#55: Michael Blank

Through his company Nighthawk Equity, Michael Blank controls over $65 million in performing multifamily assets all over the United States. In addition to investing nationwide, he teaches others how to do their first apartment building deal through tons of free content on TheMichaelBlank.com as well as additional training programs. Michael has helped students acquire over 750 units valued in excess of $27M and on track to do a 1,000 units in the next 12 months through his unique coaching and “Deal Desk” program.

Michael is the host of the popular podcast “Apartment Building Investing with Michael Blank” and writes regularly for the Bigger Pockets and Flipnerd’s REI Classroom. He lives in Northern VA with his wife and 4 children.

Looking to grow a real estate empire but don’t know where to start? Pick up a copy of Money, People, Deal by Stefan Aarnio for only $3.95 at www.moneypeopledeal.com/podcast.

To get exclusive podcast listener only offers for the 100K Challenge (like a free hotel room for the event), email Devin Savage at DSavage@StefanAarnio.com.

To learn more about the 100K Challenge visit www.stefanaarniolive.com.

 

Stefan Aarnio: Ladies and gentlemen, welcome to the show, respect to grind with Stephan Aarnio and interview people who have achieved mastery and freedom through discipline. We interview entrepreneurs, athletes, authors, artists, real estate investors, anyone who’s achieved, mastered and examine what it took to get you on the show. We have a friend of mine, Michael Blog now. He is from just outside of Washington DC in the United States. He is a leading authority on apartment block and multi family investing. I’ve got it written down here. He has done over 24 million dollars of multifamily real estate investing themselves. He has helped his students purchase or 1600 units of multifamily real estate. Michael, welcome to the show. Thank you so much for joining me. Respect the grind that.

Michael Blank: Stefan, thanks so much for the intro. Have a real honor to be here.

Stefan Aarnio: It was great. You know, I was out on your podcast for a little bit. It was great to meet you and now you’re here talking to me now Michael, you know, it’s, you’ve done an incredible saying 24 million dollars of real estate people at home are dreaming and wishing for Christmas that they could have a portfolio like that.We were talking a little bit before the show, you didn’t start that long ago. For the people who don’t know you that well at home, can you tell us a little bit about Michael Blanc, where you and how this all came to be?

Michael Blank: Thank you for that background is very similar. A lot of other people I was taught to go to school, get good grades, get a good job with benefits and that’s what I did and in late 97, late 90s, I was in the right place right time. I have a software background, so our company IPO would put a bunch of money in my pocket and then I Read Rich Dad, poor dad, and I was like, damn, I’m such an idiot. You know, I need to know it doesn’t matter how much money I’m the bank or what my salary is, how much passive income I was driving, which was crazy, close to zero and it completely derailed him. Like I would say Robert Kiyosaki essentially ruined my life because what I did after that, Stefan and I wasn’t thinking real estate at the time.

Michael Blank: I was definitely thinking cashflow, but I was surrounded by a bunch of order franchisees and they’re like, “oh, it costs this much to open a restaurant. We’re going to hire an experienced multi unit operator. We’re gonna, sit back and count the passive income.” I was like, “sweet. That’s exactly what I want.” My big idea wasn’t so much real estate. I did that and it was really this, this franchise business.

Michael Blank: I got involved with a pizza franchise and plowed like 99 percent of my net worth into this thing. It took all the chips, corn in the middle of the table. Long Story Short, I subsequently lost my IPO millions, with the restaurants plus added a couple hundred thousand dollars of unsecured debt to that and then plowed myself out. Real estates and like most people, I slipped a bunch of houses, I held a few houses and I had a small apartment building and I was making money on the flipping side, but there was real, it was not really very passive.

Michael Blank: I had achieved, I guess a certain stature or status of real estate investor, but it wasn’t really the financial freedom that I was looking for, and I was looking at these apartment buildings and it just kept sending me mailbox money. It was kind of boring actually. And I was like, Dag gone it. Maybe I should do more of that. And that’s where I shifted my focus on that might. My problem was I didn’t have any of my own money, it was all deployed in this restaurant. So I had to learn the art of raising money. And once I did that, this giant light bulb moment when I went off that I could actually do things without my own capital and then at one point I started to blog about and tell other people about it and now we’re teaching how to do it. I’m really excited about. That’s really why I wrote the book is because, in my opinion, multifamily is the most direct route to essentially becoming financially free.

