November 7, 2024 • 39 mins
In this episode of Inside The Deal Room, Gabe Bowling sits down with Morgan Ehrenzeller,(IG: @morganehrenzeller) one of The Deal Room community's top-performing members. Morgan shares his incredible journey from a rural childhood to owning nearly 200 real estate units. Learn his strategies for scaling from zero, and how he navigates the multifamily investment world.
Links:
- Website: thedealroom.io
- Circle Community: https://thedealroomcommunity.com/
- Schedule a call: https://api.leadconnectorhq.com/widget/booking/yQ8MDJsT2MBPa6VlfP61
- Morgan's IG: @morganehrenzeller
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
All right, what is going on everybody? Welcome back to another episode of Inside The Deal Room.
(00:09):
My name is Gabe Bowling and in today's episode, I have an amazing guest speaker here in person
in our Tampa, Florida office and honestly, one of the top performing members inside of
The Deal Room community, Morgan Ehrenzeller. Welcome to the office.
Hey, thank you for having me, Gabe.
So what I wanted to do with this episode is I've been able to see you grow so much over
(00:32):
the last year and a half, but I think the story behind how you even got to where you
are when you first started is really important for a lot of people who are listening to this
episode where they wanted to jump in the multifamily, but they're stuck in their job or they're
just going through the motions and you had to be extremely creative getting into real
estate.
So I want to break it out for a lot of the beginners, but then also the amount of growth
(00:55):
that you've had from when you started to scaling to... What are you at now for number of units?
117 and now with 198 to close next month, well this month.
And what were you at when you first initially joined our community?
About 30.
Yeah. So to be able to see that growth as well, it's almost like a two-part story. So
(01:15):
that's really what I want to take the time and dig deep on. So welcome. Thank you for
being here.
Thank you.
So let's get started. One, how in the world did you even get started in real estate? So
if you could just break out your story, where did you grow up in? Modest childhood, did
(01:36):
you grow up super broke? Did you grow up super rich? What was it for you growing up? And
then where did real estate become of interest for you?
Yeah, that's a great question. So I grew up in a very small rural area, about probably
700 population. We didn't even have a middle school. We had a 7th through 12th high school
because it was that small. So that's where I grew up. How I got into real estate really
(02:01):
was kind of an accident. So at 13, we grew up, we didn't have a lot of money at all.
We couldn't... I remember one point we had a hole in our bathroom floor and I was so
embarrassed to have friends over, all of that. So that was the main driver. And I made myself
a promise at 13 that I was going to be the one that changed my bloodline forever. And
(02:22):
we were no longer going to live like that. So at 14, I started teaching myself coding.
And then at 14, I launched a software company. And then from there, we're doing that. Me
and my partner and I were making about a thousand bucks a day at 15, 16 years old.
Holy cow.
PayPal, they limited my account because I wasn't an adult. I wasn't 18. So you had to
be an adult to have third party processors. So then as a young entrepreneur, I'm like,
(02:47):
okay, I need to pivot to another currency. So then I found Bitcoin and cryptocurrency.
So then I started rerouting all my software profits into Bitcoin. This was 2011, 2012.
And at this point it was like $30 a coin. So that was kind of an accident as well too.
I just needed a new currency to take my payments from. So then at that point, money was making
(03:10):
pretty good money as a teenager. And I picked something up that I didn't know what to do
with the money. I didn't come from money or anything like that. Now, granted, my parents
gave me everything that they could. I'm not dissing them by any means, everything that
they physically could. But I realized every rich or wealthy person was involved in real
(03:30):
estate. And it's one of those ones, if you want to drive a Ferrari, you want to take
advice from someone driving a Toyota or a Ferrari. So at 17, I bought my first duplex,
one seller finance with 5,000 bucks down. That's insane. And that was my journey into
real estate. All right. So let's unpack. That's kind of insane to be honest, because I'm pretty
(03:52):
sure when I was 14 and 15 and 16, I was like worrying about how I would dress the school
and not really worried about money. Were you just born natural entrepreneur? I like to
recreate things or was it like there was a figure in your life or it's like, okay, he's
rich, he's a business owner, I want to be like him. What was it that made you like,
(04:14):
okay, I want to make money and build a business and do all that fun stuff? Yeah, honestly,
I didn't have a mentor that person growing up at all. My parents worked at normal W-2.
My siblings have W-2 jobs. No one in my family owns a business at all. So it's just one of
those ones where I always had that entrepreneurial mindset growing up, so to say. I think when
(04:35):
I was like nine, 10, my aunt, she would get discount candles from Virginia and bring up
and I would flip them at Christmas. Yeah. So we were doing things like that. I had access
to a Best Buy employee login where you could get discount electronics. And then from there,
I would flip those as well, buy them at a discount from Best Buy and I would flip them.
(04:56):
You had that little vein of seeing, I can buy this for this, I can sell it for this
and this is where that little spread is. Yeah. So I always had that entrepreneurial ever
since I was young, but no one else in my family has that like me. Interesting. Very cool.
So all right, you get up to 17, you buy your first duplex. Are you in school or where are
you at in 17? Are you in high school or college at 17? So yeah, I started college at 17 and
(05:19):
then I bought the duplex right before I went to college and then sold the software company
because I wanted to do what every teenager did, drink, chase girls, all that stuff. So
then I bought the duplex, but I didn't do anything with it because I wanted to get my
degree and have fun while I was in college. So I started college at 17, pretty much was
(05:41):
hands off. And then while I was in college in my free time, I knew since I already bought
the duplex, there's one of those moments where, okay, I don't know it now, but I'm going to
push myself off the cliff and I'm going to learn it. I'm resourceful. If I can do all
the other things I did at that age, I can figure this out. So it was one of those ones,
I'll figure it out as I go. And while in college, in my free time, I was still listening to
(06:05):
podcasts, reading books, reading Rich Dad Poor Dad, found out about the burn method.
And I think when I was like 18 or 19 at that point, I was like, holy shit, this industry
is going to change my life. And then I was just soaking up that wisdom in those gold
nuggets waiting for when I graduated college to start executing.
Yeah.
At what point, and it probably is a mix between the self entrepreneurial thing that you have
(06:29):
in your veins, but at what point does personal development become really important for you?
Because every time I'm around you, every time I see you, you're like, I'm always trying
to grow. I'm always trying to learn. Is this where it started like this early on or was
that later on in your career?
Honestly, personal development probably started when I joined The Deal Room.
(06:50):
Really?
Yeah. And right around that time, I quickly realized, okay, to get into life or to get
to where I want to go, you have two options. You hear A, work your way there or B, you
can pay your way there. So you're paying with time, you're paying with money. And at that
point in time, my time is worth more to me than money. And it still is to this day. So
(07:11):
I'm very big advocate of continuing education, continuing self improvement, that stuff.
Very cool.
But yeah, it's one of those ones where it's just as you grow, your time becomes more worth
to you than what money is.
Yeah.
All right. So let's dive into the deal side of it. So you do the duplex, you go to college,
and then at what point does... So you're at two, you get to 30 somehow, because I know
(07:36):
we enter the picture at 30. Walk me through two and 30. What's that look like for you?
Yeah, great question. So right after college, well, my last semester of college, COVID was
just happening, 2020. I had extra money left over still from software. Even in college,
I was flipping things, flipping shoes, flipping Supreme. I flipped a car. One time I picked
(07:57):
up a dog and flipped a dog, make some money. Anything I could to make extra money. So...
I think that's important though, for everybody listening, people might laugh at it, but you
gotta have that hustle. It's just straight hustler mentality. It's like you can either
sit, complain on a couch and do nothing and have nothing, or you can just get after it.
If you're not born into it, you gotta hustle your way to it. So I saw that and you're like,
(08:21):
man, this guy's extremely hungry. And it didn't start at 20, it started when you were 14 and
15. That's awesome. All right, two to 30 after the college and stuff.
So last semester of college, just got back from Cancun, spring break with my friends.
