Episode 166 of the Diary of an Apartment Investor with Reed Goossens and Michael Messner. Transcript by Otter.ai – please forgive any errors.
Brian Briscoe 0:00
This is Brian Briscoe, host of the diary apartment investor, podcast and partner at four oaks capital. So we have something that we've been working on for a really long time we are building and we'll continue to build an educational community that we're calling the tribe of Titans. And it's going to be a community of multifamily investors based around education and his house on the mighty networks. What you're gonna find in there is a lot of events that are exclusive to the tribe of Titans members a tonne of educational content, and you're gonna find great people. So if you're listening to this podcast, because you're looking for community or you're looking for education, go no further the tribe of Titans is something you need to look into for the price of about $1 a day, you're going to be able to have access to everything that we have an elder content that we continue to produce for years to come. And just so there's no pressure and there's no obligation, the first month is free. So sign up first month free, and give it a test drive, if you'd like to keep hanging out and you'll continue to have access to Well, me and my partners are four oaks capital in a lot of other experience and aspiring investors. And where can you find it? The tribe of Titans dot info, there's a link to that at the bottom of the show notes of every single episode right now. So if you're interested, type in www dot the tribe of Titans dot info or go down to this bottom in the show notes and just tap the link. So Michael, we got Reed in the line here. What do you want to ask him?
Michael Messner 1:23
How do you work with your property managers in the sort of day to day or month to month? Really, you know, how are you managing the p&l?
Reed Goossens 1:29
It's all about empowering the people to run the asset likely as if they own it. So two things I'm going to say about that, and I'm quite passionate about it is that the choice of property management company is crucial. And the talent that sits in your property will make or break your asset. It also comes down to how I communicate with them, essentially, my employees and I tried to drive a culture that I'm on the call every week, I want to hear their opinion. I look at the p&l on a weekly basis as we approach the end of the month. I have certain KPIs that they need to be hitting, and I've got them trained so well that they know exactly what the questions I'm going to ask each and every week, so they know how to answer me.
Brian Briscoe 2:15
Welcome to the Diary of an Apartment Investor Podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investment field 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.
Welcome to the Dyer and apartment investor podcast. I'm your host Brian brisco with Forbes capital very excited for today's show. It's another one of our Ask the Expert episodes we got once again two great people on the line with us. You know guy with a tonne of experience in in the real estate investment business read Goossens and a very motivated and energetic aspiring investor Michael Messner, for anybody listening right now I'm gonna drop the bios of these two fine gentlemen in the show notes. You know, I find that most of what comes out in the conversation is, you know, double what's in the bio. So instead of reading the bio, check out the show notes if you want to learn more about him, but that's it Reed You're up first. Welcome to the show.
Reed Goossens 3:14
Mike, thank you so much for having me. It's great to be here.
Brian Briscoe 3:18
Yeah. So this is great. So first of all, let's talk a little bit about you tell us, you know, first of all, where you're from, you know, there there's an accent there. That's not 100% American, tell us where you're from and give us a little idea of your background. It was West Texas, right? The good old west Texas. Yeah, that's all West tech centres thought, right.
Unknown Speaker 3:38
Exactly. My background, I'm originally from Australia, I moved here and in 2012, to really chase to love the love for a girl who now is my wife, she's American, so chose to go over here. And then I moved here just to be a an expat and live in New York City and my backgrounds in structural engineering, I came here without a job, I pounded the pounding the pavement. So I got one. And the rest is history because I started investing very soon thereafter with my own money. And I've scaled to be you know, financially free and all that sort of stuff. And my whole sort of stick here on these podcasts is not to boast but to try and inspire someone if you know, someone like myself moving halfway across the world visa issues, no established network, very little very little money I had at stage and be able to scale it into what it is today. If I can do it, then so can the average American.
Brian Briscoe 4:26
Yeah. And I believe that I mean, I've talked to a lot of people who have who have immigrated to us, it's not easy to get into the investment field. If you're if you're a foreign born there. There's a lot of you know, sec red tape, there's a lot of IRS red tape, you know, and you had to get through all that red tape before you started doing what you did. And then from there, you have the same hurdles as any American born in addition to the extra hurdles that the US government levies on yet so that is, that is correct. Yeah. So let's, let's talk a little bit about your journey, basically getting started and you know what, what did that process look like and how did you get into multifamily?
Unknown Speaker 5:03
So coming to America I was already bitten by the bug I'd already written written already read Rich Dad, Poor Dad was attending a bunch of you know conferences in Australia, very small conferences and not like you have here in in the United States. And then when I moved to New York City, I was blown away with the amount of incredible access to information such as short, you know, very cheap, you know, I'm talking about real the real estate investment associations that don't exist in Australia. And so I remember being Fresh Off the Boat, and within two weeks being at my first event, you know, paying 2030 bucks at the door and just in case surrounded by incredible, you know, other individuals who are just all motivated by real estate investing. And so my first deal was actually six months moving to the United States, I purchased a triplex in upstate New York for 38,000 bucks, all cash because I know it was gonna lend to me because I was a foreigner. I couldn't get any credit. Even though an LLC was I didn't even know any i n was to sort of learn all these things. But the beauty of what coming to America was, and again, part of what I'd call my superpower is that I came from a country that doesn't have very, it has no properties in secondary tertiary markets. So great to see these barriers to entry so low, compared to where I'm from, you know, was just like, that's a no brainer. You know, of course, part of when I talk about my story, it is the fact that I have a different perspective that sort of gives me not an edge, but just I can compare it to what is not available where I'm from. So that was that was the first deal that I did. You know, it was two and a half years of self education. I did some in Australia before coming here. So but but I bought it within six months of being Fresh Off the Boat.