Stefan Aarnio: Incredible story. Michael, I really love it because a good friend of mine I’ve had on the podcast recently, his name is Nico Sanchez. Same thing. He had a pizza franchise. The pizza franchise was beating the living daylights out of him, and he had to negotiate. The royalty is down. Let me ask this, why do you think the pizza franchise doesn’t work as well as so many people Imagine would you know ,I see people like Aquileia O’neal. He owns five guys franchises, and he has hundreds and hundreds of franchises. He’s worth half a billion. Why do you think the pizza franchise wasn’t so easy?

Michael Blank: Well, the franchisees that were surrounding me wasn’t in fact five guys, Burger franchisees and what I didn’t realize at a time is that the concept is very important. Now, five guys is very successful even to this day, but the truth is that most are not. Ideally you get into a more mature franchise, but the problem is with that is you don’t get the actual licenses maybe in your backyard, you might get them in the middle of nowhere US, but not really where you are.

Michael Blank: Your kind of quote forced to go with a smaller concepts. That of course is less proven. One of the things in hindsight is I did not really look at the middle of the road franchisees. How are they doing? Are they making money? You know, when you check references, they give you your top five percent performers who are printing money, but really when you look at the middle of the road franchisees, there really weren’t that happy, and it certainly wasn’t something that you could set up as a passive investments, which was also source. A lot of, misguided things going on there, a couple of words, of course, the recession, because I got into this in 2005 and six and you kind of get my butt kicked her in the recession, which did not help us. It was a lot of things that are outside of your control as well.

Stefan Aarnio: That’s amazing. Shifting over to multifamily real estate investing. Now imagine you’re doing B-class apartment buildings. That’s where most people like to go.

Michael Blank: We’re even, we’ve been doing CC plus. We’re starting to move upstream a little bit towards the nicer ones. The main advantage of C class properties is that, these are blue collar workers. They’re relatively literally saved, but they tend to be a little older, and the returns are higher, which is why we tend to gravitate towards the C plus B minus ones, but we are trying to get into some nicer ones. It really all depends on the investor appetite as well.

Stefan Aarnio: Michael, you started with your own money in real estate and then you transitioned to using OPM, other people’s money. Tell me a little bit about that transition.

Michael Blank: Well, it actually started without any of my own money because it was all deployed in the restaurants, if you remember, like back in 2005, I just went to … I’m all in, and I started building and buying restaurants like crazy. We’re up to eight restaurants at one point and so even on the house flipping side, it was all enabled through other people’s money. I never actually did real estate with my own money because I didn’t have any of it. It was this big “Aha” moment when I went to friends and family and I raised 25 thousand dollars from someone and paid him 12 percent interest, six months flip, and they said yes. I’m like, oh gosh. They said yes. And then a second person said yes. Before you know it, I had a million dollars raised and deployed, and it was like this giant light bulb went off.

Michael Blank: Then I just used that same principle for the apartment buildings a little more complicated because you know, it’s a longer term hold and people aren’t necessarily familiar with that. Normally the minimum investment is a little higher. I would like to say it’s the same thing but different. Nevertheless, very empowering. When we teach this whole business about a multifamily, it’s all predicated on you raising money. Now whether you have or not doesn’t really matter because you do a deal or two and eventually you’ll be out of your own money. Really the art and science of raising money is an invaluable skill.

Stefan Aarnio: I love that. I was educating some guys this morning and went through nine different ways to finance or real estate and number nine was raising joint venture money. It is the only sustainable way I think of doing deals. You can’t always get a vendor take back. You can’t always get a lease option. You can’t always get those things. But raising money is the main thing. Now, Mike, let me ask you this, you’re very successful man today, sounds like you’ve been a chain of successes. You have the IPO at success getting in the pizza business that the arguably a success and then, a bit of a dip there. Let me ask you this. Did you have to change to become successful or did success change you?