I went to a foreclosure auction in my college town. It was the only person who bid on a
house for 10K. So yeah, I was like, I have this extra money, all my other friends, I
(08:46):
have friends that are spending on new cars, all this, that. I'm like, going to the city,
buying the nice apartment or renting the nicest apartment. I knew in my head that's not the
right move right now. That's gonna get me stuck in the rat race. So I bought that for
10,000. My dad was a carpenter, so he had me up on a roof at the age of nine. So my
(09:07):
whole life growing up, I knew construction, not just from the outside in, or not from,
but yeah, the inside out as well. So I was very familiar with construction. Put about
17,000 of sweat equity into it. And then I refinanced that one. It was worth 126. And
that's when it really clicked with me. I was like, shit. At that point I was 22 years old,
(09:27):
like three, four weeks. I just picked up 100K in equity. I'm like, wow, I don't come from
investment banking. I don't come from money. No other industry is ever going to do this
for me where I'm at in my life right now. So I did that. And then I did a bridge loan
on that, pulled out money, went and bought two more houses outright. I bought them for
(09:50):
44,000 for the both, a five bed, two baths, and a one bed, one bath with a garage. Now
this was a killer deal. After repair values, those are probably hovering around 375, 400.
Wow.
Granted, same scenario though. These are value adds. I had to go and fix them up, all of
that. So I bought those two outright, bought another house at a, there's a website called
(10:11):
Pre-REO, it's a gold nugget. Pre-REO, they finance mortgage or foreclosures as well.
So there I found another foreclosure for 12,000 bucks, 25% down from that refinance from the
bridge and got into another house. That's where it's about 175. So then I had that one
as well. And then from there liquidated some of my cryptocurrency. At that point, the bull
(10:33):
ran hit again, made a lot more money in cryptocurrency, bought some more foreclosures outright, got
to about 10 to 15 houses there doing that in my first 12 to 18 months out of college.
And then I ran out of money. So at that point I'm like, okay, how do I keep scaling as an
entrepreneur? And then I'm starting to shake, make a little bit of noise before starting
(10:56):
out, no one wants to give you money. And you shouldn't take other people's money when you
have less than 10 houses under you. So at that point, started shaking and grooving.
My friends from college, they're all graduating professional jobs. Some of them attorneys,
nurses, school teachers. They're like, I want a piece of that. So they were seeing it. So
(11:18):
then I started partnering with those people who are bringing the money. I would find the
home run deal. I would go in, I'd run operations, I would flip the house and then we would split
the profits at the end. We'd refinance out and split it. So did that to about that 30
house mark there.
So two to 30, extremely creative foreclosure, low money down, financing with Bridge. And
(11:41):
then you run out of money. And then instead of going online and starting an entire little
syndication business and doing the whole thing, you go to immediate friends and family. The
reason they're so comfortable with it is because they're literally seeing you do the two to
15. And they're like, okay, this is good. You've proven it out. I want a piece of that.
Yep, exactly.
(12:02):
And then that's what gets you to 30-ish mark. Yeah, that's awesome. Very cool. Now, okay,
first off, congrats. I don't know if every single person here that's watching is even
going to get up to that point. Hopefully everybody does. You're out of that first initial phase
of the first couple of years of the investor side. And now it's like, all right, this is
(12:26):
becoming a real business. We're getting outside capital from more than just friends and family.
I'm sure they're talking about it to their friends and it just keeps snowball effect
growing. Walk me through the thought process of you're at 30, you probably feel pretty
good about the income that you have at this point. You're probably financially free to
(12:49):
this degree at a very young age. What's the mindset that you have, or maybe you're just
entrepreneurial bug, you're never going to stop growing. Is there a big mindset shift
of we could just keep doing the thing that we're doing right this second and stay this
certain size, or we can go and focus on scale, which I think you are right this second. Walk
(13:11):
me through that.
Yeah. So when I got to the 30, I was trying to get loans from banks and stuff to keep
growing the portfolio and they kept shutting me down. Morgan, you don't have three years
tax returns, you don't have three years jobs history. Good luck, go get lost, kid. We're
not giving you money to go play Monopoly. You need that. So at that point I'm like,
okay, darn. I was like, okay, well, I have this degree. Well, I have these two degrees
(13:34):
I just wasted four and a half years of my life on. Let me see if I can do something
with that. So long story short, I went and I got a job at a market research firm, growing
technology companies, which I was actually very passionate about because I come from
that tech background. So I was already familiar with a lot of that. And at that point I had
about 30 and I was talking to one of my clients, Darren Columbus, secured too. And to grow
(14:02):
their technology companies over a hundred million in revenue, that was really my job.
And we were talking about saving taxes and I was like, oh, Darren, do you have any real
estate to help mitigate your tax issue? And he's like, yeah, I actually have a 16 unit
building. And I was like, oh, I actually own real estate too myself. So then he's like,
tell me about your background, what's your story? So I told him and he just looks at
(14:24):
me and he's like, Morgan, what the fuck are you doing working here? And I'm like, what
do you mean? I went to school, I'm here working. He's like, no, no, no, no, Morgan, you don't
belong here. You have characteristics, you can change this world. You need to go open
a fund, you need to go raise outside investors, you need to make projections. He's like, my
(14:49):
family friends have funded Facebook for 300 million when they first launched. I can introduce
you to people. So then at that point the mind starts going. He was that arm that believed
in me when I didn't have it. So then at that point I was like, shit, this guy's right.
I don't belong here. So then that's when I started researching funds, going down the
(15:10):
fund route, came across a lot of Bridger Paint and stuff. And then that's how ultimately
came, found you then through podcasts with the bigger pockets and stuff.
I think that the part that you just pulled out, the exposure or somebody, because up
to this point you have a limiting belief on what you can and can't do. And you're an entrepreneurial
person at heart, so you're like, gonna hustle. And you did. And that hustle is what got you
(15:32):
up to this point that 15 and then friends and family got you up to 30. But to go from
30 to like over 100 in a very short period of time, something changes mentally. And a
lot of it's like somebody that's done a really big amount, like something that you can't
even fathom. And they're like, dude, you have potential. You should be doing something a
(15:54):
lot bigger than what you're currently doing. I find that commonly in a lot of these people.
So thank you for sharing that. Yeah. I mean, props to him. He believed in me when no one
else did. So that definitely shifted me up and expanded it. But then at that time frame
too, some of my partners from college, they wanted to be active and learn all this stuff
(16:17):
too. So at that point I was like at 30, I knew the projector of where I was going. I
was going up quickly and I quickly realized for me to keep scaling, I'm not going to be
able to do this all myself. So then I was teaching my partners my knowledge. So then
because I knew in one to two years, I was going to be on a whole nother level and that
(16:40):
small shit isn't going to be worth my time. So at that point I made it very, very involved
with my partners in teaching and writing out those SOPs and the systems and processes because
I knew in my near future that small stuff, it wasn't going to fly for me anymore. And
we were sanding drywall in the middle of the winter with no heat in the houses and stuff
(17:02):
like that. We were sleeping on the floors. So I want to bring them with me too. I don't
want to leave them behind because they were in the trenches with me. So I made it a point
to build the team. And as I knew as I built the team, the team would help build the business.
So that's a very pivotal mind shift too to this day because they help a lot with the
(17:23):
heavy lift. I'm not trying to take their credit, but if it wasn't for teaching them that versus
I just go do it all, it would be much, much, much harder.
I think a lot of people need to be okay not having a hundred percent of the pie if the
pie is big enough. Everybody tries to hold on. I need a hundred percent. I need it. I
(17:45):
need it all. Most of the wealthy people I know own a smaller percentage of a much bigger
pie and they're much better off than a lot of the people that are focused on owning a
hundred percent of it.
Yeah. It's like, would you rather eat a grape or have 5% of a watermelon?
Yeah, watermelon. All right. So let's go ahead. Let's break into first year into The Deal Room..
(18:08):
Okay. You found the right vehicle by the way. Thank you for joining. Hopefully it's been
worth every amount of dollars that you put into it in the time. Walk me through this
last year for you, scaling from 30 to over a hundred.
Yeah. So since I joined The Deal Room, we still were picking up some small stuff here
(18:29):
and there generally for flipping just for active income. So I won't generally touch
a single family house unless we can pick up at least a hundred thousand dollars on the
flip. So that's just generally what our time, energy and all that's worth. So picking up
a handful of those in there just to move money across the board. But from the multifamily
lens bought an 18 unit and now we already have acquisition and disposition that one,
(18:55):
picked that 18 unit for 70K. Brian and I bought a 12 unit for 55K. Some of my partners from
college and I, we bought a 24 unit on seller finance with 32K with credit cards. And then
as well right now, some other stuff we have under contract to close next month. 22 unit
in Bluefield, West Virginia. It's also seller finance deal, 120K down. And then also a 34
(19:20):
unit in Trino, Texas. Also seller finance deal, 1.4 million, 275K down. Market rents
are about half of what they should be. Mom and pop owned it for 10, 15 years, haven't
raised the rents. And then recently the bigger one is a 47 unit that we got under contract
for 50,000 down.