Brian Briscoe 6:39
Right so 38,000 triplex in upstate New York. Yeah, that price is unheard of. I had somebody else on the podcast recently that talked about buying real estate in Indianapolis for 20k. A door but Incidentally, just just for just for curiosity sake, what year was that? You bought that $30,000 triplex? Yeah,
Reed Goossens 7:01
that was in 2012. Say that someone sent me a Zillow listing of that exact property because I've taught I've given the illegals 512 Fabius street in Syracuse, New York, you can look up on Zillow, it hasn't appreciated that much. Trust me, fresh face, bushy tail, Australian coming in blind, these cheap properties. Well, they're also section eight, you know, I learned really quickly what Section D Class D housing was, yes, but it got me started, right. And the whole thing that you don't get to deal number 10 without doing deal number one, and it was my money, I was willing to risk it. And I knew that it was never going to get the experience that I needed to get by reading in a book, I'd got to the analysis paralysis stage, I'd already been self educated about two and a half years, then I need to just go out and take action, because I was never going to get again to deal number 10 without doing that first deal. Yeah,
Brian Briscoe 7:49
yeah, I love it. And that's a concept that, you know, it took me a while to figure out you know, I think a lot of people I was in that analysis paralysis, you know, rut for a little while, you know, where I was looking at properties on Zillow looking for properties on Trulia on loop net on everything else. And you know, it took a long time for me to actually make an offer. And, you know, you're not going to get to property one if you make zero offers, too. So you got to get out there, you got to be in the trenches, you got to start taking action. That's that's a huge, huge learning point there. So So section eight, D, class two, let's see, let's let's walk, walk the dog, you know, Section D, class two, where are you at now what's what was the progression from there.
Reed Goossens 8:31
So the progression from there was a long and hard road, it wasn't easy. There was a lot of late nights and still today, what I built but I'm now I'm a co founder of wild home capital. And I'll jump ahead and I'll come back to the to the, to the sort of scale steps. So we have about 3000 units in the portfolio today about just shy of 400 million assets under management or in central Central Texas, and my business partner, Andrew Campbell, and I have started the company. And that's where we are today in 2021. But leading up to that, you know, after I bought that first property in Syracuse, I got to I was able to buy a few more properties. And at the end of 2013, I had a very influential conversation with a friend of mine who came down from Canada, in New York City. And he said, and I was boasting, I think I had two properties in upstate New York and I was about to do a flip in Philadelphia very, you probably had seven units in total roasting, doing, you know, probably making 1000 bucks a month and clear cash flow, nothing, nothing to you know, to poke a stick out, but it wasn't I was not going yeah, we're gonna get financially free. So he then went on to say, you know, that's incredible, right? And again, he was a guy that does engineering, like I didn't, I had no idea was even involved in real estate. But he he went on to tell me about how he closed on a 70 unit deal. And I said, what he said, You mean seven, zero, and he's like, yes, 70 units, and I'm like, here's a guy that I was a mate. He's already he's sitting right in front of me and he's just up the game like he just sounded he just sort of put the bar up here next
Brian Briscoe 9:53
year, right there.
Reed Goossens 9:55
Right there. And but it was all the same things. I was I was learning about, you know, going in Adding, you know, five 6000 buttons or increasing the rent by 100 bucks a month. But instead of just doing on triplexes and duplexes he was doing it on 70 units. And as I sort of went into dive into the story, it was the similar things came up, I said, well, how'd you go to get a deal and mentor, other people's money, seller carry back financing, all the things that you've been, I've been learning about in the rears, but he there he was actively doing a deal. And I was like, boom, that's what I got to do. And then for the longest period of time, Brian, I put off getting a mentor, I said, I'm gonna do it myself. I'm gonna I can I can do it. I don't want to go spend $30,000 on a mentorship course, I'm going to spend $30,000, buying a triplex. And then I just realised I need to play a bigger game. And that bigger game came with having a coach. And so I actually liquidated those couple of properties in upstate New York and I went in early 2014, I went and got myself a very well known investor in the space today, he was very cheap at the time, I think it was obviously second or third client. Right. And that that's that what he didn't give me it wasn't a silver bullet. But it was enough I the money I spent on him was that I was taking a bet on myself. And I'm willing to invest in my future, because I can't take a bet on myself, who am I going to take a bet on right. And that was really the the limiting beliefs in the shackles came off at that stage. And I'm Joe Joe fairless. And he was he was there as a sounding board. And he was an opportunity for me to think bigger. But it goes back to that art, not the art the the act of paying for someone's services to be in my court in order in order to be a rebound. So that was that was a pivotal