Michael Blank: No, it was a very receptive. I had to change first before I could be successful, and I learned a lot of things are in during this time. On the one hand I didn’t really do anything to get the IPO. I just write right place and that I instinctively I knew that, it’s kind of like a lottery winner, right? If the majority of lottery winners within a year or two, they’re basically back to where before, and not that I had a poor mindset at all by really, if you look back on it, it was all about me. Okay. It was all about me because I was on this, on this path to financial freedom. Now you can include my family in that, but it’s not really a very selfless thing because your family is still kind of you.

Michael Blank: It’s really all about money and when the crap was hitting the fan and I’m losing 10 thousand dollars a month and I’m nearly exhausted my lines of credits, that’s when you know, I became very humble because you know, you keep losing money and all of a sudden all your money is gone and now you’re just getting into debt. You do start asking yourself, why is this happening? What should I be learning? And it’s kind of in the depths of my misery where I got the restaurant sensation that it needs to be about others. In other words, how can you help other people avoid this on the one hand and perhaps accelerate their journey to financial freedom. Out of that came the whole blogging thing and I blogged for the bigger packs at a time.

Michael Blank: The only problem with this plan was, Stefan, that the business plan sucked and I had a long conversation with God about this great idea, but there wasn’t really much of a business model now behind that at all, even though while the real estate was wasn’t making money, and so it was that shift in me where it was more about how can I help others that the kind of the success came in.

Michael Blank: I knew you went to a very similar realization. It’s almost like you have to come to that mindsets if you’re just after the money. It’s just… I don’t know, maybe it’s something that you’re blocking the energy or something like that, but, but a lot of people have come to the realization that’s really about how can I serve others and then in doing so, but only after the fact, do I become successful?

Stefan Aarnio: Well, I think that philosophically or spiritually with that money chases value and when you’re just after the money, you’re just going for the results. You’re not going for the core value, right? When you provide value, money comes, but if you just want money and there’s no value, there ends up being nothing. Would you agree with that?

Stefan Aarnio: It’s like the Zig Ziglar, Jim Rohn. I can’t remember who it was, but it’s how many people can you serve and your net worth is really based on that. The more people you can serve, the more money you make. I think if you approach it with, hey, how many can I start so I can make money? I think even that is probably misguided. It’s more like how can I serve others without expecting anything in return and in doing so because you’re providing value, people are then willing to pay for that and, and, but it does require a fundamental mind shift and I had to learn that the hard way, I guess.

Michael Blank: Right? We have a very interesting… A parallel story or Michael, you’re talking about your blogging and I did the same thing when I started taking real estate seriously. I started blogging every day for 120 days and that turned into speaking gigs. It turned into a book. It mushroomed into this empire. Raise five million dollar of capital. Tell me about, about your blogging career because it’s something that I always recommend people born and raised money. You’ve got to put information out there. Start blogging. Tell me about blogging and how that worked.

Stefan Aarnio: You’re right. Yes, it is one of those things that leads one thing to another and looking back on it, maybe I looked like a visionary, but I’m not right. You just do one thing and it leads to something else and lead to something else. I mean we’ve written books. I just wrote one, but if you told me you write this book and all of a sudden that leads to something else, right? You write this blogging thing and all of a sudden you become, you create a credit platform, you create a following, and in doing so you create a platform, a credibility. Almost all the people who start meet ups, for example, the same thing, they’re just meet up in their teaching or sharing whatever their experiences is and now they’ve gained credibility with people and that then leads to x and that released to Y. Right now in my case it, I developed some products and training online and people really liked it.

Stefan Aarnio: It then leads to the deal desk where people could bring me deals and we would partner with them and raise money for them and so on thing kind of led to the other, which it often does, but a lot of things you kind of do in face I guess, right? Because blogging but not the business model around blogging, it’s very uncertain. It can take a long time for you to build a certain kind of list. You can’t really do it for the money. Right? It’s very tough to do that for the money, you really doing because you want to serve other people. Then once know thing again, let’s leads to another.

