stay out of Houston. So I think we might buy a couple things in San Antonio. And then we need to probably find a market outside of outside of Texas, to kind of strategically grow into so kind of I don't know if that's gonna be a 2021 goal, but it probably by 2022, where we'll be out of state and some other market just trying to be measured and the way we grow and make sure we grow smart and not grow.
Brian Briscoe 21:42
Yeah, that makes total sense. Now one other thing, before we bring Brock on, you know, since since you have all of your assets right now in two metro areas, what economies Do you guys get by having things centralized in those areas?
Michael Becker 21:55
Yeah, I mean, we use a third party management company so they got they're pretty big in both both of the markets that they manage both markets for us and so that certainly helps to get operational efficiencies kind of buyer them but for me really is on the deal sourcing and acquisition side, you really get to do this business right? So relationship is this a secondary source you source your deals are mostly deals with source to brokers. And so for me to you know, us physically have presence in both the mortgages that we participate in. And for me to be in Dallas, so you really get to spend a lot of time in person with these brokers and you just have relationships and become your friends and I was in the suburbs, I moved back into Dallas three and a half, four years ago against now. And so when I moved to Dallas, that's honestly one of the best things I did was get out suburbs go back into town and then I get ones you know, offices I live I office in an area a couple miles of my house and that's one of the two major office hubs for commercial real estate guys in Dallas. The one I'm in was one other. And so I was walking while I walk to lunch and I every day I walk to lunch or almost every other day I watch a lunch or I see someone I know and I say hi and get them in the business. So price proximity is really power and a lot of ways and and so by being in the market focusing on you know, one one or two markets, you really get to know the markets you get these deep relationships and it's a completely unfair business right? You know, a lot of us who you know what, you know, which you can trade? Oh, yeah, guys, I've done 100 deals of advantage of the guy doing this first deal all day, and I'll get seen in August showed an opportunity that you will never see, just because I'm you know, really good buddies, I went on vacation with one of those brokers family or I go to the corner bar with this other broker we hang out there every week. And you know, things like that. And that's really kind of how this business gets done, is through through these relationships. So by the people that I see that buy a deal in the middle of nowhere, Kentucky, and then they buy a deal in Dallas lay by a deal in Memphis, and they're scattered as one is really hard to manage operationally, and stay on top of your stuff. And then two, if you're buying these little tiny markets, it's really hard with you to do this business right to get those relationships. It's really hard to you know, monetize that relationship over and over and over again, which is what I've been successful doing. I have, you know, handful wish ships, I did monetize a relationship over and over and over again. And if I'm bouncing all around, you can't get that same deep relationship or if I'm buying in Topeka, Kansas, there's only so many units in Topeka, Kansas I can have opportunity to buy or buy in Dallas is 800,000 market rent apartment units and awesome those 200,000 market rate apartment Yes, there's like a million potential unit million to choose from. Yeah,
Brian Briscoe 24:37
yeah. You know, I was thinking, I'm glad you brought that up. And I always think it's totally like operational expenses and synergies there but of course, you know, you also get you gain a reputation in the market, you get a lot of relationships, and those are going to feed the business as well. So for sure. That said let's let's switch gears here. We'll introduce our aspiring investor. We got Brock merchants on the line. He A native native of abbeville, Louisiana. He's serving in the United States Army Special Forces and has been in the army for nearly 20 years. Currently out of Fort Bragg North Carolina, and like yours truly, he will retire in 2021 and is using real estate as his exit plan. So that said, Brock, welcome to the show.
Brock Mergist 25:19
Hey, thanks, Brian. Thanks for having me on. Mike. Great hearing about your your great career man.
Brian Briscoe 25:25
So So Brock, let's talk a little bit about you. Now. Tell us a little bit about yourself your background history and and why you're jumping into apartment investing.
