You will want to explore adding multifamily investing to your portfolio at some point especially after you listen to this episode. A multifamily property is any private property that contains more than one lodging/housing unit. No matter how you decide to put resources into a multifamily property, this venture can be an extraordinary financial building tool. Michael Albaum is our guest on Unstoppable REI Wealth to discuss how he invests in multi-family real estate properties, remotely, while embodying the nomadic lifestyle of living in a van and traveling with his wife full time. Michael Albaum is a real estate investor and Program Manager/Head Coach of Roof-stock Academy. In the last decade, he has done a variety of deals ranging from single-family homes to longer-term NNN lease properties with national chain tenants. After years of investing, he found his niche in long-distance, value-add multifamily investing. Michael recently left the 9-5 world and before the pandemic was traveling around the world with his wife, who is also able to work remotely. Having seen the benefits that real estate can provide, Michael is extremely passionate about helping others to achieve their goals by using real estate as a vehicle. Michael is also the host of The Remote Real Estate Investor Podcast, which interviews RE industry professionals about remote real estate investing. Below are the topics that Michael discussed in the show to educate the listeners: • Nomadic Investing - How to manage/invest in RE while living in a van/traveling full time • Hands off NNN vs Remote Value Add Multifamily - Why Michael landed on Multifamily • How much passive income is needed to live nomadically and travel constantly? • How to start investing in RE as a side hustle while having a full-time job to fund purchases. • How to make the mental mindset shift around never seeing, or touching an investment property before purchasing or ever during the lifecycle of ownership. • Why I dove headfirst into the commercial multifamily asset class (5+ units) • What actionable steps do you need to take today to get yourself on the road to investing in rental properties? • How to scale your side hustle investment properties into a portfolio that could give you financial freedom. If you want to connect with Michael Albaum, here are his social links: Michael Albaum LinkedIn - https://www.linkedin.com/in/michael-albaum-297a8534/ Michael Albaum Twitter - https://twitter.com/MichaelAlbaum The Remote Real Estate Investor Podcast - https://apple.co/3MAgH1J Roofstock LinkedIn - https://www.linkedin.com/company/roofstock/ (12.1k followers) Thank you all for listening and I will see you in the next episode. When you're ready, head on over to https://easysell411.com https://billyalvaro.com https://billyssecrets.com To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
You will want to explore adding multifamily investing to your portfolio at some point especially after you listen to this episode.
A multifamily property is any private property that contains more than one lodging/housing unit. No matter how you decide to put resources into a multifamily property, this venture can be an extraordinary financial building tool.
Michael Albaum is our guest on Unstoppable REI Wealth to discuss how he invests in multi-family real estate properties, remotely, while embodying the nomadic lifestyle of living in a van and traveling with his wife full time.
Michael Albaum is a real estate investor and Program Manager/Head Coach of Roof-stock Academy. In the last decade, he has done a variety of deals ranging from single-family homes to longer-term NNN lease properties with national chain tenants. After years of investing, he found his niche in long-distance, value-add multifamily investing. Michael recently left the 9-5 world and before the pandemic was traveling around the world with his wife, who is also able to work remotely. Having seen the benefits that real estate can provide, Michael is extremely passionate about helping others to achieve their goals by using real estate as a vehicle. Michael is also the host of The Remote Real Estate Investor Podcast, which interviews RE industry professionals about remote real estate investing.
Below are the topics that Michael discussed in the show to educate the listeners:
• Nomadic Investing - How to manage/invest in RE while living in a van/traveling full time
• Hands off NNN vs Remote Value Add Multifamily - Why Michael landed on Multifamily
• How much passive income is needed to live nomadically and travel constantly?
• How to start investing in RE as a side hustle while having a full-time job to fund purchases.
• How to make the mental mindset shift around never seeing, or touching an investment property before purchasing or ever during the lifecycle of ownership.
• Why I dove headfirst into the commercial multifamily asset class (5+ units)
• What actionable steps do you need to take today to get yourself on the road to investing in rental properties?
• How to scale your side hustle investment properties into a portfolio that could give you financial freedom.
If you want to connect with Michael Albaum, here are his social links:
Michael Albaum LinkedIn - https://www.linkedin.com/in/michael-albaum-297a8534/
Michael Albaum Twitter - https://twitter.com/MichaelAlbaum
The Remote Real Estate Investor Podcast - https://apple.co/3MAgH1J
Roofstock LinkedIn - https://www.linkedin.com/company/roofstock/ (12.1k followers)
Thank you all for listening and I will see you in the next episode.
When you're ready, head on over to
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Billy 0:00
What is going on everybody? Welcome back to another episode of unstoppable REI wealth. I am your freakin host, Billy Alvaro, the unstoppable BA. And I'm glad to have this gentleman on today because this guy is flipping houses. This guy is buying multifamily nationally from his van. He's known as Mr. Michael Albaum, The Nomadic investor.
Michael Albaum 1:19
Hey, Billy not too much thanks so much for having me. I'm super excited to be here, man.