Stefan Aarnio: There’s so much nuggets in what you’re saying. It’s just like nuggets of gold and diamonds. Michael, you’re talking about, you’re talking about the deal desk, which is a really interesting concept. You started educating people, you started training people little bit. Then you open this deal desk where other people bringing deals to you and you decide if you’re going to fund it or not. Tell me about what that does to your deal flow and how that’s changed your business.

Michael Blank: Well, that is my deal flow at this point, right? I mean, it’s not really that interesting for me to do my own deals anymore because my mission is to help people do their first deal. That’s really why I wrote the book.To me, in reverse as me calling brokers, analyzing deals, why don’t I teach you how to do it? Why don’t I give you an analysis spreadsheet where you can analyze deals. Why don’t I provide you with support that makes you very confident about analyzing deal? Why don’t I give you support and help you get it to the point where you can get it on the contract. Right?

Michael Blank: In doing these things in an effort to support people doing it for themselves, people said, well, Gosh, I just got the 75 units, under letter of intent, but it’s too big for me. I say well let me take it. Let me take a look at us already underwritten in my analysis spreadsheet. Right? Why don’t we do a joint venture, right? Why don’t I raise the money because now I have a platform to do that, and you find me a deal. You’re solving a big problem for me because finding deals is always a challenge and do a joint venture. Now all of a sudden, you know, instead of you being the student, we’re now peers, we’re not partners in a deal to some extent. That person that does that 75 unit deal, which might seem really big, it’s actually maybe a little small for me. Well guess what? The second time around, that person’s going to do 168 unit and then I got some knuckleheads who have done $168 and now they’re bringing me 500 units, and they’re stretching my capacity to raise money.

Michael Blank: I always have to try to stay ahead of these guys because they keep bringing bigger and bigger deals. But what it does though is it enables opportunity for, for everybody, and it all starts. Like I said you do one thing, and it leads on to another. I think it would be very difficult for me three years ago to imagine people bringing us 500 unit deals.

Stefan Aarnio: Let me ask you this, Michael. This is a big limiting factor, I think for a lot of people is the education, right? For someone to go out and tie up a 170 units or 500 units or 76 units, it takes a certain amount of brains, and a certain amount of intelligence to do that. I’ve got three acquisition guys in my office who do nothing but write offers and phone people and get deals every day, and they probably do a deal or two deals a week.

Stefan Aarnio: Those guys have to be a certain level of intelligence, a certain level of education. How smart does somebody have to be to buy real estate or buy multifamily real estate? That’s a good question. I don’t think they have to be particular smart. I think a lot has to do with confidence. How confident are you and then you know, also comfort zone. There’s a, there’s definitely both of those and you can increase and expand both of those over time. For example, when you do your first deal, let’s say you do a really small deal. Do you do a duplex? I can wrap my head around. The duplex is kind of like a house with two doors. Well, once you do a duplex and you get into it, your comfort zone and you’re expands in, your confidence expands, and now the second deal is not likely to be a duplicate anymore.

Stefan Aarnio: Second deal is probably going to be somewhere in the 10 to 20 range and all this. You can really wrap your head around that and then once you close your second deal was third deal is not going to be 20 units, it will be 50 to 100 units and so what I like about this business is that people’s confidence and comfort zone expands and some expand at different levels, but most typically expand and the rate I have now, and like I said, there’s other people, a 21 year old, Jake Poland, he is an air force academy, jumps out of planes, a guy who was awarded a 10 million dollar deal. He hasn’t even done a single deal. It hasn’t only single family houses, it’s just as confidence is so high is education of course is there, but it’s confidence is very high.

Stefan Aarnio: It really depends what I like about a dose that you can help someone expand their comfort zone and increased your confidence in certain ways.

Michael Blank: What’s the key to increasing someone’s confidence? Is it knowledge? Is it education? What’s the key there?