Brock Mergist 25:33
All right, well, it started. Back in Louisiana, man, I was a commercial industrial air conditioning man. mechanic when 911 happened. So number 13. I was in the army recruiter's office said I want to go fight for my country for free. So I got a contract for the 82nd airborne here in North Carolina. Airborne infantry. And at the end of basic training, a special forces recruiter came and said they were starting up an old Vietnam era program called the X ray program. So I volunteered for Special Forces, and I've been greenbrae ever since. So in about 2011, you know, 10 years in the military? You either make that decision, are you going to go 20? Yep. Or more? Are you going to get out? I was really having a good time. It was a great time to be in the military at that time. But I was scared because I had a family had a wife, kids and like, what would I do? I didn't know I wanted to be my own boss, I tired of people telling me what to do. So I got on amazon prime, they have a bunch of free books for the Kindle version. And it's like a business tab that has like 50 to 70,000 different titles. And I just started reading I think the first one I read was six months to six figures by Peter rude. And he started talking about passive income. I didn't know what passive income was. So I started reading more books and passive income kept coming up. And they kept focusing on the stock market or real estate. I think the stock market had the learning curve is a little steep. It's longer a greater curve than real estate. So I kind of made a decision, Hey, man, if I start a business, I want to do it in real estate. But because I love my job, I kind of just put it off on the burner. Fast forward seven, eight years, I was getting close to the end of my career. So I kind of picked back up and started learning. So my last deployment 2019 I started doing a lot of research. I was like, Hey, I'm not gonna wait any longer. So I started a business. That's the first step Hey, let's just get in the game. I was gonna do foreclosures. But instead, I found Grant Cardone on the on the YouTube and started listening to him. And I was like, Hey, man, what is this is talking about scaling, he's talking about multifamily. So I kind of changed my course. I was like, hey, I need to get into multifamily. So then overseas, I ran into Mike Keller, my business partner. He's like, Hey, man, I heard you are into real estate. I was like, Yes, I am. So we had a discussion. We both liked what we heard. And then when he came back over, he was like, Hey, man, let's get together and talk about it. So I kind of told him like, Hey, man, this is where I'm at the store. I want to go and this is how we're going to get there. And he said this exactly what I want to do. And I'm like, did we just become best friends? Yep. So really, from that we we started a business, multifamily, and through that we started investing in ourselves. So we got onto microblog program as a mentorship. And that's kind of what leads brings me to this. Yeah, that's how we met because you found you on LinkedIn, you were in the military, and you did a lot program. So
Brian Briscoe 29:00
yeah, you know, and there's there's a lot more parallels there. I mean, you were your recruiters office, September 13. I was at my recruiters office on September 7. All right. And I actually told him, No, thanks. You know, on September 12, I was on the phone back with him. I'm like, do you remember me? Again, I remember you. I changed my mind. Is that okay? You know, so I mean, very, very similar stories as far as that goes. And you talked about the the line in the sand that everybody has, and it's true. Everybody has a line in the sand somewhere. If you're in the military, because you have that pension at 20 years, 19 years, 364 days, you have nothing, you know, is how it works. So, my line in the sand was during the last recession, you know, I saw my dad lose his job. I saw both my brothers lose their jobs. You know, one of my sisters lost her job. And, you know, I saw this steady constant paycheck, you know, and it was just like, I can't, I can't get out right now. You know, I can't you know, just Just and like you said, I appreciate you saying the word fear. That's exactly what it was, you know, I was afraid that if I got out, I'd be on that same roller coaster as everybody else, but took me a little while to realize that that wasn't real security. It took me a little while and took me a little while to realize same thing that Michael did was I don't you said the same thing broke, I don't want to work for somebody else. I want to I want to control my own destiny there. So that said, I mean, we got a lot of a lot of things in common, you know, and talked a couple times before and I'm sure we'll we'll keep on keep on talking. But now you brought this up, you know, in and out of your story already. Your your big burning, why, but if you could distill it down, you know, what's your big burning? Why for this?
Brock Mergist 30:42
Yeah, man, we we kind of have Mike and I have aligning goals, Mike Keller, my business partner. And we have kind of two big why's, and I'll start with a story. My daughter, Hannah, when she was about to go to college, I was so proud of her. I was talking to her like, Hey, what do you want to do? And she was like, I knew what she kind of wanted to do. But I was like, hey, what is your decision? And she was like, hey, I want to be a school teacher. And I was like, amen. I'm proud of you. That your your teaching and training the future of humanity. That's great. It's it's an honorable job. But they don't make that much money. And she didn't look my mind. She was like, Dad, I don't care about that. I just want to help. And I want to change some child's life. And, and right, there was kind of the why. So when Mike and I started talking, you know, fast forward a few years, we start talking about real estate, it comes back to the same thing. We want to help out our self brothers. And we don't we want to raise their financial IQ. And we want to teach him other than the thrift savings plans. That's like the 401k for the military, or 401k. Like, Hey, man, there's another avenue, there's real estate. So how do you help raise their financial IQ and teach them about things? So that's the first right. And the second one is we want to buy back time. We've traveled so much, we missed a lot of our children's lives. And time is the greatest commodity. So how do we lean forward to build a lasting legacy wealth for our kids, but during that we're going to buy back some time, because you only have so much time and I did a Jesse Hetzler class, and he talks about the bus of life, the bus of life is moving down the road, it doesn't stop. You can do whatever you want. You can waste your time you can do this, but it never stops. The bus continues down the road. And with that, he mentioned something like, like my my youngest daughter, she's 10 years old. I only have eight summers left before she's out of the house. When you when you look at time that way, it seems like it's a lot shorter. Yeah. So it's how do we buy back that time for our children?