move. First and foremost. The second pillar of little move was when I moved to LA from LA to from New York to LA, I had a skill set. And I had a skill set instructional engineering, that was my background. And so what I did was at this age, I'm just I still today, I'm just hungry for real estate, all I want to do is real estate, real estate, real estate, I remember going to site for for as a structure engineer, talking to one of the developers. And I'm like, you know, is asking about how many bolts we need in that connection. And I was like, don't worry about that. What are you gonna, what are you gonna rent the space for, like I was, so into understanding what he was doing. And it clicked to me, I said, well, I've got to, I've got to be in this country, I need a visa, right? If I'm going to cook, grow my knowledge, why not go join a real estate development company or get out of engineering, and learn how the big dogs do it. And so I then pivoted, and I applied for certain jobs in for developers. And in 2014, I made the switch and I worked for that for a big developer in Los Angeles building granite construction in multifamily for about three and a half years whilst doing deals on the side. But it was because I had to stay in this country to keep the visa but it was also very very pivotal moment that I could be surrounded by real estate 24 seven on the side as a side hustle, but also can be doing it every day in and day out. And that was the big for people listening this show is like think about a skill that you have that can be tangible or usable in a in a person's business or real estate business that you can then continue to get paid, but also learn on the job and that was really really pivotal in my growth. So that that is sort of the summary of how I got there that there was deals done along the way that I was go GPS on and what sort of stuff but there was some just some really I want to just talk about some high takeaways for your listeners to understand the journey and then it didn't happen overnight. Trust me It happened over multiple years. But it was it was part of the different minds that I had to get into using stepping stones to get to where I want it to get to
Brian Briscoe 13:22
Yeah, you know a couple a couple things to unpack right there. You know and you mentioned the Rich Dad Poor Dad book a little while ago that that real estate development company move is like straight out of rich dad poor dad and something that quite frankly I was too afraid to do is you you go get a job to learn skills. You had several motives for it, obviously keep the green card, you know is a big motivation for you. Especially since you came here chasing chasing a girl but you went there you learn some skills, and I'm guessing you're much more of a better operator now than you would have been regardless. And 100% Yeah, absolutely in mentorship. I mean, that's huge as well. I my story's a little similar, you know, I had to instead of seven and I liquidated both of those and took a bet on myself. I paid the $30,000 price tag for mentorship with a different well known multifamily educational guys. So you know, my mine was Michael Blanc and incidentally we we just were both at his conference last weekend which was a great event again, like like normal, but
Reed Goossens 14:25
just be judge Joe wasn't $30,000 back in the day when he's getting study was a lunch.
Brian Briscoe 14:30
Oh, no, no, and I paid a little less for I think Michael Blanc, but I think that's his current price. But I tell you what, going back and putting myself in that position where I was contemplating writing that big check for mentorship. I don't know about you, but I would do it again in a heartbeat.
Reed Goossens 14:48
Brian Briscoe 15:26
you know, and I hate to say it, but I mean, I don't hate to say it's actually true, something that I realised later on is, you know, paying that big price was a commitment, you know, and I think I was 100% or more, more committed after paying that big price than I was prior to, you know, it was, it was one of those things, hey, I'm gonna write a big check. Am I really gonna do this? Am I really wanting to do that? And did I get the same amount of dollar in value back? I did, you know, but at the same time, it resolved, you know, every every issue that I had, in my mind, it was just like, No, I'm, I'm all in, I'm 100% going this direction. So I think there's a lot of psychology to paying that big, big amount as well,
Reed Goossens 16:12
so much psychology and you bring up a really good point is that, yeah, that that, when it's a little bit more like, oh, you're sweating a little bit over that check, you know, you're gonna probably rock up with a bit more intention, than if it was, you know, 500 bucks, you know what I mean? Like, and then 500 bucks is a lot of money, but it's a different scale from $30,000. So
Brian Briscoe 16:29
I've paid a couple $100 on courses, you know, many times in my life that I never made it past the second lesson, you know, but, you know, you start start adding zero or multiplying it by, you know, 500, and then all of a sudden, you know, it's real, you know, it's like, all right, that's a big dollar amount. That's, that's, that's a new car, you know, in my driveway type stuff, which is different than, you know, I guess I'll drink one less soda a day and pay for this one. So what let's talk specifically about, you know, one of the deals you've done, and then we'll move into what I call a big brain wide. But first, hit us up with one of the deals that you've done specifically, recently, and I talked about good, bad and ugly.