Stefan Aarnio: I think knowledge definitely. Education is definitely a foundation now, but, but you can have plenty of people who will go from one seminar to another and they never actually do anything. Education is foundational. What I find works very well for expanding someone’s comfort zone and confidence is an experiential experience, if you will. For example, let’s say you wrap your head around making … Putting an offer on a 10 unit and that thing gets, gets accepted. They will certainly, like for my first deal, 12 year and I’m going, I’m an average flipped three houses at this point and I look at this building, I’m like, oh my God, this building is so big as 12 units, which is small of course, but I was still overwhelmed.

Stefan Aarnio: Then I got into the due diligence and I was visiting the property every day. I’m talking to people, I’m touring and I’m making phone calls and within like five days and I’m like, Dag gone and this, a lot of work. I wish this was bigger. What happens is as people get into a deal, it doesn’t even have to close, let’s say you’re going to contract and then you do the diligence and you terminate the contract because you found an issue with a foundation or some kind of water problem, what have you. But that person’s comfort zone all of a sudden expanded far beyond that 10 units, very quickly. This is why we put on event twice a year called the financial freedom summit that simulates the purchase of a 69 unit building in the course of two days. People actually have to go through.

Stefan Aarnio: Now we accelerate this process, but it’s a very tactile experience for that very exact reason. It’s not enough to someone goes through a course, but as much better, someone experiences it. That’s what we found is a great way to accelerate someone’s comfort zone. I am getting them as far into the deal as possible. I love that. So you have a simulator, a deal simulator like a boot camp. People are buying a 69 unit apartment building. You didn’t have a big stack of documents, a commercial appraisal. You’re like, here buddy, figure out what this is worth. Figure what you should be paid. We’ve got to go raise the money. How’d you come up with Michael because a lot of people want to. Educators out there, don’t have anything that tastes you’re that hot to put out there. They go put some power-point presentations on and they make you read a book. How you come up with that.

Michael Blank: Well, it came up so are nearly as I was doing my own coaching and we’re a big thing now so I can’t afford to do my own coaching. Unfortunate, I really enjoy it, but I saw, I saw what happened to someone who found it was a 50 unit I think in middle of Tennessee. We had our contract for about 14 days and his comfort zone ended up 10 units, which is why I brought me this deal and it didn’t work out for different reasons, but they. But then as soon as it was done, he was like, you know what? I’m not looking for anything under 50 units anymore. And I was like, holy cow. The guy just went from 10 minutes to 50 plus and in 14 days and that’s kind of what this light bulb one out.

Michael Blank: I created something called by with Mike, which was basically the precursor of this event and I did it virtually. It was like a six, eight week class and I had like 10 people in there and it was a kind of virtual thing and it was a very similar experience for people and that’s when I say, well, if I really want people to transform their lives and get a and change your lives, I need to get them together in person for a concentrated period. That’s why how the financial freedom summit idea came up and you really see it does accelerate people’s confidence and comfort zone.

Stefan Aarnio: What I love about what you’re talking about might be, there’s two ways to scale real estate. One, as you do more transactions or you do bigger transactions, and I love how you’re just going completely vertical with that. Another thing I love about it is it’s not necessarily a higher skill game to go bigger. It’s just more confidence, more balls, more stomach. Would you agree? It’s not really much more skill. It’s more about confidence.

Stefan Aarnio: It’s, about confidence. I think it’s about that first deal, in fact, I call it the law, the first deal, and I talk a lot about it in the book. It’s not as complicated as, oh, how do I get 500 units? So I quit my job is how do I do the deal of any size? You’re, basically, I’d say know your three to five years away from your placing your income. In fact, most people are one to two years away. Which means it reduces the goal not or 500 units or whatever number it is. It reduces the only one thing, which is your first deal. And what’s very encouraging about that, you can pick your favorite entry point, could be two, 10, 15. It doesn’t matter wherever you are. As soon as you focus on that first deal, the second, and third happens in almost automatic rapid succession.