Billy 1:23
Yeah, bro. Do you look like Jesus Christ for Christ's sake.
Michael Albaum 1:27
You know, I live in wine country. So it's kind of a convenient look to have.
Billy 1:31
Yeah, wine country aka pot smoking country. You're up in the mountains in Cali, right.
Michael Albaum 1:36
In Northern California. It is. Yeah. A lot of people know it as the Green Triangle.
Billy 1:39
Yeah, no doubt. Well, listen, it's good having you on man. I want you to just, you know, introduce yourself. Give me like a quick backstory on you know, how did you get into real estate investors, I know, you've only been doing it for about what, five, six years.
Michael Albaum 1:52
I started like in 2012. So just about 10 years now. So I grew up Southern California and the dad was always an insurance industry. So I kind of grew up around that. And had was exposed a little bit to real estate. And went did the very traditional thing that I'm sure so many of your listeners did, went to school, got good grades, got a good job. And I was like, sweet, I'm done. I did it. I did all the things. And then pretty quickly realized that that job wasn't going to get me where I wanted to go fast enough. So I got this book, Rich Dad, Poor Dad. And I was like, Oh, crap, I like this is so different than what I was thinking I was supposed to do. So that's what I really started getting self educated about real estate investing. And podcasts weren't a thing in my life at the time. BiggerPockets wasn't around roofstock, the company I work for now really wasn't around. So I was just piecing together stuff for myself. And I was an engineer. So I said, Okay, this just makes sense from a mathematical, mathematical and like execution level, I understand what I have to do to get these results. And so that's what I went and did. And I was too stupid, naive green to know that there was supposed to be a strategy behind it. And a lot of thought behind it. I was like, this math makes sense. Cool. Like, let's do it. And so kind of fell into my first investment. And I said, if I can do this once a year, for 10 years, I'll have 10 properties. And that sounds like a good round number. So that's what I was shooting for. And throughout that journey, I realized, well, if I go out of state, things get better. If I purchased larger properties, more units, things get better. If I add value, things get better. So had this kind of organic growth over the last 10 years. That's kind of led me to where I am today with a portfolio of multifamily and short term rentals and single family multifamily value add stuff. So I've done quite a number of different things just enough to be dangerous. I always say.
Billy 3:31
I love it. You know what's weird, a lot of engineers end up getting into real estate investing, I've probably interviewed, I don't know, 16 17 Guys, where they all started off as engineers, and I'm like, You know what, I'm getting into this real estate investing business. Why do you think that is?
Michael Albaum 3:49
I think it's like a problem solving mindset. That's what we're trained to do as engineers is figure out what the problem is, and then figure out how to fix it or what the engineered solution looks like. And so we're constantly thinking and tinkering in our brains. And I once had this engineering professor, he goes, I know why each and every one of you is here. I'll click around like, Okay, what's this guy gonna say? He's like, because you all played with Legos as a kid. I was like, Oh, he's right. Like, I love Legos as a kid. And so building stuff was just like, so how my brain is wired to work. And so like mathematics and problem solving are two things that I think are super integral into real estate investing. If you're not into that stuff, you could still be a great and super successful investor. But I think we're just wired that way. And so have a probably predisposition to get into this business. Maybe more so than other professions.
Billy 4:36
Because I'm like you I'm dumb as a bag of rocks. Like I am not that guy, man. Like, I just tried to I figure shit out. But you know, I don't think the way engineers think like my brain goes a little bit erratic and sideways. But the one thing we do have in common is I'm a problem solver. Like yes, it is a problem. A big problem, a little problem. My mind just goes to fixing it and I very quickly like, identify what the solution is, and then execute like a friggin animal. And that's the difference with those that succeed versus those that want and wish, right those that succeed want to go out there they just take the bull by the horns and make that happen. So what does this do what you like living out of your car like you're traveling around the states living at it? What is this? Yeah, minivan with a sunflower on smoking weed on there.
Michael Albaum 5:22
Have a diversity and Little bit Sunshine, it looks just like that van. So in 2019, I left the corporate world I was working as an engineer. And prior to that, actually, I lost my father to cancer. And so I asked the company I said, Hey, look, I need a hard reset for like six months, and I'll come back and work. Just need to go travel with my, at the time girlfriend now fiance and wife. And they were like, sorry, we can't, can't have basically have you take a sabbatical for six months. And I was like, well, then sorry, I don't need to work here anymore. I'm out. So I was traveling the world with my wife, having a ball and just doing some freelance consulting work in the real estate space investing the whole time as well. So close the deal from Panama City, Panama, which was really funny, we can get into that. Maybe another time, but came back during the middle of the pandemic because everyone's like the world's shutting down borders are closing, you need to get home, my wife and I moved home. And we're like, we're not quite done getting our wiggles out. Let's do this whole van life thing that we've been seeing and hearing so much about. So we bought a van had a buddy of ours convert it. And until we were doing that full time for like eight months figuring out where we wanted to settle down because where we were living just wasn't our forever spot. And so we said, Let's go explore this country, there's so many things to see and do here. We don't need to be in another country to do that. So yeah, I got a like an antenna. So I was doing podcasts and taking coaching calls from my van and closing deals. That was a blast.