So I hear a bunch of things I could probably open up at. Let's start. So deal flow and
(19:44):
how in the world you're even finding these seller finance deals. I know is the number
one question people are gonna wanna know. Before that, how important is the training
aspect of it? Because you're a go, go, go guy and you're making a lot of decisions quickly
and to be able to do that, you have to have a lot of certainty behind decisions and like
the numbers in it. When you join, like how important was it to actually get trained to
(20:08):
be able to move this fast?
Yes. So that was very, very good question. When I first joined, I knew surface level
stuff about multifamily, but...
Like everybody, that's the reason I asked this question. I think it's really important.
A lot of people try to shoot from the hip. They wanna go, because it's flipped, like
they come from the flipping world. They're used to doing, all right, what's ARV minus
(20:31):
25%, all right, let's submit the offer. It's almost as simple as that, but there are a
few variables that you can get stuck up on and lose quite a bit of money. I'm trying
to paint the importance of proper training before shooting from the hip.
That's a great question. So I was in the single family, the small stuff. And I mean, at that
(20:53):
point I could have taken down million, $2 million deals from multifamily, but I knew
I wasn't there personally yet. And I mean, not that I couldn't have done it, but I knew
I would have cost myself a lot of money along the way. And like I said earlier, you're gonna
pay with time, you're gonna pay with money. And I recognize by me falling and tripping
my knees, I could be a 500,000 screw up. So I made it apparent really for those first
(21:21):
zero to eight months, really just education, education, education, and really focused on
the education aspect rather than trying to find the deals. But my whole entire real estate
career so far, I really hone on just trying to find the deal. A, I think that's my specialty,
but also from the standpoint of everything starts with the deal. Without a deal, you
(21:47):
can't raise capital. Without a deal, you can't find an operator. So when you have the deal
and you have good deals, you can find an operator, you can find capital to plug the pieces together.
So I still try to have that mindset today is really honing in on the deal and finding
the deal.
You got trained in it and then you started taking action. What would you say the period
(22:09):
of time that you spent for the education was?
Couple of months.
Yeah, I think probably like zero to... Probably six months, eight months, I think at that
time I was buying a couple of five units, about what? Six, eight months into the deal
room. Starting out with those five, a six, I think I got a little 12 there and there
too, but yeah, just real small stuff to test the waters and then gradually start going
(22:30):
up and digging better.
Cool. So now let's dive in and hopefully everybody understands, I'm not trying to be that guy.
It's super important you get trained, you should get trained. Now let's go into the
fun stuff. One, what defines a home run deal for you and then let's move into deal flow
and the fun sourcing of it.
(22:50):
So what defines a home run deal to me is a deal with little entry that you can get into
with enormous upside and that you can mitigate the risk within that middle space there. Because
generally, you can mitigate risk in almost any investment, at least 50, 60, 70% depending
(23:11):
on how you break it down. So finding ways on how you can mitigate risk is crucial in
that. But yeah, it's really the deals and then finding low entry. What was so attractive
to me about those home run deals is because I didn't come from money, so I don't have
an abundance of money sitting behind me that could come and fill these deals. So there's
(23:34):
one of those ones, you have to know exactly what you're looking for because if you don't
know what you're looking for, you'll never find it.
That's why I ask because your definition of a great deal is different than my definition
of a great deal. My definition of a great deal is different than Anthony's definition
of a great deal. So you're finding a lot of these opportunities where they're seller finance
deals, they're low money down and they're extremely tough to come by. So let's ask the
(24:00):
obvious and like the elephant in the room, how are you actually finding these deals?
You don't have to go into all of it, but what is the main source of your deal flow right
now?
Yeah. So most people, you hear the traditional, go write mailers, go door knocking, driving
for dollars, all of that and ads. I don't spend a single dollar on ads or my marketing
(24:20):
at all, not a single dollar. And most people have, go all those options I just mentioned
is an outward marketing approach. So if you're not familiar with marketing, you have inbound,
you have outbound, outbound you're going, you're chasing, inbound they're coming to
you. I would much rather have an inbound approach where I don't have to go chase them all. So
I made it apparent from the beginning of setting up inbound marketing funnels. So that's, for
(24:46):
example, I'll go to broker events, other real estate events and subscribe, subscribe to
wholesalers emails list where, and making a point where they're sending me deals all
the time. So like my inbox is flooded full of deals. And then I go through and I analyze
those deals. And at this point, you know, you know, a deal that sticks out like a sore
(25:08):
thumb, a good one from a bad one when you just have so much data taking in all these
deals. So that's generally what my deal flow looks like. It's all inbound coming to me
rather than me chasing it.
Let's dig deeper a little bit. So what is this realtor relationships in a local market
that come across multifamily or come across sellers that might want to pass something
on but not to their kids or something like that, the story that we all look for? Is it
(25:33):
going to events, letting people know that you're a cash buyer or whatever, however you're
framing it? What is some really good golden nuggets that the listeners can walk away with?
Yeah. So all of those, yes, I do all of those, but I like to have a far reach. I like to
get as much eyeballs to see what I'm doing as possible. So if I get to a particular market,
(25:54):
for example, say we were here in Tampa and I want something in Tampa. Yeah, I could,
you know, punt those feelers out, but guess what? Maybe 200, 300, 400 people know that's
what I'm looking for. So I'll go and I'll join the community, the county community page.
So if we're in Tampa, I'll go join Hillsborough County community page. Now there's millions
(26:17):
of people there. So now I'll post exactly what I'm looking for, send it to this email
address A, now the deal flow comes there. I don't have to siphon through it. B, it helps
promote my website, all of that too. And, you know, I get millions of views instantly
rather than trying to, here's a nugget, here's a nugget, you know, pass it out, pass it out,
pass it out. So that's the approach I take is by mass communication. Yeah. Leveraging
(26:42):
other people's stages, kind of other people's audiences. That's a very, very valuable night.
Thank you for that. So we got a little bit of the deal flow. You have it coming in and
this is direct to seller conversation. So what's the biggest thing that, because for
me, I'm a broker guy. I love going on market, bigger stuff that's controlled by brokers.
(27:03):
For a lot of these mid sized ish multifamily deals that you're doing direct to seller conversations,
it's I'm, I'm assuming much more based around the sellers wants and needs more than like
the broker is only concerned about the price and like the best LOI that will come in. Can
you talk to us a little bit about the importance of understanding the seller and actually what
(27:28):
they're looking for versus do you want to sell the building right now? Like how is your
approach with this and getting so many deals? Yeah. So generally on multifamily, you know,
your earners are generally a little more sophisticated than, you know, the, the for and under. But
it's, it's all about finding the pain and sales 101, finding the pain and tying the
value to the pain. So like me, if I'm talking to a mom and pop, I say, okay, um, what price
(27:54):
do you want for this? I, you know, I'd like 1.5 million. All right. How did you come up
with that number? You know, their brains will start scrambling. Oh, maybe I'm, I'm asking
too high. Oh, you know, it's been sitting a little bit. Okay. If I could give you that
one and a half million, could you work with me a little bit on some terms? And you know,
if I can get you the price that you truly want, would you work with me when maybe, you
(28:15):
know, give me a little bit of a down payment. Let me go and fix the building up. You know,
I'm going to put money into it. Worse, you know, worse comes worse. You take the building
back. I dumped a shit ton of money in it and you're off to a better building. So it's,
you know, finding those, finding the bunnies has pace more because it, and, uh, you know,
really scratching deeper. Uh, so like one example that I got, she was, she was worried
(28:38):
because if she sold her building, um, her Medicaid, she would have had all that income,
her Medicaid, her insurance would have been gone. So that's what she was really worried
about that because she didn't want to pay for insurance. So I was like, okay, how about
we explore this option? A, you know, you can keep your insurance and B, you know, I'll
give you the price that you want on your terms when you want it out. So now, and I mean,
(28:59):
that's just one, there's so many different examples. You'd be surprised on some of the
stuff that people really truly, truly want at the end of the day. So it's, you know,
diving a lot deeper and peeling that onion back to the core to find out what they truly,
truly are looking for and then how you can position that and tie that value to that issue.