Stefan Aarnio: It can take you 12, 18 months to do your duplex, like it’s just, oh my gosh, I’m freaking out here. What happens is that next deal, that 10 unit deal follows within weeks and no more than a few months, that have that first deal and then the third one and so forth and so on. Most people have covered the living expenses in three deals. So I don’t even know if it, if it, if it requires a lot more balls or anything like that, it’s just simply a maniacal focus on that first deal, whatever that means for you. Right? I mean if you’re, if you have a 10 thousand dollar per month income, you’re not likely to start with a duplex because at first deal has to be both achievable, which it is, but also has to be meaningful. If you’re replacing $10 thousand dollar of income, you’re not likely to start with a duplex, because at first it will have to be achievable but also has to be very meaningful.If you are placing 10 thousand dollar of income a duplex may not be a meaningful step in the right direction.

Stefan Aarnio: For someone like that, it might be a doable to do a 10 or 20 because that means you have some money saved up and you probably know other people with money, Go for a 10 to 20 units and make that your first deal. In other words, that first deal has got to be something that you can achieve reasonably in the next 12 months. That’s kind of how we define that first deal.

Michael Blank: I love it. I love what you said, especially about higher income people because I’m at the point when I’m doing a deal, it’s gonna have a 22 thousand dollar a month cashflow that excites me. So $200 a month cash flow doesn’t excite me anymore and it’s just. It’s amazing. I remember I started 200 bucks a month was a big deal. Now its not.

Stefan Aarnio: Let me ask you this, Michael, what’s more important? Having a great business or having a great brand?

Michael Blank: That’s a good great question. I think a lot of them are very closely linked. I think building a great brand in the long run really builds your business and it we hear it a lot. I mean even on the equity side are things called Nighthawk equity and we’re starting to kind of unintentionally building a brand a little bit, but Nighthawk now it’s starting to get a reputation. What that is doing is “oh, I’ve heard of you guys”, you know, “I heard good things about you guys”, and now we may be awarded deals where we’re not even the high bidder, right? If you build, this and it takes a while to do, and you can destroy your reputation much quicker than it took to build it up.

Michael Blank: For example, what is your brand? What do you stand for, what are your values? Then sometimes you have to make decisions based on those and we’ve made decisions where something would make money, but it’s what it actually is not consistent with our brand. We said no to that. It took me a while because everyone wants to make money. Right? You’re like, oh, you know, once I’m making money actually is not really consistent with my brand. So I’m going to say no to that moving forward. In the short term, I think it hurts you. I really do. When you’re trying to make money and you’re building a business, but in the long run, having a brand brings people to you in a way that you can explain because of that, because of that brand.

Stefan Aarnio: We’re talking about, things that are in the short term versus long term. Michael, the… What’s an example of something you’d have to turn down that could have brought you money but would mess your brand up or dilute your brand.

Michael Blank: Let me give you example, affiliates in the online world where I promote someone else’s product and they promote mine, which makes a lot of sense on paper, for example, it’s this educational spaces, kind of what I’m going here, but the promise, I want to teach my passion is financial freedom with real estate, investing the apartment buildings now as if I’m a promoter affiliates, I may be promoting some other strategy that I was going to be different from what I’m teaching, which is multifamily now sometimes are complimentary. Maybe I got a tax guy and they’re in there. They’re trying to educate you on how to become better and taxes. Well, why are they promoting a house flipping course or land or something like that.

Michael Blank: I’ve done this and I actually made tens of thousands of dollars on these things and always kind of was, but it was inconsistent with my brand. If I’m really excited about multifamily, why am I promoting something else to the point where I get a call from someone because, you know what? I think I’m going to flip land for a little while. I’m like, no, don’t do that. I made money off him, but I completely distracted him with something else, and that’s an example, where we’re, hey, who are you, as a brand, what do you want to do? I may have to say no to 10 thousand dollar for that, but it’s really not consistent with my brand.

Stefan Aarnio: That’s huge. That’s to add to that might be it was kind of like apple computers when they were weak in the nineties they had 120 products and when Steve Jobs came back he brought it down to four products and then he put all the money behind the I-pod, all the marketing money and that’s when they went up. I guess when you believe what the brand is all about, focus and focusing on the right thing.

Michael Blank: I think it’s really important, but again, it does hurt you in the short term.

Stefan Aarnio: Right? Everybody I meet on this probably goes, Michael, your all high achievers have an obsession. What would you say is your obsession?