Brian Briscoe 32:46
Yeah, and you don't want to spend those summers you know, off in a foreign land anymore. So yeah, I understand that your your special forces and you're gone a lot more than I am. But you know, I ended up time, five years out of 20 is how long I spent away. So you guys have a deployment schedule. That's like a lot higher than what the normal marine does. So understand that completely. Very, very powerful. But that said, you know, Brock, we got Michael on the line. What do you want to ask him?
Brock Mergist 33:13
We've done some questions, Mike. And I actually got another question for you with the just listen to you again. Thank you for taking time, you know, aspiring guy like myself, and you have an impressive career man, that's awesome. For me for most for Akila multifamily, I'm the acquisitions and asset management guy. So my question is going to be titled, or kind of leaning towards that. My first one is what would you do differently for the deal flow? When you got started knowing what you know, now?
Michael Becker 33:45
I don't know if I do too much differently. Um, I think we were we've done more than most and so I think it went well, what uh, you know, really, just focusing on the relationship with the brokers is kinda kind of key. I don't know what, what market or how many markets or what's kind of what's your current focus? You guys are trying to target for property acquisitions.
Brock Mergist 34:06
We're doing the South East market, but the focus is the closest to markets that we focus on is Raleigh and Charlotte.
Michael Becker 34:13
Yeah, so I would just focus on those two mortgages. I would imagine the brokers are probably similar in both people, you have different set of brokers. So in Raleigh, the new Charlotte or they have some overlap.
Brock Mergist 34:23
There is some overlap.
Michael Becker 34:25
Yeah. So that that that'd be pretty efficient. That'd be kind of like Austin, San Antonio, where I met those same brokers kind of cover both more guests that are hour and a half away from each other. So I'm just really trying to drill down into that. I mean, I think the easiest way to break into like the shops, I mean, every market seemed a little different. So I'm not sure who sells the brokers, but you kind of get it's probably three or four broker shops that probably control 80 85% of the volume there out of zoom. And then within the broker shop, there's kind of a hierarchy you get your senior guy kind of got your kind of middle level guys, you got your junior guy. So when you're breaking I wouldn't try to start at the top kind of start with maybe the the more junior guy who takes more time and, and focus on you, and then kind of really try to build and form that relationship. You know, I think really kind of some of the key things to focus on really is making sure you're on everyone's list, see all the marketing deals that they put out, and then you know, the download the package, I mean, I would take the time to, you know, underwrite these deals, especially when you're starting out, you need to get a lot of repetition and underwriting deals and making sure you kind of, you know, just do the model over and over and over again, until you kind of get really comfortable with it, go tour the properties to schedule a tour with them, you know, and then make sure you give them you know, solid feedback after the tour, whether you want to offer them a deal, you don't just make sure you don't go dark on them, give them feedback, hey, this doesn't work because of X, Y, or Z. And then you know, kind of have that that follow up conversation with them. Like those are kind of just some keys that you make sure that you know, respectful all the time, because they're people like anybody else, they don't want to go out there, especially if it's like, you know, in the middle of summer and August is hot, and they meet you at two o'clock in the afternoon. They don't want you to go home after after the fact. So I think that'll be that'll be that feedback loop is important that you know, this works for me For this reason, or this doesn't work for me for that reason. But giving them that feedback loop is a is a good way to kind of continue it and as these be a good guy. And that goes a really long way. And that's awesome.
Brock Mergist 36:20
Yeah. Yes. You mentioned how you wrote that. And look relationships, man, you said that, like work on your relationships and continue to build them. That's awesome. I think the second one is kind of along the lines of the brokers just starting out, like how do you become relevant to brokers? Other than constantly, you know, calling them?