Reed Goossens 17:11
Yeah, so I, so I'm gonna, I'm just I think I could talk about the first deal I could talk about, was actually just cycled. Two deals, which was really is really, really important in the growth. And what did I learn from from those deals, I think, you know, coming out of COVID, up until this point, I was viewed because I don't have grey hair as Oh, he doesn't have enough experience, right, you have people who are not going to dress because you don't have grey hair. But navigating a portfolio through COVID is what I did help me Give me my stripes. And I also exited two deals in that time. And we grew the noi over 30%. in that in that, you know, we had the deal for about three, we had those deals about two or three years, return incredible capital back to investors. But we also went out and did what I say I was going to do, and that is so important for a lot of people talk about in this industry, getting the deal done tying it up and getting to the close on. The actual big work starts when you when you in the management, once you close, you make money, when you buy, you lose it through bad management, that includes not only property management, but asset management, if you're a bad asset manager, if you're a bad operator, it's going to come out right and you're going to in particular, when COVID hits, okay, things are going to happen, your delinquency is going to increase, people are not gonna be able to afford to pay rent. So, you know, rewind to halfway through last year, we were very concerned about, you know, where people going to pay rent on time and all that sort of stuff to how do we, you know, do we need a pause renovation straightaway. So some of the lessons coming out of that, first and foremost, the reason I could exit those deals when I did, in my first two deals that I've purchased, I didn't actually put flexible exit debt on them. And I still own those first two deals, because we put at the time 2015 2016 2017 we hold interest rates, we're going to moon so we put long term debt on it, which at the time was the best hedge for risk. And it was actually beta deals that we picked up we had bridge financing, more flexibility on exit that it was allowed, you know, I was had the ability to to exit these deals. So lesson number one is always trying to look at the the most you want to you want to reduce your risk in terms of interest rate, but you also want to have flexibility to exit that's really important. And lesson number three is coming full cycle is also very, very important. It's not just about getting the deals closed. It's about operating. It's about saying what you going out and doing what you say you're going to do, and getting it to the finish line so you can show someone, here's a run on the board. And this is what I learned from that run. And then so the lesson number three. Number three, what I'm finding is also managing risk in a COVID environment was really, really eye opening in terms of how we approached how I approached in terms of out we're in the people business, right? If we don't have tenants, we don't have rent. If we don't have rent, we can't pay a module don't get cash flow. So it's really important to try and juggle those things. In in a crisis like COVID when some of the tenants had no job For no fault of their own, besides the fact the government saying we're going to look down, so being sympathetic, but also trying to run a business at the same time, in treading that fine line, it was really, really eye opening for me. And again, that goes back to the lesson that we are in the people business of really investing when we invest in real estate. So yeah, so there's three or four lessons there, based on early deals, exiting deals and navigating through COVID.
Brian Briscoe 20:23
Yeah, and there's a lot a lot of gems there a lot of things to unpack and, you know, always fishing for similarities, our first deal we did just over two years ago, and the biggest the biggest concern everybody had is what happens if there's a recession, you know, and we have the same thing, and we locked in 12 year debt on that one, you know, so we're in the same position with a couple of products we have, I mean, I think that long term, they're, they're great, they're, they're still good buys. But I think just just to double down on that point that you made, you know, at some point, flexibility is going to be worth dollars to you. So the more flexible you can be going in, you know, when you're locked in at a, you know, on 12 year debt, and, you know, yield maintenance, you know, that that's not not an attractive place to be to sellers, or to to buyer's or seller's particularly I just read out today, right? Yeah, yeah, we'd like this one. And I like, you know, mid fours, you know, and interest rates right now are low threes. So, I mean, we were basically basically with that loan committed to the long haul. So I very much appreciate what you said, I wish I would have heard it, you know, two and a half years ago, you know, work, you know, try to have a flexible outcome on the back end. But that would definitely help a lot more to unpack there. I wish we had a lot of time to unpack every little gem that you dropped. But there's there's a whole lot there. So a question for you that I like to ask everybody, you know, what's your big burning? Why?
Reed Goossens 21:48
I think my big burning wine, it goes back to moving to the United States. And it's fear of regret, right? I never want to wake up in 60 or 70 years of ageing, Oh, geez, I wish I'd given that a go. So you know, it's a little bit about pushing my boundaries. It's a little bit about letting go the future but also, more more than that, it's about living up to my my full potential. And that means giving things that seem risky at the time, like moving halfway across the world to chase a girl that was quitting, quitting my a well paid engineering job in Australia that, that, you know, most people say, What the hell are you doing? You know, but but I wanted that I wanted that experience, I wanted that challenge. And that challenge will help me, you know, I look back on a life and say, Oh, I lived a life well lived, you know, so I think that that's for me is my big, why when I get up and do anything and make any decision that I make as I move forward in my, in my business and in my personal life.
Brian Briscoe 22:36
Yeah, I think that's huge. I mean, I think most people have a desire to reach their potential. I think some people are, you know, I realised this for a while that sometimes I was afraid of reaching my potential, you know, what if I actually do you know, type stuff, but that's something that I'm focused more and more on every day is, you know, self actualization? How do I unlock everything inside me to do more to be more and to help more people, but definitely appreciate that. Alright, so last question, before we move on to Michael, what's next for you?
Reed Goossens 23:06
What's next? For me, I think that is a lot. It's just trying to find expanding into different markets is always something I'm always eager to do, maybe in different asset classes, deals are hard to pencil right now. So it's to check trying to find those right deals, maybe it's off market deals, maybe it's it's different. Being different in a very competitive market. I think that combined with also becoming very vertically integrated to bring a bit of that fat in that, you know, property management, you know, construction management, sourcing from from China, all the different products we have, within hours within the business really doubling down on those sort of things to to make it more profitable for investors in a low cap rate environment where cash flow out of the gate isn't as what it was maybe 567 years ago. So moving forward, it's really focusing on operations and focusing on efficiency in the business to create an ecosystem of businesses that can help support not just the multifamily, but also our investors as well, which makes it profitable for everyone.
Brian Briscoe 24:00
Alright, so very, very selfish question here. At what point Neo unit count wise, do you think it was, you know, best for you guys to move that property management in house versus going with a third party management company?