Michael Blank: Mindset to… I don’t know. I don’t think I have an addictive personality. I guess my obsession really is to help as many people as possible because the thing is about to financial dictate.

Michael Blank: Speaker 3: My quest for financial freedom has been so dag on rocky and I would like here’s my thinking behind this. Stefan is, actually achieved a certain level of success as you have and what happens is it opens up your mind for bigger things. When I talked to someone, hey, you should really live a life of purpose, have passion. They’re like, what the heck are you talking about? Man, I work 50 plus hours. I come home exhausted, put the kids to bed, go to sleep, and I do it again. I don’t have the capacity to think about your passion or your purpose. Like what are you talking about?

Michael Blank: On the other hand, people who have achieved a certain level of success who controlled other time, all of a sudden have the ability to think about larger things.What they do typically is they’ll do a podcast or write a book. In other words, they try to serve people. You can’t do that when your hands down, 50 plus hours a week. My thought is, my gosh, what can I do to help someone become financially free? How can I accelerate my 12 year journey and whatever from financial freedom and if I can accelerate the two years now, what would that allow that person to do? That’s really what gets me excited is about getting more people financially free because I’m really just curious and excited to see what they do with their time.

Stefan Aarnio: I’m curious, Michael, how quickly can someone become a millionaire today? I think from zero to nothing, I’d say five years is a good estimation. How long do you think it takes for someone to become a millionaire?

Michael Blank: Here’s the funny thing about that. When I ask people what they want, they don’t actually say I want to be a millionaire. They say I want to control my time. It comes down to time and you don’t have to be a millionaire to do that. All he’s got to do is you’ve got to cover your living expenses. Right? How can you do that? What is that? What does that number? Lot of people don’t even know what the living expenses are, and the second thing is, well, how can I reduce my living expenses and then how can I produce passive income so that you achieve the rich dad poor dad goal of basically equal to or greater than you. That number oftentimes is much slower than being a millionaire.

Michael Blank: Actually the initial hurdle is that and guiding people to that.The answer to your question is, as I studied these people and I have a bunch of case studies in the book a little and I always ask people not for when they’ve done their first deal, but when they have decided to start investing in multifamily in that timeframe is one to two years, like I will say three to five years in the book. Just to kind of be more concerned with the truth of the matter is the 90 percent of people who’ve decided to going to do multifamily from that point forward, it takes one to two years to quit their job. Now that is hugely powerful and let me be off by 200 percent, let take them three to five years. It’s still a really, fast retirement plan based on everything else, and that’s really-

Stefan Aarnio: Freedom 1 to 2 instead of freedom 55?

Michael Blank: I mean that’s really exciting to me. Also, that’s kind of my passion is that message because there’s people that think they know about apartment building investing and they dismiss it because of what they think they know, and most of it is just misinformation.

Stefan Aarnio: Michael, what’s, one moment where you thought you’d fail and it was all going to come crashing down at all the over for you?

Michael Blank: I’ve had several of those, but it was definitely the restaurant experience and it was a no exhaust your cash. I had lines of credit left over from before the recession and trying to sell the restaurants couldn’t sell them, kept dropping the price, still couldn’t sell. Meanwhile, I’m losing 10 thousand dollars per month and I’m going to Starbucks, my credit card is declined because I’ve exhausted the 30 thousand dollars on that limit as well. That was pretty hard because the next step would have been I can’t make payroll. People quit. I have to shut the restaurant down. I can’t sell it, doesn’t have any value anymore, and I get sued by my landlords, and they will enforce my personally guaranteed lease, which was most likely I’ll lose my house. I was about three months away from that happening until finally one of the restaurants sold for like all cash or like 30 thousand dollars. It was a pretty dark time for me.

Stefan Aarnio: Let me ask you this, Michael. A lot of people get into real estate, lots of leverage, lots of debt, lots of pressure, usually not a lot of cash and real estate. It’s cashflow, but not a lot of cash. When you get it… When you were in that dark place, how did you crawl out of that hole? That’s pretty dark. That’s pretty scary to a lot of people can’t handle the stress in a situation like that.