Yeah, man, that's awesome. Why don't you give me a crazy, like the craziest example you
(29:22):
could think of, like the best deal that you bought for seller finance terms, um, since
you've been in the game. What's like the home run highlight? You're, you're with the guys,
you're talking about the best deals you've ever done. What's, what's the deal you're
going to bring up as like, I stole this thing or this is a home run. Yeah. So, um, yeah,
(29:42):
I was, uh, it was about 10 o'clock about two months ago at 10 PM and my phone rings is
a West constant number. I'm like, eh, it's not, it's not unusual for people to be working
this late in my life because I pick it up. So like, Hey Morgan, um, blah, blah, my name's
blah, blah, blah. You know, I've been sending deals to you for like six, eight months now.
It's like, I have this deal. I think it's, I think you're really going to like it. And
(30:04):
I was like, all right, you know, it's 10 o'clock here. Give me two minutes, pitch it to me
quick. Like, what do you got? It's like, ah, it's this 24 unit, blah, blah, blah. I'm like,
where's it at? She's like, Illinois. I'm like, whoa, whoa, whoa, whoa, whoa there. Hold up.
Like I don't touch New York, California or Illinois. She's like, no, like, I think you
really need to look at this. And I'm like, all right, send it to me. I'll check it out
(30:26):
in the morning. And I was like, if I'm going to Illinois, like this thing has to be a screamer.
And uh, I looked at it the next morning and I thought it had some, I thought it had some
potential after looking at it. So first she was like, listen, she'll take as 24 units.
We're turning into 27 units or some extra space in the basement right now. She's like,
(30:48):
she wants, she wants 400 K cash for it. Uh, 17 with 24 are rented. It's bringing 9,500
bucks in a month rent right now. And I was like, okay. So she said 400 K cash or she'll
sell or finance it for 500 K with a hundred thousand dollars down. So I'm like, okay.
Um, you know, just bringing in 9,500 bucks a month, you know, as underwriting a little
(31:11):
bit. And like I said, if I'm going to Illinois, it has to be juicy. So, uh, so I was like,
all right, how about this? I'll offer you 400,000, but it's going to be 10% down 40
K. So she took it to the owner. This was a wholesaler. She took it to the owner and she
comes back to me a couple hours. She's like, how quick can you close? And I was like, yeah.
(31:33):
So I was like, I can close quick. And, uh, so at that point it was 40 K down, you know,
I go out there, walk them. This thing's already pumping out 9,500 bucks a month. I negotiated
5% IO for five year bloom. Uh, so our monthly debt one is 1500 bucks. It's already pumping
out 9,500. That's day one. Yet alone we have these other vacancies we can fill yet too,
(31:55):
and add more units to it. That's insane. Uh, so we did that one. I went out, walked it.
Um, there was some of the plumbing was backed up. So I had a hissy fit about that. I was
like, oh, you didn't tell me that's shaved 6 K off it. And then I positioned it to him
because she was collecting all the rents on the first. So I positioned it to close on
like the fifth a because we get prorated all of that rent because they collected it on
(32:18):
the first. So we get the 25 days for all of those, those 17 tenants. So we got, you know,
prorated all the rents, we got all the security deposits, shave 6 K down all said and done
as a view. It's going to be about 55, 60 K to close all sudden done when we restructure
it this way, 32 K to close. And we put that all in an A max card. Really? So you bought
24 units. Let's just, let's, let's start high level 24 units and we should break out the
(32:44):
whiteboard next time. 24 units for 400 grand. Yes. Seller finance. Yup. 40 grand down.
Yup. That was the starting point. And then it's already producing 9,500 bucks. Is that
in a Y or just straight income? That's gross. Okay. And they're, they're about half what
they should be. Yeah. So when they're rented out, it's going to be a lot more, but 95 day
(33:08):
one, and then you negotiate it down throughout due diligence. And when you hit the closing
table, it's 32 grand and you buy it on credit cards. Yup. With an A max. That's insanity.
That is insanity. And when did this happen? About two months ago. Okay. It didn't happen
in 1977. No. Okay. So people can like actually might potentially be able to do maybe the
(33:33):
same thing. Yeah. Or it's like a possibility. It's not so far fetched. Creativity. What
would you say it is? Really? Creativity, the hunger, the willingness to never quit, sales
negotiation, understanding what people want and then underwriting? Or what would you say
like the principles are to what you do? Cause it's very different than what I do. Yeah.
(33:55):
So all of everything you just mentioned is a great foundation. You definitely need that.
But the number one thing I think it is, is if you can be resourceful, you can do anything.
What do you mean by that? By anything. When I was 14, I taught myself a little bit of
coding and hired virtual assistants to code me a software company. That's resourceful.
When you don't have anything, what can you do to make it work? And you don't have chat
(34:19):
GPT at that point. Yeah. It's even easier today. Man, that's awesome. All right. So
let's finish it up with where, well, two things. How important are partnerships? Cause I see
what you're doing with partnerships and it's one getting you to grow a lot quicker. And
then we'll kind of finish with where's the Morgan in the next five to 10 years? What's
(34:42):
the big thing that you're working for? Yeah. So partnerships, I believe partnerships are
the partnerships and collaboration is the new currency. I really believe that, but it
has to be with the right people. You know, very, very, very fine line there. It has to
be with the right people, people who are very resourceful. Because example, in my opinion,
(35:02):
say you and I partner on a deal, automatically in that deal, I have all of your resources
because you have equitable interest in it and you have all my resources. So now automatically
when we combine those resources, we have a spider web of connections, you know, all across
America where we can pull levers from. So I'm a big, big, big firm believer on that.
(35:23):
And that's really helped me scale a lot over the past year. Is that, so big, big, big fan
on collaboration and partnerships, but it has to be with the right person. I can't just
be with an average Joe, so to say. So that, and honestly, the next five to 10 years where
I want to be, every single person in my family retired, everyone in my extended family retired,
(35:47):
everyone, you know, my girlfriend's family retired. So that's actually on the horizon
for this year and next year is for that. And then as well, I would, you know, at this point,
you know, the rate that we're going today, definitely have over probably 2,500 units
in five years, I would say, if we keep up, you know, the rate that we're going today.
(36:07):
Yeah, that's generally what the big picture is. You know, I want to create a big impact
in this world and, you know, I want to give more opportunity and build infrastructure around
where I came from because there's not shit there. So I want to be, you know, creating
an infrastructure and a blueprint where I'm from so it's easier for people to do the things
(36:31):
that I'm doing and be able to give back to my community where I'm from.
Man, that's incredible. Thank you for sharing. Let's wrap it up with what I would like to
classify as probably the most valuable portion of this is tangible action steps for the people
that are listening to this podcast where let's put into mind, like not the 14-year-old version
(36:56):
that's hiring VAs and running businesses when people are like in school and stuff, but like,
you know, the 20 to 25 to 30-year-old that's in a job, they don't love it, they want to
move in the real estate or maybe they're on the come up and they're like, they're lost,
they're looking for that vehicle. I think if you're, you know, listening to this, you're
considering real estate and multifamily. Think about, you know, that person. What would
(37:19):
you say today, end of 2024, moving into 2025 would be like the best piece of advice for
that person trying to break into the game? Find the person who's doing what you want
to do and is living your ideal lifestyle and how you see yourself and how you want to paint
that picture for yourself moving forward and get around them and work. So many people are
(37:44):
so scared to do this, work for free for those people. And you say it all the time, serve
the table until you have a seat at the table. It's so true. Like I, even to this day, I've
worked for free for people who are three steps ahead of me. I will gladly work for free for
them. A, it shows them I'm committed. B, I get a hell of an education from it that I
can take that with me and you know, that'll help propel me continue forward. And C, when
(38:08):
you serve it enough and you give them so much, they're going to feel obligated to give back
to you at some point. So, you know, I still do that today, even in the position I am.
I work for free for people who are bigger than me and are, you know, doing things where
I want to go. So getting around those types of people and, you know, just working your
ass off and don't bitch and complain. You know, don't sit there with your hands out.
(38:30):
No one knows you anything in this world.
And don't quit.
Yeah, and do not quit no matter what.
People just quit. Man, thank you so much for being here. Let's end with how in the world
do people get in touch with you? Because I think it's very inspiring. I think a lot of
people are going to be tracking what you're doing because you're not 30 years ahead. You're
like a couple, you're three, five years ahead where it's not too far gone, where what you're
(38:56):
doing today is still applicable to what people can do from right this second. So where can
people find you?
So I'm all over social media, just Morgan Aronceller, or you can email me, Morgan at
aroncellercapital.com. I'm pretty active on social media. You know, I'm very responsive
to people there. So that's generally where I talk to a lot of people who have questions
(39:18):
or maybe you're asking for a little guidance. And you know, we can go from there and set
up a meeting if anyone needs help.