Reed Goossens 24:14
Well, we still do third party just so we're at 3000 units today, I think that there may be a time, but there also might not be a time, right? There might just be always I don't want to be in the HR business, right? I don't wanna be HR and bookkeeping. So it's, I'm seeing a lot of smaller regional property management companies be absorbed by the bigger guys. And it's all coming to sort of a handful of areas within a certain region, handful of groups within a certain region that know the market really, really well. So leveraging, I don't I don't aspire to have 100 employees, right I I still do very much to aspire to have a lifestyle business. But I need to also be aligned with my property management company to make the right investment decisions that may come at a cost but also we're trying to avoid Look for cost efficiencies, what as we continue to grow, right as you grow a portfolio out of 345 6000 units, is going to go back to the property management. Hey, give me a lot of business here. Like we need to jam on some of these price. Yeah. How do we get more efficient? because things are getting harder and harder to buy. So, overall, there may come a time, but also, they may not. So I don't have a solid answer for you at this at this stage. But I think right now, we're happy where we are.
Brian Briscoe 25:26
Yeah, I think it's a good answer. I was talking to somebody at the Michael Blanc conference last week, and the same question. His answer was something I never thought of it was very similar, yours actually just says, I don't want to have the liability, of having that, you know, belong to me as well, you know, so, you know, he was at the point to where he could have very easily vertically integrated and had that, you know, the management under him, the construction management, the construction teams, but for him was more of a liability thing overall, because there's, there's obviously pros and cons, when you're making a decision like that, you know, yeah, you can reduce some of the overhead you can pass that reduce overhead to your investors as profit. But on the flip side, you are shouldering a lot more liability, by now owning the property management company by owning the construction and everything else. So Exactly. Alright, so we're gonna shift gears right now. And we got Michael, who's been waiting very patiently on the line right here. Michael, welcome to the show.
Michael Messner 26:24
Hey, thanks for having me. I've been looking forward to this for a long time.
Brian Briscoe 26:27
Looking at very beautiful background there. Tell us where you're at right now.
Michael Messner 26:31
I'm in I'm in sunny San Diego, and yeah, definitely not complain about the weather here. It's it's been it's been fantastic.
Brian Briscoe 26:38
Yeah, I know. We we've talked a lot about San Diego and how much I missed San Diego. I think it's one of the favourite places I've ever lived. So yeah, I'm, you know, a little jealous right now that you're sitting on your back patio, and, you know, sunshine and probably what, 75 degrees? Just about? Yeah. I mean,
Michael Messner 26:59
you know how I knew that. But it's a great place to live for sure. Oh, yeah. perfectly.
Brian Briscoe 27:03
Yeah. Perfect. So I knew it was 75. Because it's July in San Diego. But yeah.
Michael Messner 27:09
So so that being a weatherman here must be one of the most boring jobs ever, because it's, it's always in that 70 to 80. You know, Sunny,
Brian Briscoe 27:17
you know, where I'm at right now, I just, you know, earlier today, I saw the weather forecast for southeastern Idaho. And it was 91 and sunny, every single day, you know, everything of the across the board. 91 is Sunday. That's the five day forecast. So it's it's still predictable and nice, but not San Diego. Nice. So, well, that said, Give us a little bit about your background. Tell us about yourself. And let's go from there.
Michael Messner 27:42
Yeah, sure. Um, yeah, I had, I had a little bit of a roundabout path to real estate, my, my background going way back actually was in psychology, wanted to be a psychology researcher, on the experimental psych side, not on the sort of therapy side, got a degree in child psychology, was doing research even for a couple years got publish. And I think after a little while, I got got a little soured on on academia, I realised that, you know, I was really interested in studying human behaviour. And to be really successful in that field, you need to, you know, get down almost to just my new shoe, and these tiny, you know, if you really want to add something to the, to the research body, you need to focus on something really small, and it wasn't, I wasn't quite there. So some soul searching. And I realise, you know, what I'm what I'm really enjoying about this is experimentation, is, you know, human behaviour on a really broad level. It's actually the numbers. You know, I'm kind of a kind of a math nerd. So I really enjoyed designing experiments and analysing the data, things like that. So I ended up going into marketing, which is sort of the study of human being there's,
Brian Briscoe 28:47
there's a lot of psychology and marketing.
Michael Messner 28:49
Exactly, exactly. Yeah. So yeah, especially digital marketing. You know, this was the late 90s, everybody was super excited about the web, I was starting these little kind of micro businesses, and that was going really well. So I pivoted into into tech business, I got my MBA with kind of a focus on marketing. And then, you know, the real estate side was kind of on the side. So my dad and my brother are both architects, you know, my, in my dad, you know, became sort of a real estate exec. That was sort of sort of how I started understanding the potential and just sort of Polly's deals were kind of structured, but it took me quite a while to pull the trigger. I think what what really happened was, my mom actually kind of became an accidental landlord, we hear about that a lot. Where she was, she'd buy a property, you know, live in it and fix it up, not with, you know, the intention of house hacking, but she would end up moving couldn't find a buyer right away, or just keep it in rented out. And that happened several times. And, you know, at a certain point, she ended up with like, four or five properties. You know, in my conversations with her, I was realising like, Hey, this is actually a really big part of her part of her retirement, you know, yeah. Yeah. And I realised like, wow, you know, she can do this almost actually. Generally like, you know, with my sort of background and some focus, it can look really good.
Brian Briscoe 30:05
Yes. Imagine, imagine what you can do deliberately. Right? I don't want to do that accidentally. So we'd like, right, right.