Billy 6:42
That's great. So give me an idea, right of the company structure. Is it just you and your wife? Is it virtual employees, regular employees like what does that look like?
Michael Albaum 6:52
Yeah, so for my personal portfolio in the real estate investing side, it's just myself and my wife, the company that I work for now, doing coaching and consulting and real estate education for roofstock. They're a big tech company, based in Oakland, they've got offices in New York as well, and in Dallas. So they're massive, they're countrywide. But on the personal side, again, it's always been just me, when I got married, brought my wife into the fold as well. And she's now playing a major part, an integral part in kind of managing the managers and getting all of the ducks in a row, so to speak.
Billy 7:23
Good. So I want to go down this road a little bit deeper, right, because there's a lot of guys that I when I say, Guys, it's guys and girls, a lot of people that want to get into this business, and there is gurus who preach from the tower that in order to grow and scale your business, you have to have a big business, you have to grow it, you have to have tons of employees and processes and systems and also the crap, then there's a whole flip side to it, where people want this for lifestyle. And if you I'm sure you have your processes dialed in, but it's you and your wife, tell me take us through like, first on the lead generation side, how are you going about finding your properties? What's your process to do this with you and your wife? And how do you do this from your van as you're traveling.
Michael Albaum 8:05
Yeah, Billy I'm almost embarrassed to admit it. Like it's just there's nothing special. There's nothing unique about it. It's literally making relationships with real estate agents. That's how I've sourced 95% of my properties. And so just calling people up, hey, this is what I'm looking for this, you know, and it's developing relationships. And that's what I always preach that this business is it's relationship centric, its relationship focused more than like a product or a service based industry. So go develop and foster and nurture relationships, and what will happen is gonna blow your mind. And so 95% of again, my deals have been brought to me by agents, whether on market or off markets. And that's how I source my deals. There's nothing fancy tricky or special about it.
Billy 8:49
Are the markets, the inventory that you're going towards talk about that. Is it single family, is it small multi, is it larger multi, like what does that look like?
Michael Albaum 8:58
Yeah, so most recently, it's been kind of that medium sized multifamily, so five to 12 14 units. And I was picking up a lot of those back in 2018 and 2019 2020 also, when really, that was not a super desirable asset class, everybody was kind of into the big multifamily 50 units, 100 units, or the single family or the two to four units. And so it was kind of this like purgatory space, kind of domain's land, so to speak, where there wasn't a lot of competition, truth be told in the markets that I was in. And now that's all changed, people can't get enough of multifamily kind of whatever it is, whatever it looks like , they're hungry for it. So I've kind of shifted my strategy a little bit, and I was doing a lot of heavy value add, which was I think another reason why these properties just wasn't on a competition because they were junky and beat up and no one wanted them. And so that's where I came in and was able to problem solve and add value. Now I'm kind of sick of that I'm doing it for last couple years have some more gray hairs more brain damage as a result of it. So I've shifted to seeing a short term rentals and those are all in the single family space.
Billy 9:57
Got it so you still have your rental portfolio on the multifamily side.
Michael Albaum 10:01
Yeah, the vast majority of it. I 10 31 some stuff the last couple years, trim the fat a little bit took out some equity where I could and redeployed it into some short term rentals.
Billy 10:10
What does your portfolio look like today on the multifamily side? How many doors in total Do you have?
Michael Albaum 10:14
So it's 61 units. For everything that's including the single families in there's probably four or five single families, one triplex and then the rest is multifamily commercial multifamily five to my biggest 17 units. And that's a development project, hopefully wrapping up here in the next month or so.
Billy 10:32
Yeah, this is crazy. I love it. So this has given you this is affording you the lifestyle to go out and actually travel with your wife. So give the listeners because there's a lot of guys, a lot of people that are listening, they get they have the law for the quick money to fix and flip. They make 40 80 100,000 dollars, good chunks of cash. But you're on the hamster wheel, you constantly have to go get another widget rehab it flip it countries widget rehab it flip it, right, tell us what these 60 Plus units that you have these doors that are renting. What does that doing for you and your family cash flow wise? Like if you wanted to? Could you stop working?
Michael Albaum 11:06
Yes, So in 2018, no 2019, when I left the corporate world at that time, and especially because we were traveling abroad in other countries where the dollar was stronger, I didn't really have to work. And so right, like, I think it was like a month after we started that trip, I had a fire in this development property that I was working on. And that just totally derailed things. And Billy the next week, I had another fire in the same frickin building.
Billy 11:32
And so burn your shit up,
Michael Albaum 11:34
seriously. And like I always joke, I'm like, it would have been better if the whole building had burned down because then you have the insurance money, whatever. But so I was locked up at this insurance battle for like a year delayed the whole process of getting the construction and rehab done. But all the while I stopped to make mortgage payments, I still have contractors. So I'm like, now this doesn't make sense. Now I need more money coming in. So that's why I picked up some more freelance work. And ultimately what I got connected with roofstock that and I just love the work that I'm doing. And I believe in the company's mission. But so today, if I stopped working, that would be a problem until I got this rehab project all wrapped up, fully rented and producing income. Once that happens, I think I'll be in a much stronger position to be able to say, You know what, if I need to leave work tomorrow, that's something that I could do and still make ends meet for sure.