Awesome. And potentially even do a deal with you.
Potentially do a deal with me as well.
Awesome. Ladies and gentlemen, thank you so much. We'll see you in the next episode.
All right, what is going on everybody? Welcome back to another episode of Inside The Deal Room.
(00:09):
My name is Gabe Bowling and in today's episode, I have an amazing guest speaker here in person
in our Tampa, Florida office and honestly, one of the top performing members inside of
The Deal Room community, Morgan Ehrenzeller. Welcome to the office.
Hey, thank you for having me, Gabe.
So what I wanted to do with this episode is I've been able to see you grow so much over
(00:32):
the last year and a half, but I think the story behind how you even got to where you
are when you first started is really important for a lot of people who are listening to this
episode where they wanted to jump in the multifamily, but they're stuck in their job or they're
just going through the motions and you had to be extremely creative getting into real
estate.
So I want to break it out for a lot of the beginners, but then also the amount of growth
(00:55):
that you've had from when you started to scaling to... What are you at now for number of units?
117 and now with 198 to close next month, well this month.
And what were you at when you first initially joined our community?
About 30.
Yeah. So to be able to see that growth as well, it's almost like a two-part story. So
(01:15):
that's really what I want to take the time and dig deep on. So welcome. Thank you for
being here.
Thank you.
So let's get started. One, how in the world did you even get started in real estate? So
if you could just break out your story, where did you grow up in? Modest childhood, did
(01:36):
you grow up super broke? Did you grow up super rich? What was it for you growing up? And
then where did real estate become of interest for you?
Yeah, that's a great question. So I grew up in a very small rural area, about probably
700 population. We didn't even have a middle school. We had a 7th through 12th high school
because it was that small. So that's where I grew up. How I got into real estate really
(02:01):
was kind of an accident. So at 13, we grew up, we didn't have a lot of money at all.
We couldn't... I remember one point we had a hole in our bathroom floor and I was so
embarrassed to have friends over, all of that. So that was the main driver. And I made myself
a promise at 13 that I was going to be the one that changed my bloodline forever. And
(02:22):
we were no longer going to live like that. So at 14, I started teaching myself coding.
And then at 14, I launched a software company. And then from there, we're doing that. Me
and my partner and I were making about a thousand bucks a day at 15, 16 years old.
Holy cow.
PayPal, they limited my account because I wasn't an adult. I wasn't 18. So you had to
be an adult to have third party processors. So then as a young entrepreneur, I'm like,
(02:47):
okay, I need to pivot to another currency. So then I found Bitcoin and cryptocurrency.
So then I started rerouting all my software profits into Bitcoin. This was 2011, 2012.
And at this point it was like $30 a coin. So that was kind of an accident as well too.
I just needed a new currency to take my payments from. So then at that point, money was making
(03:10):
pretty good money as a teenager. And I picked something up that I didn't know what to do
with the money. I didn't come from money or anything like that. Now, granted, my parents
gave me everything that they could. I'm not dissing them by any means, everything that
they physically could. But I realized every rich or wealthy person was involved in real
(03:30):
estate. And it's one of those ones, if you want to drive a Ferrari, you want to take
advice from someone driving a Toyota or a Ferrari. So at 17, I bought my first duplex,
one seller finance with 5,000 bucks down. That's insane. And that was my journey into
real estate. All right. So let's unpack. That's kind of insane to be honest, because I'm pretty
(03:52):
sure when I was 14 and 15 and 16, I was like worrying about how I would dress the school
and not really worried about money. Were you just born natural entrepreneur? I like to
recreate things or was it like there was a figure in your life or it's like, okay, he's
rich, he's a business owner, I want to be like him. What was it that made you like,
(04:14):
okay, I want to make money and build a business and do all that fun stuff? Yeah, honestly,
I didn't have a mentor that person growing up at all. My parents worked at normal W-2.
My siblings have W-2 jobs. No one in my family owns a business at all. So it's just one of
those ones where I always had that entrepreneurial mindset growing up, so to say. I think when
(04:35):
I was like nine, 10, my aunt, she would get discount candles from Virginia and bring up
and I would flip them at Christmas. Yeah. So we were doing things like that. I had access
to a Best Buy employee login where you could get discount electronics. And then from there,
I would flip those as well, buy them at a discount from Best Buy and I would flip them.
(04:56):
You had that little vein of seeing, I can buy this for this, I can sell it for this
and this is where that little spread is. Yeah. So I always had that entrepreneurial ever
since I was young, but no one else in my family has that like me. Interesting. Very cool.
So all right, you get up to 17, you buy your first duplex. Are you in school or where are
you at in 17? Are you in high school or college at 17? So yeah, I started college at 17 and
(05:19):
then I bought the duplex right before I went to college and then sold the software company
because I wanted to do what every teenager did, drink, chase girls, all that stuff. So
then I bought the duplex, but I didn't do anything with it because I wanted to get my
degree and have fun while I was in college. So I started college at 17, pretty much was
(05:41):
hands off. And then while I was in college in my free time, I knew since I already bought
the duplex, there's one of those moments where, okay, I don't know it now, but I'm going to
push myself off the cliff and I'm going to learn it. I'm resourceful. If I can do all
the other things I did at that age, I can figure this out. So it was one of those ones,
I'll figure it out as I go. And while in college, in my free time, I was still listening to
(06:05):
podcasts, reading books, reading Rich Dad Poor Dad, found out about the burn method.
And I think when I was like 18 or 19 at that point, I was like, holy shit, this industry
is going to change my life. And then I was just soaking up that wisdom in those gold
nuggets waiting for when I graduated college to start executing.
Yeah.
At what point, and it probably is a mix between the self entrepreneurial thing that you have
(06:29):
in your veins, but at what point does personal development become really important for you?
Because every time I'm around you, every time I see you, you're like, I'm always trying
to grow. I'm always trying to learn. Is this where it started like this early on or was
that later on in your career?
Honestly, personal development probably started when I joined The Deal Room.
(06:50):
Really?
Yeah. And right around that time, I quickly realized, okay, to get into life or to get
to where I want to go, you have two options. You hear A, work your way there or B, you
can pay your way there. So you're paying with time, you're paying with money. And at that
point in time, my time is worth more to me than money. And it still is to this day. So
(07:11):
I'm very big advocate of continuing education, continuing self improvement, that stuff.
Very cool.
But yeah, it's one of those ones where it's just as you grow, your time becomes more worth
to you than what money is.
Yeah.
All right. So let's dive into the deal side of it. So you do the duplex, you go to college,
and then at what point does... So you're at two, you get to 30 somehow, because I know
(07:36):
we enter the picture at 30. Walk me through two and 30. What's that look like for you?
Yeah, great question. So right after college, well, my last semester of college, COVID was
just happening, 2020. I had extra money left over still from software. Even in college,
I was flipping things, flipping shoes, flipping Supreme. I flipped a car. One time I picked
(07:57):
up a dog and flipped a dog, make some money. Anything I could to make extra money. So...
I think that's important though, for everybody listening, people might laugh at it, but you
gotta have that hustle. It's just straight hustler mentality. It's like you can either
sit, complain on a couch and do nothing and have nothing, or you can just get after it.
If you're not born into it, you gotta hustle your way to it. So I saw that and you're like,
(08:21):
man, this guy's extremely hungry. And it didn't start at 20, it started when you were 14 and
15. That's awesome. All right, two to 30 after the college and stuff.
So last semester of college, just got back from Cancun, spring break with my friends.
I went to a foreclosure auction in my college town. It was the only person who bid on a
house for 10K. So yeah, I was like, I have this extra money, all my other friends, I
(08:46):
have friends that are spending on new cars, all this, that. I'm like, going to the city,
buying the nice apartment or renting the nicest apartment. I knew in my head that's not the
right move right now. That's gonna get me stuck in the rat race. So I bought that for
10,000. My dad was a carpenter, so he had me up on a roof at the age of nine. So my
(09:07):
whole life growing up, I knew construction, not just from the outside in, or not from,
but yeah, the inside out as well. So I was very familiar with construction. Put about
17,000 of sweat equity into it. And then I refinanced that one. It was worth 126. And
that's when it really clicked with me. I was like, shit. At that point I was 22 years old,
(09:27):
like three, four weeks. I just picked up 100K in equity. I'm like, wow, I don't come from
investment banking. I don't come from money. No other industry is ever going to do this
for me where I'm at in my life right now. So I did that. And then I did a bridge loan
on that, pulled out money, went and bought two more houses outright. I bought them for
(09:50):
44,000 for the both, a five bed, two baths, and a one bed, one bath with a garage. Now
this was a killer deal. After repair values, those are probably hovering around 375, 400.