Michael Messner 30:13
So I guess that brings us to, you know, early 2019 I was that that was my period of reading all the books. You know, I had a general business background, but really focusing on on real estate building, you know, really complex Excel models I was downloading I, you know, come with like, really a tech orientation. So I was like, building web scrapers to download tonnes of data, I was calling real estate agents getting them to like export the entire MLS, you know, to me, things like that. And I was literally looking at hundreds of properties a day. And that was how I felt safe about jumping in, but then once you know, so once that that kind of magical property popped up, I just jumped on it. Same Day offer and knew exactly what it was worth, you know, whatever, bought a bought a quad. So I started in like small family. And yeah, that went really well. And another duplex just a couple months after that. And then two more duplexes on the same day, actually, a few months after that, so well, I jumped right in. Yeah, yeah, yeah.
Brian Briscoe 31:13
So you're in San Diego, where are these properties?
Michael Messner 31:16
Yeah. So I looked in San Diego for about a minute or something. And realise, like, okay, that's not gonna work. Yep. In terms of cash flow, and everything. So I actually grew up in Wisconsin, so I looked back there. And I was looking all over in the upper Midwest, but I had some connections there. I knew contractors, realtors, etc. And that was sort of where I, where I started. And I still love that market. And I'm still looking very much in the upper Midwest.
Brian Briscoe 31:43
Yeah, you know, a good lesson there. You know, I think that you should look in your backyard first, you know, in your backyard right now, San Diego. And I think the next place you should look at are places that you know, well, you know, because you're gonna have a competitive advantage over other people. You know, so you're in San Diego, investing in Wisconsin, you're gonna have a competitive advantage over somebody, like, I don't know, me, who's driven through Wisconsin once because, you know, the area extremely well, you know, the ins and outs, you know, the neighbourhoods. So, good idea. So, what's your big burning? Why? What's your motivation for all of this?
Michael Messner 32:18
Yeah, you know, I've, I've been thinking about this a lot. And I've been listening to the show, and I asked myself that question a lot. You know, I think I think time is a common answer. And I think, you know, buying time, um, you know, for me, the a catalyst was my dad passed away last year, early last year. And he was young, he was 66. And my grandfather died at age 66, as well. And I've had that that age, you know, in my head, kind of looming, you know, wow. Okay. So the year after I retire, you know, am I gonna punch out? Yeah. And I think you know, that that did two things. It definitely made me sort of re analyse how I'm spending my time. So part of it is like, Okay, what can I do to you know, retire early, I think is a question that lots of people ask. And I think that's important. But you know, even if I retired at 55, or whatever, like, that's, that's, that's not the answer. Right. Okay. So that buys me a little bit of time. I think the real eye opener for me was was a mind opener really was how, how can I focus on enjoying the time that I have right now? You know, how can I enjoy him? Yeah. And I love the answer that we've gave, you know, the challenge I like, I love challenges with all my jobs, really, with my w two, which I also happen to love right now. And I manoeuvred myself into a, you know, a job, the job that I actually enjoyed, I'm always asking three questions, am I am I having fun? am I learning something every day? Yeah, and my impacting, you know, the bottom line, whether that's, you know, investors in my, in my job, or, you know, customers there, or, you know, in my, in my own life, and real estate really is just hitting all three really, really hard and I'm just, I'm really enjoying it. So, you know, it's, it is a little bit about the, you know, make some money and retire early, but a lot of it is just like, I find it, I find it really fulfilling right now. So I'm gonna
Brian Briscoe 34:11
be being able to actually enjoy the time that your life you're alive. I love that, you know, a lot of people take that for granted. And, you know, sometimes it takes an unfortunate event for that to come. You become important for a lot of people. So yeah, so I love your stuff there. But let's shift gears one more time. And this is my favourite part of every episode where I hand you the mic. So Michael, we got read in the line here. What do you want to ask him?
Michael Messner 34:37
A read? Yeah. Great listening to chat before. You've actually touched on a couple of these. But one question is, how do you deal with surprises? I think I mentioned I'm really numbers oriented. So like I do, you know, when I analyse a deal, I have everything down to the down to the penny and I hate getting surprises after the fact but that has definitely been the case. So you know, whether it's before you're taking And investors are after before you close, you know, while you're underwriting or after you sign a contract. How do you how do you roll with the unexpected surprises?