Billy 12:18
Talk to me about your process, your underwriting process when you're buying small multifamily five to 15 units, like what do you take us through walk us through how you go about seeing if this is a Deal or No Deal?
Michael Albaum 12:30
Yeah, totally. Which is a funny show, by the way. So I, I take the seller provided pro forma, I look at it and I line it with, I put it in my trashcan, because that's I think, in all honesty, all they're good for, I think that what we can glean from those are what the utility payments might look like, or some of the expenses on the building. But I'm really looking at okay, what are they asking? What is my cost of capital look like? And what is a realistic rental amount number on a monthly annual basis? They're telling me rates are at 600 right now. But if you push rent, you could hit 1200. That's market rent, like, then why don't you do it? If I don't have to do anything in the building, you do it. So I looked at things with a very critical eye. And I'm also asking for all of the documentation to back up with the sellers claiming and so I'm asking for t12, which is trailing 12 numbers of the performance the property from the property manager, the owner, I'm also asking Billy for the sellers tax returns for the last two years. Because I want to see that. Yeah. Are they telling the IRS the same thing They're telling me? And if they're not, where's the disconnect? So getting very, very accurate on the numbers and factual numbers, not just numbers that someone says here, this is what the numbers are, like? No, I want to see them kind of in stone, so to speak. And then it's simply running the numbers to the calculator. This is the numbers that I'm anticipating for repair and maintenance compared against what they're actually spending for repair and maintenance and property taxes and insurance, that sort of thing. It either works or it doesn't. And so that's where I think a lot of investors get tripped up is like chasing the deal or falling in love with the deal. I love this because it's my first one, this isn't a good deal. Because look how many units it is or look at the price point. Like yes, but also numbers don't lie. And it either does or does not meet your investment criteria. So don't get emotional about it. And that's hard. That's much easier said than done because I'm totally guilty of it myself.
Billy 14:23
Yeah, I think we've all been there in a house or two or an investment or two where you just you get emotionally attached and you just you buy from emotion, which is the worst thing for you to do. Right? talk to us about when you're doing your underwriting guidelines, because everybody has a different return that looking for right and you're underwriting Are you underwriting on cap rate? Are you underwriting on cash flow? Like how do you do your underwriting?
Michael Albaum 14:45
Yes, so I'm looking at both. I'm looking more so on cashflow, because that's the number that usable, meaningful dollars in my pocket that I can use to feed my family and that to go on vacation, whatever to live off of cash. cap rate is important because I want to see what the future potential of this property is. So if I'm buying at a four cap, but it's a $5 million, building, the cash flow number might be strong. But we have to kind of zoom out and I think look at both in unison and concert, because where's that four cap going to go from here? How much lower can that get? Now, if I can add value on the NOI side, okay, maybe the cap rate doesn't need to go anywhere for me to make a big profit on the exit. But I want to see strong cash flow numbers. And I also want to see kind of a strong cap rate as well, to give myself plenty of room to compress it down the road.
Billy 15:36
When you're doing your due diligence, how are you going about in a new market, you've never invested in? How are you going about gathering that information, to ensure that the asset that you're going into the numbers that you're putting into your calculator in your underwriting, they're actually correct or as close to correct as you can get?
Michael Albaum 15:52
It's a ton of legwork. And it's a ton of relationship building. When you go into any new market, I'm interviewing three to four agents, I'm interviewing three to four PMS, I'm interviewing three to four contractors. And I'm asking them all similar questions and looking to see where I'm hearing inconsistencies. Because if I hear the same thing across the board, okay, we cannot take that as fact and move on. But if you're hearing something different from every person, or three in one type of thing, so you really need to trust but verify. And also ask the people that you're meeting who they work with, because it might not be that you have to go set up an entire new team, you can plug into one person who knows a contractor and a property manager and a real estate agent, whatever. And you can just leverage that person. But I think it's really a lot of work on the front end on making sure that the information you're getting is factual is accurate. These are good players, or finding a network that you can just plug into, which is kind of roofstocks value ad, which is interesting, but there are tons of like local real estate. meetups or areas that you can plug into as well. Or pockets like you don't have to reinvent the wheel.
Billy 15:52
How much time do you think into a typical 12 14 unit building that you're buying? How much due diligence on your part? Because I'm assuming you're doing all the due diligence, right? Yeah. how much of your time goes into due diligence to buy one of these assets?
Michael Albaum 17:10
And that's a really good question. I think part of it comes down to how prepared the seller is. And do I have like, am I playing this back and forth game? is my agent chasing down the sellers agent to get this stuff? Or are they like, Hey, here's all of our marketing materials. Here's, here's all the documents that I know, you're going to ask for anyhow, you know, probably 15 hours, 20 hours, something like that, on the property itself. And then there's of course, the lending stuff that I'm working on in the background. congruently. But I'd say probably 15 to 20 hours, if I had to throw a number out there just evaluating understanding, analyzing that property itself.