Michael Becker 36:41
Yeah, I mean, I think you got to be top of mind without being annoying. That's kind of like the fine line, you got to walk a little bit. Yeah, I think it's getting on the list, making sure you download all the packages, making sure you reach out to them, you know, try to to work, try to get feedback, you know, be honest and straightforward with, like, Hey, this is where I'm at, as well, I'm looking forward to how much equity I have, this is how I'm planning on doing my debt. So making sure you kind of have you know, you find your debt, find your equity and make sure that you communicate where you're at, and don't over promise and, and, you know, it was a fine line where you gotta you got to stretch a little bit, sometimes to pass your comfort zone, to try to get something done, but you don't want to go too too crazy, and you know, over over promised something and then not be able to deliver on what you say, because you missed your first shot up, you're probably not going to get a get a second one. So it's okay. You know, maybe not be able to do the deal and give them that feedback. For whatever reason, this reason that reason, but what I've seen a lot of people get their first deal, you know, Don is they You don't look at your first property and buy your first deal. It's usually a journey or a process where you gotta look at, you know, numerous number of deals, make several offers come up short, you know, a few times. And eventually, you kind of in the mix a few times a broker, you know, starts to recognize you, you've been there, you've been participate in the process, and you've been making progress, you're gonna get a little bit of data, every time you do that, and you start kind of making little adjustments to your, your offer process, your underwriting process, whatever, you start making a little incremental differences along the way, and eventually you're gonna you're gonna get one. So it's kind of a kind of a journey in the process. And, you know, I think one of the things that we always try to do is do like a post mortem on every deal. We do, and kind of take, take away the good, the bad, and things we want to kind of change and implement. And fortunately, now the things we implement are pretty small. But at the beginning, there was a lot of like, oh, that the that worked out, let's never do that again, type of thing. And so you can just be making incremental progress I think you may be you do make big mental notes of like, What's going well, what was effective and what was ineffective when you're communicating with the brokers and making offers that you didn't get? And nobody's asked the broker, Hey, what did I do? What did this next guy do that I didn't do that got him this deal? Why did he get it over me? And if you just ask him direct, honest questions like that, I bet you get some really great, great feedback and then you kind of endear yourself and kind of help establish that relationship a little bit better.
Brian Briscoe 39:03
For us, it was a very iterative process. I mean, just just like you said, Yeah, you look at what you did poorly and and you fix it for the next time. You know, I asked him atrocious broker calls upfront, like they were, you know, probably more painful for him and they were for me, but you just learn from those and every time you get asked a question, you can't answer that that's that was what I did. Every time I got asked a question I didn't answer you know and and one thing I that really helped me is Michael made the point make sure you know your debts coming from Make sure you know where your equity is coming from, you know, when when every single broker started asking me those questions, and I didn't have those answers. I'm pretty sure they just took my you know, file folder and just, you know, tucked it away in the trash can somewhere but
Brock Mergist 39:45
yeah, great info. And the next one would be how, how should we approach lenders to build a lasting relationship but also brokers, man, I think that's where and we continue to we Reach out to brokers. But it's like that. Other than, like, especially if you're not getting that deal at the beginning, how do you build that relationship for them to take your call?