Reed Goossens 35:09
Well, first and foremost, my underwriting that I used to do is completely different to what my underwriting is today. So it's gotten better as the deals got more, the more deals are done, because underwriting is only a snapshot in time, right. And you can only predict so much and COVID is such an incredible example of where things can go wrong, and the market will be the market. on smaller deals, you can probably there's not it there's less variability on smaller deals like but on bigger deals, when 20 or 30, people just don't want to pay or the you know, we're not getting those rental pops that we thought we're going to get, those things can affect have a drastic knock on effect to, to have the deal is is going to be underwritten. And so part of that is, is you want to use real time data to make informed decisions as you move forward. Now, being a newer investor, you're going to have to just rely on all the data you've you've collated. Now, I will give you kudos because so many people don't go at what you what you just mentioned before you went out and underwrites, I think he said 60 or 100 deals, I mean, you're getting data from everywhere. And the more data, the better, the more likely it is you're going to be able to go and execute on a deal. But that data gives you confidence and gives you power. So hopefully you're backed into really, really robust underwriting. But again, the markets going to be the market and if people lose their jobs, if the economy just grinds to a halt, your your underwriting that you wrote on a piece of paper isn't really worth a whole lot. So you're trying to make the unexpected will happen. So first and foremost, you have to have the mindset that it will come about, and you have to be prepared for it. Once you are when I say prepared, that's both mentally but also on the financial side that you maybe have some slush funds on the back end that you can support, you know, increased vacancy or increased delinquency or whatever, you know, increased expenses, whatever that might be. And then moving forward is you always want to look backwards and say, Okay, what did I learn from that deal? And how does it make the next deal better for me and reduce my risk? This isn't rocket science, what we do in terms of real estate investing, but it is all about boxing in risk. And the more you you box it in, the better, you'll be able to handle those unexpected surprises as they come up. So I hope that answered that question.
Brian Briscoe 37:22
Yeah, you one thing I'll add is, you know, we look on our projections at what things we control versus the things we don't control, right, I don't control where the markets going to be, you know, six months or six years from now. But, you know, we try to get as detailed as we can on things we can't, we can control. And then when it looks at the things that we can't control, we try to be as conservative as possible on that. So, you know, we're not underwriting, you know, five or 8% year over year rent bumps, because we don't control that type of stuff. So, and definitely, definitely have that slush fund available that that, you know, the reserves on the side. That's huge right there.
Michael Messner 38:03
Yeah, that jives with my experience so far, especially, you know, doing lots of lots of underwriting. One of the main things that has come out of it is just almost instinctually now I'm starting to understand averages and like sort of what's typical, just and I think the only way to do that is to look at lots and lots and lots of deals. And at this point, I can just I can glance at four or five numbers and get a get a dialled in with like a pretty rough sense before, you know, sitting with the with Excel for a while. All right, what's
Brian Briscoe 38:30
your next question, man?
Michael Messner 38:32
Yeah. So how do you stand out I guess amongst other syndicators? You know, there was a there was a guest on your show, Brian, couple weeks ago, when your first deal said he was a he was an LP in 13 different deals. And like I really wanted to ask him like, of the ones that are really good, like, what makes them? What makes them good? I mean, in your experience, is it is it really the numbers, you know, that that investors are primarily looking at as a trust? Is that, you know, is it your brand's? Is that how you communicate? What's is there? Is there sort of a secret sauce to landing investors?
Reed Goossens 39:05
There's no secret sauce. And when you're getting started, it is all about trust, right? And the first thing that I've found when I first went out to start raising my first ever dollar, was people invest in me first and foremost. So when you go out and raise money, they're going to invest in you first and foremost, because you may not have a tonne of experience. I had a little bit of experience given that I was done a few deals myself, and I think you're doing the right thing by doing deals on your own to get started to give you the confidence that you can go out and do bigger and bigger deals. But ultimately, it's going to be Yeah, have you done a big call? 100 unit deal before you're like no, I've only done these small quads and duplexes and triplexes and that's going to be a leap of faith for them. It is about your story. It is about resonating with who you are as a human being because they they want to know that their money is safe. So for me My story is all about coming to America and doing you know creating something from nothing for you. You're gonna have a story of your own and people are going to want to trust that and resonate to that and thus want to invest with you. And it's all about having those touches with people I'm going to talk about touches, it's about talking to people who have a mindset of who you are in their head, friends and family, you know, all those people in your close circle. And you have to tell them over and over again, if you're in real estate, it's I'm in real estate, I'm in real estate, I'm in real estate, I'm real estate, I'm riddles. I was an engineer, people like you asked me for money for real estate, what are you doing real estate like? And what I realised when I started asking that the question about do you want to invest with me, because I wasn't doing a good enough job of communicating to them that the change in which I've had in my life through my story, and I use different platforms, like podcasting, like books, like being interviewed on other shows, to get that message out. And it takes time. But it helps create a narrative that people are gonna say, Ah, I understand, Michael, now you're doing what you're doing, you're not doing what you used to do before. And I and I see the your success you're having online, or whatever it might be, you're in their perspective. And thus, I'm interested to learn more about what you have to do, or what you have to deal with what you have to offer me, it takes time, but it is about your brand. First, it is about being you are a business, right, people will go invest in you first and foremost, before they know the deal is actually secondary, they need to trust that you're going to run away to Mexico with their money. So it's all about trust and transparency and building that brand.
Brian Briscoe 41:21
Yeah, I agree wholeheartedly, no, a couple of things to add to that. One is, you know, you naturally attract certain people, right. And that's, that's something that I realised that, you know, there, there are people that are naturally attracted to me and people that I'm naturally attracted to, you look for the type of person that resonates with you. And Reid said the same thing with with the coaching, he found, he found somebody that he could have in his back corner, you know, somebody he related to so that's one takeaway right there. But right now, I think, when we started syndicating all my available capital was going into my deals, you know, and now that I'm starting to look at things as an LP, you know, mind as well, I am looking at people more than I'm looking at numbers, you know, 100%, you know, I am looking at people. And my big question is, can that person deliver the numbers that are on the spreadsheet, or the PDF or the PowerPoint or whatever? So I think end of the day, you know, you gotta you got to let people know what you're doing, just like Reid said, but the same time you have to inspire confidence that you can deliver the numbers that are on your pitch deck. All right, and we got time for one more question. So let's go.