Wow.
Granted, same scenario though. These are value adds. I had to go and fix them up, all of
that. So I bought those two outright, bought another house at a, there's a website called
(10:11):
Pre-REO, it's a gold nugget. Pre-REO, they finance mortgage or foreclosures as well.
So there I found another foreclosure for 12,000 bucks, 25% down from that refinance from the
bridge and got into another house. That's where it's about 175. So then I had that one
as well. And then from there liquidated some of my cryptocurrency. At that point, the bull
(10:33):
ran hit again, made a lot more money in cryptocurrency, bought some more foreclosures outright, got
to about 10 to 15 houses there doing that in my first 12 to 18 months out of college.
And then I ran out of money. So at that point I'm like, okay, how do I keep scaling as an
entrepreneur? And then I'm starting to shake, make a little bit of noise before starting
(10:56):
out, no one wants to give you money. And you shouldn't take other people's money when you
have less than 10 houses under you. So at that point, started shaking and grooving.
My friends from college, they're all graduating professional jobs. Some of them attorneys,
nurses, school teachers. They're like, I want a piece of that. So they were seeing it. So
(11:18):
then I started partnering with those people who are bringing the money. I would find the
home run deal. I would go in, I'd run operations, I would flip the house and then we would split
the profits at the end. We'd refinance out and split it. So did that to about that 30
house mark there.
So two to 30, extremely creative foreclosure, low money down, financing with Bridge. And
(11:41):
then you run out of money. And then instead of going online and starting an entire little
syndication business and doing the whole thing, you go to immediate friends and family. The
reason they're so comfortable with it is because they're literally seeing you do the two to
15. And they're like, okay, this is good. You've proven it out. I want a piece of that.
Yep, exactly.
(12:02):
And then that's what gets you to 30-ish mark. Yeah, that's awesome. Very cool. Now, okay,
first off, congrats. I don't know if every single person here that's watching is even
going to get up to that point. Hopefully everybody does. You're out of that first initial phase
of the first couple of years of the investor side. And now it's like, all right, this is
(12:26):
becoming a real business. We're getting outside capital from more than just friends and family.
I'm sure they're talking about it to their friends and it just keeps snowball effect
growing. Walk me through the thought process of you're at 30, you probably feel pretty
good about the income that you have at this point. You're probably financially free to
(12:49):
this degree at a very young age. What's the mindset that you have, or maybe you're just
entrepreneurial bug, you're never going to stop growing. Is there a big mindset shift
of we could just keep doing the thing that we're doing right this second and stay this
certain size, or we can go and focus on scale, which I think you are right this second. Walk
(13:11):
me through that.
Yeah. So when I got to the 30, I was trying to get loans from banks and stuff to keep
growing the portfolio and they kept shutting me down. Morgan, you don't have three years
tax returns, you don't have three years jobs history. Good luck, go get lost, kid. We're
not giving you money to go play Monopoly. You need that. So at that point I'm like,
okay, darn. I was like, okay, well, I have this degree. Well, I have these two degrees
(13:34):
I just wasted four and a half years of my life on. Let me see if I can do something
with that. So long story short, I went and I got a job at a market research firm, growing
technology companies, which I was actually very passionate about because I come from
that tech background. So I was already familiar with a lot of that. And at that point I had
about 30 and I was talking to one of my clients, Darren Columbus, secured too. And to grow
(14:02):
their technology companies over a hundred million in revenue, that was really my job.
And we were talking about saving taxes and I was like, oh, Darren, do you have any real
estate to help mitigate your tax issue? And he's like, yeah, I actually have a 16 unit
building. And I was like, oh, I actually own real estate too myself. So then he's like,
tell me about your background, what's your story? So I told him and he just looks at
(14:24):
me and he's like, Morgan, what the fuck are you doing working here? And I'm like, what
do you mean? I went to school, I'm here working. He's like, no, no, no, no, Morgan, you don't
belong here. You have characteristics, you can change this world. You need to go open
a fund, you need to go raise outside investors, you need to make projections. He's like, my
(14:49):
family friends have funded Facebook for 300 million when they first launched. I can introduce
you to people. So then at that point the mind starts going. He was that arm that believed
in me when I didn't have it. So then at that point I was like, shit, this guy's right.
I don't belong here. So then that's when I started researching funds, going down the
(15:10):
fund route, came across a lot of Bridger Paint and stuff. And then that's how ultimately
came, found you then through podcasts with the bigger pockets and stuff.
I think that the part that you just pulled out, the exposure or somebody, because up
to this point you have a limiting belief on what you can and can't do. And you're an entrepreneurial
person at heart, so you're like, gonna hustle. And you did. And that hustle is what got you
(15:32):
up to this point that 15 and then friends and family got you up to 30. But to go from
30 to like over 100 in a very short period of time, something changes mentally. And a
lot of it's like somebody that's done a really big amount, like something that you can't
even fathom. And they're like, dude, you have potential. You should be doing something a
(15:54):
lot bigger than what you're currently doing. I find that commonly in a lot of these people.
So thank you for sharing that. Yeah. I mean, props to him. He believed in me when no one
else did. So that definitely shifted me up and expanded it. But then at that time frame
too, some of my partners from college, they wanted to be active and learn all this stuff
(16:17):
too. So at that point I was like at 30, I knew the projector of where I was going. I
was going up quickly and I quickly realized for me to keep scaling, I'm not going to be
able to do this all myself. So then I was teaching my partners my knowledge. So then
because I knew in one to two years, I was going to be on a whole nother level and that
(16:40):
small shit isn't going to be worth my time. So at that point I made it very, very involved
with my partners in teaching and writing out those SOPs and the systems and processes because
I knew in my near future that small stuff, it wasn't going to fly for me anymore. And
we were sanding drywall in the middle of the winter with no heat in the houses and stuff
(17:02):
like that. We were sleeping on the floors. So I want to bring them with me too. I don't
want to leave them behind because they were in the trenches with me. So I made it a point
to build the team. And as I knew as I built the team, the team would help build the business.
So that's a very pivotal mind shift too to this day because they help a lot with the
(17:23):
heavy lift. I'm not trying to take their credit, but if it wasn't for teaching them that versus
I just go do it all, it would be much, much, much harder.
I think a lot of people need to be okay not having a hundred percent of the pie if the
pie is big enough. Everybody tries to hold on. I need a hundred percent. I need it. I
(17:45):
need it all. Most of the wealthy people I know own a smaller percentage of a much bigger
pie and they're much better off than a lot of the people that are focused on owning a
hundred percent of it.
Yeah. It's like, would you rather eat a grape or have 5% of a watermelon?
Yeah, watermelon. All right. So let's go ahead. Let's break into first year into The Deal Room..
(18:08):
Okay. You found the right vehicle by the way. Thank you for joining. Hopefully it's been
worth every amount of dollars that you put into it in the time. Walk me through this
last year for you, scaling from 30 to over a hundred.
Yeah. So since I joined The Deal Room, we still were picking up some small stuff here
(18:29):
and there generally for flipping just for active income. So I won't generally touch
a single family house unless we can pick up at least a hundred thousand dollars on the
flip. So that's just generally what our time, energy and all that's worth. So picking up
a handful of those in there just to move money across the board. But from the multifamily
lens bought an 18 unit and now we already have acquisition and disposition that one,
(18:55):
picked that 18 unit for 70K. Brian and I bought a 12 unit for 55K. Some of my partners from
college and I, we bought a 24 unit on seller finance with 32K with credit cards. And then
as well right now, some other stuff we have under contract to close next month. 22 unit
in Bluefield, West Virginia. It's also seller finance deal, 120K down. And then also a 34
(19:20):
unit in Trino, Texas. Also seller finance deal, 1.4 million, 275K down. Market rents
are about half of what they should be. Mom and pop owned it for 10, 15 years, haven't
raised the rents. And then recently the bigger one is a 47 unit that we got under contract
for 50,000 down.