Michael Becker 40:10
Yeah, I mean, I think like I said, starting with the right broker, so you see the angel list, you see the, the Vice Chairman on the list. So you see the Associate Broker list, call the Associate Broker, right? I mean, that's, that's sick is that Associate Broker is going to be in likely in their mid mid to late 20s, trying to make a name for themselves, that can take a lot more time with you. And maybe they don't have all the experience and answers the senior guy does, but he's got the ear of the senior guy. And so that's kind of really, really where you know that that's the person to form that relationship with. And some of those guys don't make it and some of those guys turned into the vice chairman, 1520 years later, and you just use, you know, he's don't know, right? So that that's talking to the right person to kind of get going, I think is first critical. And then, you know, I mean, those guys are probably more likely to go have a beer with you, or go get lunch with you after the tour, maybe maybe tour schedule a tour at 11am. And then, you know, hey, afterwards, let's go grab lunch, you know, it's like one of those things where, where you're a little bit more strategic about it, or if you do it at 2pm is not a natural time to go get a lunch right afterwards. So maybe think through that a little bit than if you just go with it to spend 45 minutes with this person. It's amazing how much, you know, well, small talk will go a really, really long way. So thinking about thinking about my career, and some of the bigger deals we've done, a lot of this is just like soft skills, dumb little things that this guy just kind of likes me a little bit and likes me more than the next guy. And you know, at the end of the day, I got to be able to deliver and have the equity, have the dad, you know, be able to manage it, be able to get the deal put together. But you know, I got the opportunity because this guy liked me a little bit more than the next guy. So those little soft skills, you know, another thing that I think is important when you're starting out, it's not so much your spirit track record, you kind of shortcut a lot of that by just surrounding yourself with people that have a lot of experience because it's kind of like a team sport, really where you got you know, your your property manager, you got your banker, you got your Prop, your lawyer, your accountant, but you know, really kind of in the space, you know, property management company and mortgage broker, and they're probably your lender, and that that kind of priority really, maybe your mortgage broker than your management company than your than your lawyer. And when you're trying to get a deal put together. So if you could get with a reasonably well known mortgage broker in the area, you're bidding on a deal, and then you get this mortgage broker kind of bet you you know, send them your financial statements and say, Hey, this is where our equity is, or balance sheets, how big of a deal Can I kind of work backwards? Like, this is what I have, then how big of a deal should I be targeting? Right? So then you know how much loan I can qualify for, and then you just got to be able to solve the the equity by raising it. And then when you're talking to the, to the broker sell and the listing agent, so on the deal, you can say, Oh, yeah, so and so is gonna do my dad, you know, give them a call for like a reference on me. And then if that broker knows that mortgage broker and then in the marketplace, and that's kind of a little credibility transfer from a well known mortgage broker to you. And that's probably the first thing you should, you should really try to establish with a mortgage broker. And same thing with the management company. If this management company manages, you know, a third of the C class apartments in Charlotte, you're going to be targeting, that's also kind of a credibility, oh, you know, this management company's going to manage my deal. And this broker knows them because I manage a third of them. similar properties in the area. That's a good that's a good kind of transfer credibility. So he knows how to operate it. He's got a mortgage broker that says, he gets a dat I'm gonna take, I'm gonna take you a little bit more seriously.
Brian Briscoe 43:38
I was actually surprised once we went to walk a property. The broker walked right over to our property manager, they shook hands and they started talking like old buddies. And, I mean, look, looking at it from where I'm right, where I'm sitting right now, I shouldn't have been surprised. I mean, the broker is taking people on property tours all the time. And he's coming across these these same managers on a lot of these trips, you know, so something I didn't realize two years ago, but I think it's priceless. You got the management company on you, you got somebody else who can who can vouch for you, if that's going to get you the foot in the door that you may not get without him? For sure. So we're getting close. Getting close to time now. So I've got one more question for both of you. And Michael, how do you go first? How can our listeners learn more about you?
Michael Becker 44:24
Yeah, like we talked about, we kicked it off. And the thing I'm most excited about right now is the the news shows, you guessed the multifamily investing show Michael Becker song, YouTube's iTunes, Stitcher or you go to our website, which is www dot multifamily investing show.com. Or if you want to find more information about my company SPI visor potentially investing alongside of us you go to our website, which is www. SPI advisory comm SSP. I like spy advisor.com there's a Contact Us form you fill that out and always happy to send out some data
Brian Briscoe 44:55
about us. If you're listening, that's gonna be in the show notes hyperlinked, so you can just go to the show. Show Notes tab and it'll take you straight to the podcast, the website. Anything you want there. Brock, same question for you. how can listeners learn more about you?
Brock Mergist 45:09
You can visit our website at Akilah multifamily. So it's a qu IRA. And that's mf.com. And I'm also on social media. We're on LinkedIn, Instagram, and Facebook. If you want to reach out to me, it's just Brock at Akila. mf.com
Brian Briscoe 45:30
All right, sounds good. And same same deal. We'll have website we'll have hyperlinks to his social media profiles, and his email address in the show notes. So you want to get in touch with Brock or learn more about him, you know, hit the show notes up and there we go. That said, you know, thank you so much to both of you for coming on the show today. Very informative. You know, I learned a lot myself and I appreciate it.
Brian Briscoe 45:56
Thank you for listening to the tired apartment investor podcast today brought to you by forex capital. If you'd like to know more about how to invest in apartment buildings, you want to be a guest in our show, visit our website at forex capital comm slash podcast or email us directly. If you're still listening, you obviously like the show. So pull out your phone, app, subscribe, and leave us a five star rating on your favorite podcast app. And we'll see you again next week.