Michael Messner 42:29
Yeah. Last one, a little more pragmatic. How do you work with your property managers to increase the rents and decrease expenses? How often are you meeting with them? You know, do you give them goals? I've heard of folks doing, you know, some sort of a bonus or a spiff if they're, if their PMS can, you know, have a big influence on the on the bottom line? So I guess that's something I haven't haven't heard a lot of detail on is like, you know, in the sort of day to day or month to month, really, you know, how are you managing the p&l?
Reed Goossens 42:59
For me on bigger properties, and the portfolio I'm looking at pretty much on a weekly basis, I'm with my team, I'm talking I have call set up for each region. So I've been Austin, call a San Antonio call, as we build out of the markets, we'll have different calls for those. And I can't, I can only be across certain amount of deals that I'm bringing an asset managers to help support me. But as I grew the business from scratch, and I still do it to this day, it's all about empowering the people to run the asset, like as if they own it. So two things I'm going to say about that, and I'm quite passionate about it is that the choice of property management company is is crucial. And I've changed property management companies over time, I had a property management company that was four or 5000 units under management, I thought that was enough. But as we started to grow, their back end wasn't there to support me. And I sort of used the analogy of I was driving around a Toyota seleka, 1992, Toyota Celica was get me from point A to point B, but I needed as I grew the portfolio into 1000s, of doors, I needed the BMW with seat warmers, I'd pay a little bit more for that, but two things are going to happen. One, I'm going to they're going to have a better culture than the previous property management, and I'm going to attract better talent. And the talent that sits in your property will make or break your asset, right, having turnover property management, or the region or the community manager isn't good for your deal. Regardless if you stay with the same property property company. So property management company, so you want to that comes down to culture within the property management company, but also comes down to how I communicate with them, essentially, my employees and I try to drive a culture that I'm on the call every week, this I want to hear their opinion, right. And then I've also been told and managing them to, you know, beat their chests that I'm going to I'm going to manage this thing like to the nth degree. So coming down to looking at the p&l. I look at the p&l on a weekly basis as we approach the end of the month. I have certain KPIs that they need to be hitting that I've developed over years. It doesn't just happen overnight, that I make sure that I'm looking at least trade out reports how much traffic are we getting on site, what's the expirations coming up for people moving out and then on The financial side I'm looking at what's our bad debt? How is this comparison to the budget that you sent? And what set and why are we off? Or why are we tracking, you know, to beat it. And that, you know, I need to hear this feedback from my, from my community managers. And I've got them trained so well that they know exactly what the questions I'm going to ask each and every week. So they know how to answer me took a little bit of time. And I've created a team around me that I'm really happy with. But as I go and expand to other markets, I need to use those same fundamentals in order to build the same property management, you know, partnership, so my assets are successful.
Brian Briscoe 45:38
Love that answer. And from where we're at, I mean, we've got 600 units, we've hopped around property management, property management company, read, I wish I would have talked to you about this two years ago, because, you know, all of our very least recent lessons learned just just came out with that. So you know, Mike, I'd like to go further on your question, but I am not the asset manager in our company. So I'm going to let Reid answer stand right there. And, you know, very, very noteworthy there. So hey, we're about out of time. So I just like to thank you guys both, again, for coming on the show. And one question for each of you. Read, you get to go first. how can listeners learn more about you?
Reed Goossens 46:20
Yeah, the easiest way is to head up to read goossens.com. That's redgosss.com. All the educational stuff over there. The podcast, the books, and if you ever coming through Los Angeles, you want to meet up for a drink or a coffee. You can hit me up at info that's i n email@example.com. All right, perfect.
Brian Briscoe 46:39
We'll put a link to that in the show notes. I don't think we've brought the podcast up. Tell us the name of your podcast, too.
Reed Goossens 46:45
It's called investing in the US. And it's been running for about six and a half years now. It's about over 400 episodes. So I definitely jump over there and check it out. And give us a give us a review after you review this one.
Brian Briscoe 46:57
All right. Sounds great. So we're gonna put a link to that podcast in there as well. And if you're looking at this on YouTube, you know, it's right over his right shoulder right there. You can see the logo there. Boom. Alright, Michael, same question for you. What is the best way listeners can learn more about you?
Michael Messner 47:15
Yeah, you can find me at matanza, capital matanzas. Two T's in a z that was that was actually a official ceremony that my grandfather used to lead and insistently. So it's sort of in his his honour. And yeah, schedule, schedule a chat with me, I'm talking to investors, I'm talking to potential partners, anybody that can add value, anybody that I can add value to so yeah, don't be a stranger. Just hop on over there and say hi.
Brian Briscoe 47:42
All right, perfect. And incidentally, you know, for the listeners, if something you heard you know, resonated or, or really struck a chord with you in a good way, definitely reach out to these guys. I know I appreciate it when people reach out to me after I've been on a podcast but definitely reach out and all that information once again to the show notes. And you know, that said, thanks again, guys for coming on the show today, and I had a lot of fun, and I learned a lot.
Thank you for listening to the divergent apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest on our show, visit our website at four oaks 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 favourite podcast app. And we'll see you again next week.
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