Billy 17:48
That's, good. I mean, that's a decent amount, how many deals because your model is a little bit different from some of the guys that interview, you're getting 95% of your shit from Realtors on market or off market? So how many of those deals that come across to you? Yeah, so you go through and underwrite, how many of them actually close?
Michael Albaum 18:05
A very small percentage, because there has to be alignment between myself and the seller, right? Of course, like we have to agree on price, we have to agree on terms. And there's like, fundamentally, we're at odds, I'm trying to get the lowest price, they're trying to get the highest price and try to get the best terms, they're trying to get the best terms like just mathematically, a lot of deals aren't going to work out. And that's okay. So I would say, I don't know, 5% 10% of the deals that have ever come across my desk, I ended up closing on and
Billy 18:34
But you don't go through the whole due diligence process of 25 hours and every deal, you're doing quick reviews to try to figure out which ones are worth your time.
Michael Albaum 18:42
Exactly. It takes me five to 10 minutes to run the numbers on a property. If someone comes to me says, Michael, this is the property purchase. This is what the advertised price is, this is what the rent is, I'm making up assumptions for 95% of the expenses on that property. If I don't know the market, I'm plugging in utilities, plugging repair, maintenance, whatever NFF seeing if it's interesting, is this even in the realm of possibility based on the rent that they have the numbers that I'm making up and the purchase price that they're throwing out there? If it's a total no go, forget about it. If it's interesting, I'll say Hey, get me some more numbers, which sometimes sellers say we'll make an offer. And I'm like, That is the stupidest most backwards way to do business. Because now I'm going to make an offer, then I'm going to find out stuff about the property, then we're going to go back renegotiates like, just give me all the stuff up front and I can make the best educated offer I can highest and best, and then we'll move on. So I think there's a lot of that in this business, which is kind of backwards. But so it's very much like kind of shoot, aim. Ask questions later.
Billy 19:43
Yeah. I love it. And when you're going through and I want to educate the listeners when you're going through and you're trying to figure out rents for the area, what systems you are utilizing to confirm like, Okay, I'm getting this property that rents currently at 700 What do you do to see what you can get rent wise like what kind of research do you go through?
Michael Albaum 20:00
Yeah. So it's again calling local property managers, because they're the ones day in and day out that are the ones leasing actual properties. I don't really take agents, even my own agents input. I'll take the input, but I don't take it really to heart because they're again, trying to do a deal. Yeah, so property managers, other property management websites, Zillow can be great. And just see what our properties in the area leasing for that are of that size and caliber. And I think it's really important to loop in a real person on the ground, the property manager, because like, there are algorithms out there, there's rent to meter. And then even looking at Zillow, like I could be looking across the street at a rental, that might not be a comp at all. And I have no idea because I'm not in that market. I'm not an expert in that market. And so markets change street by street block by block. So really getting a locals expertise, as to Hey, I know what you're seeing. These two things aren't equivalent. And here's why. So this is the comp we need to use, this is the rent I think you can get.
Billy 20:59
Do you utilize any like back of the napkin formulas for quick analyzation? Because I know you said you do like five minutes like, talk to the listeners about some of the, you know, 1, 2, 3 different types of rules or formulas that you deploy quickly, to do a quick underwrite to see if this is a pass, or hey, you know what I want to dig into this a little bit deeper
Michael Albaum 21:19
Yeah, absolutely. It's a great question. So the two rules that I use the most are probably the 50% rule and the 1% rule. And the 50% rule says take 50% of the income that you're receiving, throw it out the window to expenses, the remaining 50% Is what you're going to pay yourself and pay your mortgage with. So figure out what your approximate mortgage looks like. And if there's still enough leftover to pay yourself could be interesting. The other rule says the 1% rule says that if the property rents for about 1% of the purchase price. So for example, if you have $100,000 property, and it rents for about 1000 bucks a month, you will probably cash flow. So when we marry these two things together, if we take that $100,000 example property, if it rents for 1000 bucks a month, we're taking 500, throw it out the window to the expenses, the operating expenses, your insurance, tax maintenance, that sort of thing. Management, you're left over with 500. So what's the typical mortgage look like on a $80,000 mortgage at whatever interest rate that would add We're gonna subtract that out whatever's left over. That's what we're paying ourselves.
Billy 22:19
Yeah, this is what I want people understand. It's really a simple freaking business. It's not easy. It's not easy at all. But it's a simple bit. It's formulaic, there's little quick things that you can do to understand if it's a deal or not a deal to go through the 20 25. asking these questions in such a way where I wanted to build upon so people can understand it takes work to get to an ultimate deal, whether you're doing a fix in flip, you're doing a multifamily or a large multifamily, a lot of work is going to have to go into it. But it doesn't mean you're gonna have to spend all your time on every single deal that comes across your desk, the quick back of the napkin formulas, those quick one to 50% rule, 1% rule, fix and flip the 75 70% rule on that slide. Like, it all comes down to just quick analysis to see if it's going to be something that you want to get into. I want to pick your brain now about finance. Yeah. So you got these deals that are coming in? Are you syndicating the deals? Are you using your own money for the down payment? Like how you constructing the financing all these properties?