So I hear a bunch of things I could probably open up at. Let's start. So deal flow and
(19:44):
how in the world you're even finding these seller finance deals. I know is the number
one question people are gonna wanna know. Before that, how important is the training
aspect of it? Because you're a go, go, go guy and you're making a lot of decisions quickly
and to be able to do that, you have to have a lot of certainty behind decisions and like
the numbers in it. When you join, like how important was it to actually get trained to
(20:08):
be able to move this fast?
Yes. So that was very, very good question. When I first joined, I knew surface level
stuff about multifamily, but...
Like everybody, that's the reason I asked this question. I think it's really important.
A lot of people try to shoot from the hip. They wanna go, because it's flipped, like
they come from the flipping world. They're used to doing, all right, what's ARV minus
(20:31):
25%, all right, let's submit the offer. It's almost as simple as that, but there are a
few variables that you can get stuck up on and lose quite a bit of money. I'm trying
to paint the importance of proper training before shooting from the hip.
That's a great question. So I was in the single family, the small stuff. And I mean, at that
(20:53):
point I could have taken down million, $2 million deals from multifamily, but I knew
I wasn't there personally yet. And I mean, not that I couldn't have done it, but I knew
I would have cost myself a lot of money along the way. And like I said earlier, you're gonna
pay with time, you're gonna pay with money. And I recognize by me falling and tripping
my knees, I could be a 500,000 screw up. So I made it apparent really for those first
(21:21):
zero to eight months, really just education, education, education, and really focused on
the education aspect rather than trying to find the deals. But my whole entire real estate
career so far, I really hone on just trying to find the deal. A, I think that's my specialty,
but also from the standpoint of everything starts with the deal. Without a deal, you
(21:47):
can't raise capital. Without a deal, you can't find an operator. So when you have the deal
and you have good deals, you can find an operator, you can find capital to plug the pieces together.
So I still try to have that mindset today is really honing in on the deal and finding
the deal.
You got trained in it and then you started taking action. What would you say the period
(22:09):
of time that you spent for the education was?
Couple of months.
Yeah, I think probably like zero to... Probably six months, eight months, I think at that
time I was buying a couple of five units, about what? Six, eight months into the deal
room. Starting out with those five, a six, I think I got a little 12 there and there
too, but yeah, just real small stuff to test the waters and then gradually start going
(22:30):
up and digging better.
Cool. So now let's dive in and hopefully everybody understands, I'm not trying to be that guy.
It's super important you get trained, you should get trained. Now let's go into the
fun stuff. One, what defines a home run deal for you and then let's move into deal flow
and the fun sourcing of it.
(22:50):
So what defines a home run deal to me is a deal with little entry that you can get into
with enormous upside and that you can mitigate the risk within that middle space there. Because
generally, you can mitigate risk in almost any investment, at least 50, 60, 70% depending
(23:11):
on how you break it down. So finding ways on how you can mitigate risk is crucial in
that. But yeah, it's really the deals and then finding low entry. What was so attractive
to me about those home run deals is because I didn't come from money, so I don't have
an abundance of money sitting behind me that could come and fill these deals. So there's
(23:34):
one of those ones, you have to know exactly what you're looking for because if you don't
know what you're looking for, you'll never find it.
That's why I ask because your definition of a great deal is different than my definition
of a great deal. My definition of a great deal is different than Anthony's definition
of a great deal. So you're finding a lot of these opportunities where they're seller finance
deals, they're low money down and they're extremely tough to come by. So let's ask the
(24:00):
obvious and like the elephant in the room, how are you actually finding these deals?
You don't have to go into all of it, but what is the main source of your deal flow right
now?
Yeah. So most people, you hear the traditional, go write mailers, go door knocking, driving
for dollars, all of that and ads. I don't spend a single dollar on ads or my marketing
(24:20):
at all, not a single dollar. And most people have, go all those options I just mentioned
is an outward marketing approach. So if you're not familiar with marketing, you have inbound,
you have outbound, outbound you're going, you're chasing, inbound they're coming to
you. I would much rather have an inbound approach where I don't have to go chase them all. So
I made it apparent from the beginning of setting up inbound marketing funnels. So that's, for
(24:46):
example, I'll go to broker events, other real estate events and subscribe, subscribe to
wholesalers emails list where, and making a point where they're sending me deals all
the time. So like my inbox is flooded full of deals. And then I go through and I analyze
those deals. And at this point, you know, you know, a deal that sticks out like a sore
(25:08):
thumb, a good one from a bad one when you just have so much data taking in all these
deals. So that's generally what my deal flow looks like. It's all inbound coming to me
rather than me chasing it.
Let's dig deeper a little bit. So what is this realtor relationships in a local market
that come across multifamily or come across sellers that might want to pass something
on but not to their kids or something like that, the story that we all look for? Is it
(25:33):
going to events, letting people know that you're a cash buyer or whatever, however you're
framing it? What is some really good golden nuggets that the listeners can walk away with?
Yeah. So all of those, yes, I do all of those, but I like to have a far reach. I like to
get as much eyeballs to see what I'm doing as possible. So if I get to a particular market,
(25:54):
for example, say we were here in Tampa and I want something in Tampa. Yeah, I could,
you know, punt those feelers out, but guess what? Maybe 200, 300, 400 people know that's
what I'm looking for. So I'll go and I'll join the community, the county community page.
So if we're in Tampa, I'll go join Hillsborough County community page. Now there's millions
(26:17):
of people there. So now I'll post exactly what I'm looking for, send it to this email
address A, now the deal flow comes there. I don't have to siphon through it. B, it helps
promote my website, all of that too. And, you know, I get millions of views instantly
rather than trying to, here's a nugget, here's a nugget, you know, pass it out, pass it out,
pass it out. So that's the approach I take is by mass communication. Yeah. Leveraging
(26:42):
other people's stages, kind of other people's audiences. That's a very, very valuable night.
Thank you for that. So we got a little bit of the deal flow. You have it coming in and
this is direct to seller conversation. So what's the biggest thing that, because for
me, I'm a broker guy. I love going on market, bigger stuff that's controlled by brokers.
(27:03):
For a lot of these mid sized ish multifamily deals that you're doing direct to seller conversations,
it's I'm, I'm assuming much more based around the sellers wants and needs more than like
the broker is only concerned about the price and like the best LOI that will come in. Can
you talk to us a little bit about the importance of understanding the seller and actually what
(27:28):
they're looking for versus do you want to sell the building right now? Like how is your
approach with this and getting so many deals? Yeah. So generally on multifamily, you know,
your earners are generally a little more sophisticated than, you know, the, the for and under. But
it's, it's all about finding the pain and sales 101, finding the pain and tying the
value to the pain. So like me, if I'm talking to a mom and pop, I say, okay, um, what price
(27:54):
do you want for this? I, you know, I'd like 1.5 million. All right. How did you come up
with that number? You know, their brains will start scrambling. Oh, maybe I'm, I'm asking
too high. Oh, you know, it's been sitting a little bit. Okay. If I could give you that
one and a half million, could you work with me a little bit on some terms? And you know,
if I can get you the price that you truly want, would you work with me when maybe, you
(28:15):
know, give me a little bit of a down payment. Let me go and fix the building up. You know,
I'm going to put money into it. Worse, you know, worse comes worse. You take the building
back. I dumped a shit ton of money in it and you're off to a better building. So it's,
you know, finding those, finding the bunnies has pace more because it, and, uh, you know,
really scratching deeper. Uh, so like one example that I got, she was, she was worried
(28:38):
because if she sold her building, um, her Medicaid, she would have had all that income,
her Medicaid, her insurance would have been gone. So that's what she was really worried
about that because she didn't want to pay for insurance. So I was like, okay, how about
we explore this option? A, you know, you can keep your insurance and B, you know, I'll
give you the price that you want on your terms when you want it out. So now, and I mean,
(28:59):
that's just one, there's so many different examples. You'd be surprised on some of the
stuff that people really truly, truly want at the end of the day. So it's, you know,
diving a lot deeper and peeling that onion back to the core to find out what they truly,
truly are looking for and then how you can position that and tie that value to that issue.
Yeah, man, that's awesome. Why don't you give me a crazy, like the craziest example you
(29:22):
could think of, like the best deal that you bought for seller finance terms, um, since
you've been in the game. What's like the home run highlight? You're, you're with the guys,
you're talking about the best deals you've ever done. What's, what's the deal you're
going to bring up as like, I stole this thing or this is a home run. Yeah. So, um, yeah,
(29:42):
I was, uh, it was about 10 o'clock about two months ago at 10 PM and my phone rings is
a West constant number. I'm like, eh, it's not, it's not unusual for people to be working
this late in my life because I pick it up. So like, Hey Morgan, um, blah, blah, my name's
blah, blah, blah. You know, I've been sending deals to you for like six, eight months now.