Michael Albaum 23:19
Yeah, so it's been a combination of both just my own personal money that I've saved and made in the business over years. Or I've also partnered with people if I don't have the money for a deal, but I know it's a killer deal. I know people that love the real estate business, but have no desire to run, own, maintain a property or deal with property managers. So I'm like great, you're the money partner, I'm the everything else partner we'll double up on this and split the profits down the middle. And so that's worked really well in the past as well. I just now, because I've had people ask me in the past, like, will you take my money and I'm like, I never thought that would happen. So I'm kicking around the idea of syndicating down the road. But I haven't really done that in the past. No.
Billy 23:56
I love it the other way. I love the shock on questions and answers, like you're giving a lot of value to see, you know, because
Michael Albaum 24:03
Oh good. I'm glad to hear it.
Billy 24:04
Yeah, the people that are listening, it's all useful information. It's not about a bunch of fluff that you're driving around your daisy you know van that you bought you smoking weed you just hanging out. Like you're getting into the meat and potatoes about deals. It's important stuff, right? So it's good shit good stuff. So
Michael Albaum 24:19
and Billy, just if we could just take a step back, like we're talking about the quick analysis that we're doing, like I don't want anyone to feel bad or that they're less than because they're not there yet. Like, I think it's important to also kind of lift up the skirt or open the vest a little bit and to let people know, I've analyzed 1000s of deals. And it's taken me to that point to where I can now sit in five minutes and tell myself an investor a seller if I'm interested or not. And so I've encouraged out like everyone listening, go get really good at deal analysis, go find properties that you have no interest in buying and run the numbers and like play game turn into a game like as you look at the property you see the purchase price and the rent. Do you think it's a good deal? Yes or no? until you can get to that point, now you'll start to get really good at evaluating properties. And you'll be able to make kind of shotgun quick decisions, but it takes time. And so don't feel like oh, man, I can never invest in property because I'm not that fast. It takes time.
Billy 25:12
It takes time. And you do have an edge because you are an engineer and you think a little bit differently. Than guys like us,
Michael Albaum 25:17
Right. Yeah, I always joke. I'm a recovering engineer. So you got to forgive me.
Billy 25:21
Yeah, that's hysterical. How do you go about Michael? Figuring out where you want to invest? Because that's a big one, too. Right? Like, you know, how do you pick out your markets? What's your process for that? you're not just holding a dart at a, you know, at a map?
Michael Albaum 25:35
Yeah. So it's funny because I was in the past, like, almost like legitimately. So in the past. So I was working as a fire protection engineer. So and my territory was all over the Northwest US. And so I was traveling all over the country. And where I was because I was now a self proclaimed real estate investor. Because I've done two deals. I'm like looking at the market, seeing what things rent for what they sell for. And so that was literally my strategy. Where did I happen to be and what were things selling for compared to what they could rent for. And that's how I was picking up properties all over the country. And I'm like, I'm a genius. I'm so smart. I'm so well diversified, if anything happens in market A and B through E, like, untouchable. And then it just got to be this mental headache where I couldn't track like chasing down six different property managers, six different properties. This sucks. So a buddy of mine, he's like, you're going about it all wrong. He's like, go get laser focused, watch what happens, it'll blow your mind. I was like, okay, that mean, that's kind of counterintuitive to everything. I thought I knew about investing, but let's give it a go. And so when I got laser focused on two markets, it was so much easier from an operational standpoint. And so how I arrived on these two markets was like, almost literally throwing darts at a map. Zillow used to allow you to be able to have two filters on at the same time. And so again, I was still totally green, I was still totally new. I didn't know nearly enough to be probably investing where I was, but I was just turned on the rent filter and the sale filter. And I said, where are things selling for about 100 grand? And where are they renting for about 1000 bucks a month. And where there was a lot of overlap. I said, let's find out about that market a little bit more. And so that's how I landed on Northern Kentucky and eventually Cincinnati, Ohio, just across the river. But that like was my process. And knowing what I know, now, I should have done a lot more research. But I was like, whatever, like this works.
Billy 27:15
It's insane, man. Good. Good stuff, good stories. This is all good stuff. So now you're transitioning over? Like why the transition from multi over to short term? What's the thought process there? Why do you want to do that?
Michael Albaum 27:30
Yeah, so I was doing a ton of value add in the multifamily space. And truth be told, like I just kind of got burned. I got burned by some deals I got burned out from the amount of work it was and how much expense there was. And I was seeing like, yes, the the BRRR strategy was working like I'm doing it, I'm getting these these values up and above what I paid for them and more than I put into it, but it's just like a lot of work, and especially on multiple units. And so I was just chasing down all these people and getting burned. And I said this, like, it's just a lot of work. I'm glad I did it. I'm no longer at a point in my investing career where I have to press the gas so much. And so like, let me just ease off a little bit. And my wife and I really took stock of okay, are these things are these purchases are these projects really aligning with our life's goals and vision. And a lot of them weren't. And they were still really good deals. But I'm like, You know what, let's get rid of them. Because they're not contributing to where we want to go. They might be financially. But again, we're kind of looking to align a lot of things right now. And so we've made a pivot and said, if it's not easy, we're not going to do it. And again, it could be an amazing deal. It could have great cap rate, great cash on cash return, it might be a great deal for someone else. It's just not for us right now.
Billy 28:45
Got it. llet me pick your brain I want to back up to the flipping. Well, not to the flipping to the renovation. When you were buying these properties at a state you had a project manager overseeing the renovations or were you actually overseeing it.
Michael Albaum 28:59
No it was me because I was too stupid to know that I was supposed to go get a project manager to do so.
Billy 29:04
That's the problem for sure.
Michael Albaum 29:05
I would do it totally different now.
Billy 29:08
And will you try to do this virtually like you're in another market? You're trying to like manage all this shit from afar?
Michael Albaum 29:15
Yeah, I got the call that I had the two fires, but I was in Costa Rica. Yeah. So It's super rough. And don't get me wrong. There are tons of people that can do it and tons of people have done it and can do it really well. But I think that project manager piece I was just trying to work too many hats. Yeah, that's something that I got. That's probably the engineer in me. I'm like I could do everything.
Billy 29:35
Yeah, yep, you can do it all but when you do it all you just create a job for yourself and who the hell wants a job? Right. You know, when you're looking at your asset managers to manage the properties What do you allocate percent wise to pay them for the property management side? You managing yourself or you have a professional property manager
Michael Albaum 29:58
No so that I knew Very early on was not something I could ever do personally, especially from afar. So property managers all the way I've always leveraged them and utilize them. There's I have two properties now here in California that I manage myself just because one was our old primary residence. So I know it, I know the area, whatever. And then the upstairs unit of our duplex that we live in, we manage because we live in it. So it's quite easy. But so property managers, I've negotiated because I brought them multiple deals multiple units, I met like 7%, and like 50% of one month's rent, so 7% of the monthly revenue and 50% to put a new tenant in place with I think, a flat fee for renewals for like 200 bucks, something like that. What, yeah, it's totally fair like, and that's the thing, like, if you actually go and understand, put yourself in the Property Manager shoes for a minute and walk a mile in their shoes and understand what it is they're doing on a daily basis. All the stuff that you don't hear about is because they're doing it, right, like they're taking care of all this stuff. And so people like I don't hear about proper manager, they don't do anything. No, it's because they're busy doing it. So I think don't try to nickel and dime your property manager. They don't get paid enough as it is, By that same token, understand what value you're bringing to them, and determine, you know, is it equitable? Is it reasonable for what you're paying? And don't be afraid to ask for what it is you need? I have clients that have said, Hey, Michael, I can't get these numbers to work. I've all my numbers are accurate. It just doesn't work. I said, What's your property manager? They told me what the number is. I said, Have you asked for a discount? They said no, they went and asked for a discount, and they got it. And now the numbers worked. So it took a no go into a go. So again, you have to be willing to ask for what is whatever it is you need. But also you have to be accepting of the answer.Which those things are hard to do.
Billy 31:40
Yeah. Now, listen, you mentioned a couple times about the company that you're coaching for roofstock, you want to get into that at all, do you want to keep it separate?
Michael Albaum 31:46
Yeah, totally. Let's get into it.
Billy 31:49
Alight. So what is roofstocks for the listeners who don't know.
Michael Albaum 31:52
So roofstock is a really the premier marketplace for investing in single family and small multifamily rental homes. And so we've got listings all over the country of properties that we have the list price for we have the rental information for we have a lot of the diligence already done in advance. So kinda like I was saying, it's so stupid that we negotiate with the seller they make an offer, then I'll show you the paperwork, like roofstock has kind of cut all of that out and said, Let's get all the information ahead of time, so that our investors can make a decision going into the property that's informed and not have to be surprised after the fact. So you can go online roofstock.com. And check out properties all over the country with calculators, you can see what they rent for what the expenses are, you can run your own pro formas and get cash on cash returns, yield returns, cap rate returns. And it really allows you to plug into an entire network, because they'll put you in touch with insurance agents they'll put you in touch with property managers, they'll put you in touch with lenders. And so kind of as your question of going into new market, what does that look like, you can either go do the legwork yourself, which is something that I did and bang my head against the wall for a lot of time, or plug into an existing network of folks, and feel fairly confident that you can go now operate in a new market without having to reinvent the wheel without having to go make all the new contacts for yourself.
Billy 33:05
So it's a listing technology service they're not brokers though, right?
Michael Albaum 33:10
So it's a marketplace So we facilitate the transaction
Billy 33:15
How do they actually make their money from the list from the buyers and the sellers Both sides of the transaction?