It's like, I have this deal. I think it's, I think you're really going to like it. And
(30:04):
I was like, all right, you know, it's 10 o'clock here. Give me two minutes, pitch it to me
quick. Like, what do you got? It's like, ah, it's this 24 unit, blah, blah, blah. I'm like,
where's it at? She's like, Illinois. I'm like, whoa, whoa, whoa, whoa, whoa there. Hold up.
Like I don't touch New York, California or Illinois. She's like, no, like, I think you
really need to look at this. And I'm like, all right, send it to me. I'll check it out
(30:26):
in the morning. And I was like, if I'm going to Illinois, like this thing has to be a screamer.
And uh, I looked at it the next morning and I thought it had some, I thought it had some
potential after looking at it. So first she was like, listen, she'll take as 24 units.
We're turning into 27 units or some extra space in the basement right now. She's like,
(30:48):
she wants, she wants 400 K cash for it. Uh, 17 with 24 are rented. It's bringing 9,500
bucks in a month rent right now. And I was like, okay. So she said 400 K cash or she'll
sell or finance it for 500 K with a hundred thousand dollars down. So I'm like, okay.
Um, you know, just bringing in 9,500 bucks a month, you know, as underwriting a little
(31:11):
bit. And like I said, if I'm going to Illinois, it has to be juicy. So, uh, so I was like,
all right, how about this? I'll offer you 400,000, but it's going to be 10% down 40
K. So she took it to the owner. This was a wholesaler. She took it to the owner and she
comes back to me a couple hours. She's like, how quick can you close? And I was like, yeah.
(31:33):
So I was like, I can close quick. And, uh, so at that point it was 40 K down, you know,
I go out there, walk them. This thing's already pumping out 9,500 bucks a month. I negotiated
5% IO for five year bloom. Uh, so our monthly debt one is 1500 bucks. It's already pumping
out 9,500. That's day one. Yet alone we have these other vacancies we can fill yet too,
(31:55):
and add more units to it. That's insane. Uh, so we did that one. I went out, walked it.
Um, there was some of the plumbing was backed up. So I had a hissy fit about that. I was
like, oh, you didn't tell me that's shaved 6 K off it. And then I positioned it to him
because she was collecting all the rents on the first. So I positioned it to close on
like the fifth a because we get prorated all of that rent because they collected it on
(32:18):
the first. So we get the 25 days for all of those, those 17 tenants. So we got, you know,
prorated all the rents, we got all the security deposits, shave 6 K down all said and done
as a view. It's going to be about 55, 60 K to close all sudden done when we restructure
it this way, 32 K to close. And we put that all in an A max card. Really? So you bought
24 units. Let's just, let's, let's start high level 24 units and we should break out the
(32:44):
whiteboard next time. 24 units for 400 grand. Yes. Seller finance. Yup. 40 grand down.
Yup. That was the starting point. And then it's already producing 9,500 bucks. Is that
in a Y or just straight income? That's gross. Okay. And they're, they're about half what
they should be. Yeah. So when they're rented out, it's going to be a lot more, but 95 day
(33:08):
one, and then you negotiate it down throughout due diligence. And when you hit the closing
table, it's 32 grand and you buy it on credit cards. Yup. With an A max. That's insanity.
That is insanity. And when did this happen? About two months ago. Okay. It didn't happen
in 1977. No. Okay. So people can like actually might potentially be able to do maybe the
(33:33):
same thing. Yeah. Or it's like a possibility. It's not so far fetched. Creativity. What
would you say it is? Really? Creativity, the hunger, the willingness to never quit, sales
negotiation, understanding what people want and then underwriting? Or what would you say
like the principles are to what you do? Cause it's very different than what I do. Yeah.
(33:55):
So all of everything you just mentioned is a great foundation. You definitely need that.
But the number one thing I think it is, is if you can be resourceful, you can do anything.
What do you mean by that? By anything. When I was 14, I taught myself a little bit of
coding and hired virtual assistants to code me a software company. That's resourceful.
When you don't have anything, what can you do to make it work? And you don't have chat
(34:19):
GPT at that point. Yeah. It's even easier today. Man, that's awesome. All right. So
let's finish it up with where, well, two things. How important are partnerships? Cause I see
what you're doing with partnerships and it's one getting you to grow a lot quicker. And
then we'll kind of finish with where's the Morgan in the next five to 10 years? What's
(34:42):
the big thing that you're working for? Yeah. So partnerships, I believe partnerships are
the partnerships and collaboration is the new currency. I really believe that, but it
has to be with the right people. You know, very, very, very fine line there. It has to
be with the right people, people who are very resourceful. Because example, in my opinion,
(35:02):
say you and I partner on a deal, automatically in that deal, I have all of your resources
because you have equitable interest in it and you have all my resources. So now automatically
when we combine those resources, we have a spider web of connections, you know, all across
America where we can pull levers from. So I'm a big, big, big firm believer on that.
(35:23):
And that's really helped me scale a lot over the past year. Is that, so big, big, big fan
on collaboration and partnerships, but it has to be with the right person. I can't just
be with an average Joe, so to say. So that, and honestly, the next five to 10 years where
I want to be, every single person in my family retired, everyone in my extended family retired,
(35:47):
everyone, you know, my girlfriend's family retired. So that's actually on the horizon
for this year and next year is for that. And then as well, I would, you know, at this point,
you know, the rate that we're going today, definitely have over probably 2,500 units
in five years, I would say, if we keep up, you know, the rate that we're going today.
(36:07):
Yeah, that's generally what the big picture is. You know, I want to create a big impact
in this world and, you know, I want to give more opportunity and build infrastructure around
where I came from because there's not shit there. So I want to be, you know, creating
an infrastructure and a blueprint where I'm from so it's easier for people to do the things
(36:31):
that I'm doing and be able to give back to my community where I'm from.
Man, that's incredible. Thank you for sharing. Let's wrap it up with what I would like to
classify as probably the most valuable portion of this is tangible action steps for the people
that are listening to this podcast where let's put into mind, like not the 14-year-old version
(36:56):
that's hiring VAs and running businesses when people are like in school and stuff, but like,
you know, the 20 to 25 to 30-year-old that's in a job, they don't love it, they want to
move in the real estate or maybe they're on the come up and they're like, they're lost,
they're looking for that vehicle. I think if you're, you know, listening to this, you're
considering real estate and multifamily. Think about, you know, that person. What would
(37:19):
you say today, end of 2024, moving into 2025 would be like the best piece of advice for
that person trying to break into the game? Find the person who's doing what you want
to do and is living your ideal lifestyle and how you see yourself and how you want to paint
that picture for yourself moving forward and get around them and work. So many people are
(37:44):
so scared to do this, work for free for those people. And you say it all the time, serve
the table until you have a seat at the table. It's so true. Like I, even to this day, I've
worked for free for people who are three steps ahead of me. I will gladly work for free for
them. A, it shows them I'm committed. B, I get a hell of an education from it that I
can take that with me and you know, that'll help propel me continue forward. And C, when
(38:08):
you serve it enough and you give them so much, they're going to feel obligated to give back
to you at some point. So, you know, I still do that today, even in the position I am.
I work for free for people who are bigger than me and are, you know, doing things where
I want to go. So getting around those types of people and, you know, just working your
ass off and don't bitch and complain. You know, don't sit there with your hands out.
(38:30):
No one knows you anything in this world.
And don't quit.
Yeah, and do not quit no matter what.
People just quit. Man, thank you so much for being here. Let's end with how in the world
do people get in touch with you? Because I think it's very inspiring. I think a lot of
people are going to be tracking what you're doing because you're not 30 years ahead. You're
like a couple, you're three, five years ahead where it's not too far gone, where what you're
(38:56):
doing today is still applicable to what people can do from right this second. So where can
people find you?
So I'm all over social media, just Morgan Aronceller, or you can email me, Morgan at
aroncellercapital.com. I'm pretty active on social media. You know, I'm very responsive
to people there. So that's generally where I talk to a lot of people who have questions
(39:18):
or maybe you're asking for a little guidance. And you know, we can go from there and set
up a meeting if anyone needs help.
Awesome. And potentially even do a deal with you.
Potentially do a deal with me as well.
Awesome. Ladies and gentlemen, thank you so much. We'll see you in the next episode.
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