Michael Albaum 33:19
Yeah, exactly. So there's a marketplace fee that the buyer pays, it's usually a half a percent or 500 bucks of the list price. And then we collect a commission from the seller, which is I think, 3%, or three and a half percent right now from the seller. And so that's really where the bulk of our revenue comes from.
Billy 33:35
Great. It's a good model, man. is there any cost Besides the buying and selling fees to go on roofstock and start playing around, is there any cost to become a member
Michael Albaum 33:44
Nope. So totally free to sign up, you can just plug in your email. And you can start searching properties today. And we don't spam you or anything like that. You can search by market, you can search by price point, there's tons of different filters. And so whatever your personal buy box looks like you can go online. And something I love to do is like Don't, put anything in the location filter. Just plug in your cap rate or your cash on cash or your price point and see where in the country properties are popping up. And that way you can kind of narrow it down and see what what works for you.
Billy 34:13
Yeah, it's a great little tool right there. I want to get into one of the subjects and maybe we'll wrap it up. So yeah, we've been doing this for about 10 years, right, you've probably never been in a downslide in a market when it's a complete tank. So we're about to at least from my view, I think we're about to come into one of those markets. What are you doing, if anything, to prepare yourself for the upcoming market shifts that are about to happen?
Michael Albaum 34:35
Yeah, so something I was really focused on Billy in the latter half of 2022 is getting all my financing as tight as physically possible, because the Fed announced there's interest rate hikes coming that was not a surprise to anyone. I think it probably caught a lot of people off guard at the speed at which they were raised. But it was like they told like hey, we're raising rates and people like oh crap, I didn't know like, No, we all knew if we were listening And so I was really locking up all the financing that I could long term fixed rate debt as best I could, because I said, we're gonna ride this thing out. And so all of the commercial notes that I had due that were coming due in the next two to three years, I refinanced in a longer term debt. I was also and now currently working on doing that with a couple more properties, trying to get again, as long term fixed debt as I can, even if the rates are slightly higher than where I'd like to be.
Billy 35:26
Is there anything you're doing and your underwriting that you're going to change, just besides the rate, because obviously, the rate increase on the long term buying holds is a major factor. Is there anything else that you're looking at?
Michael Albaum 35:37
Yeah, on the short term side of things for the short term rentals, I think, building it a little bit more buffer and conservativeness around what the revenues are going to be. Because 2020 and 2021 were like record years for short term rentals. And so if someone's like, oh 2022 is gonna be the same as 2021 like probably not if it is great, but if you build in some conservativeness and the deal still makes sense, and then it is another banner year well, great, but if it's not you want to be able to protect yourself for sure. And so not getting over leveraged, making sure that you're underwriting very conservatively and then locking in as long term fixed debt as you can I think is a good move and not going into arm type products or adjustable rate products that kind of scares me with where interest rates are.
Billy 36:26
Seems like a lot of the on the multifamily side a lot of the lenders are like five and seven year fix very few are 20 or 25 on the fixed term.
Michael Albaum 36:36
Yep, five 7 10 year is really kind of what I've seen as par for the course. Man. So I had this let this loan locked up at four and a quarter 30 year fixed refi on three commercial properties that I own and the lender the day that the lowness was a closed told me we can't do the loan I'm like what you mean you can't do the loan like oh, we can't do the loan and I'm, like so infuriating because now I have to go out and shop the loan again where interest rates are now higher I can't go find a 30 year product for it so if you have something strike while the iron is hot, lock it up and just know that you can always refinance down the road if it's not the perfect product especially if things are going to expire soon. I'm of the opinion I don't want to gamble with what rates could be I want to understand what they are today and to kind of take the sure thing because that's burned me too in the past is like trying to play that game work doesn't always work out
Billy 37:27
Naah that's not worth it. When it comes down to the rates man lock them in for as long as possible because the market just it's too shifty. You're never gonna know and then you know 2 3 4 percent increase can wipe out your cash flow kill you
Michael Albaum 37:38
pretty quickly.
Billy 37:39
Yo, this has been like, I feel like I know you for Christ's sake. Like I feel like you and we got this thing going on.
Michael Albaum 37:45
You got to come hang out my van dude.
Billy 37:46
No doubt man.
Michael Albaum 37:51
I love it.
Billy 37:52
Honestly, Mike, this is a great interview. You're a good person to interview how do people get in touch with you if they want to reach out to you and find out more information about you?
Michael Albaum 37:59
Thanks so much for asking Billy so they can find me on LinkedIn Michael Albaum. I'm on Twitter at Michael Albaum. You can come find me at roofstockacademy.com is educational program that I run over there at roofstock so come find me reach out would love to hear from any of your listeners.
Billy 38:14
Beautiful brother. Listen, it's been a pleasure having you on really full of energy, great information you delivered like really hardcore answers. You gave listeners a lot of stuff that they can take back to their business and start working on so thank you so much for that brother and I will see you again.
Michael Albaum 38:29
Looking forward to it Billy. Thank you
Billy 38:31
Take care bro