Michael Blank: I was prepared for this stress. It’s not like this was my first exposure to stress. My first exposure to stress was going out on my own, big, leave my W2 jobs and realizing that I couldn’t control things anymore.

Michael Blank: I was always been used to if I do work very hard, I basically control the outcome and when I went into the restaurants, I couldn’t control people walking through the door and buying the pizza. For six months, for example, in one of the stores we opened, despite my efforts, it didn’t change anything for six months, the sales didn’t go up, so I learned I don’t control everything and I had to become at peace with that, and we’ve had other recession certainly was one of those things where we had to sell to the floor six restaurants we had basically first sale and it had a similar smaller experience where I was losing 10 thousand dollars a month while I’m making money and the store. It wasn’t nearly as bad. The more I had these situations, one of my… I started asking the questions different. What should I be learning right now in one of my key lessons was to learn to be at peace regardless of the circumstance.

Michael Blank: Because of these repeated things, and I on the real estate side, I had even had some experiences there. You can’t really control the circumstance, you can control your reaction to that circumstance and if you can be calm, then you’re going to be at peace no matter what happens. When the crap is hitting a fan, I was actually relatively peaceful, believe it or not because of my previous experience leading up to that. It didn’t, tear me apart.

Stefan Aarnio: What do you think causes a … What do you think is the biggest cause of failure in others? Mike? When you’re coaching people, training people, what causes people to fail when they sign up for something like this?

Michael Blank: I think it’s a lack of support. I think one of the things that I did not do very well is I did not have a restaurant mentor. Right? Hey, who do I have that actually has built a 20 units restaurant operation from scratch, right? I was a bit arrogant. I had a bunch of money in my bank accounts and I could spend it, however I want it and no one’s looking over my shoulder. I didn’t have to go get a bank loan. I just kind of did stuff and now when you look at people in the real estate world, like I had a conversation three weeks ago with someone who lost 23 thousand dollars on a 100 unit deal and he was like, Hey John, what happened? He started telling me the story about this thing on like, oh gosh, you did that. Oh Gosh, you did this, and I was like, these are things that would never happen to any of our students.

Michael Blank: I think everybody eventually gets to the goal. I think about the differences that some people get there faster will support and they lose less money getting there. I think eventually through trial and error people will get there, but if people really want to accelerate a process, having a mentor or a coach either paid or unpaid, it doesn’t really matter. Someone that has done what you have done really accelerates the process.

Stefan Aarnio: If you can go back in time, Michael, to the beginning, 18 year old Michael, 16 year old Michael, what’s a piece of advice you’d give yourself?

Michael Blank: I love this question. I would definitely introduce myself to entrepreneurship because I wasn’t… My dad was IBM for 35 years. Even in the early days he was trying to talk me out everything he thought I was crazy. He started praying for my soul, I think at one point. I would introduce myself to the world of real estate investing and I literally, I went hand myself, my own book honestly, because it talks about real estate investing in terms of where most people are thinking, which typically single family house investing talks about raising money and these are all at Aha moments. I had developed over a decade here. You can raise money, you can do single family house investing, but you can skip it if you want go here to multifamily and really building up, the hope, the accelerating the path to financial freedom.

Michael Blank: Mine was, like I said, very convoluted, lost a lot of money. Now it did shape me as a person obviously. I don’t regret that, but perhaps I couldn’t learn the lesson in a possible at a less painful way. I don’t know.

Stefan Aarnio: I like that hand your own book to yourself. Speaking of books, Michael, top three books that changed your life.

Michael Blank: Besides my own. Top three books, our Rich Dad, poor dad obviously was, was pretty, fundamental for me and for you and for many others. Right? For sure, I think some other books there’s a really short book called the alchemist. It’s like this almost like this children’s book and it really talks about exploring your purpose in life. I thought that was really insightful. I think the one thing by Gary Keller recently, it’s been probably been read there about a year ago, because it really allows you to simplify the clutter and focus on the one thing.

Michael Blank: The other one is probably the miracle by Hal El rod, by Really influenced my morning routine quite a bit. I’ve really been struggling with that. Trying to get that down. How just really breaks it down. What do you do in 60 minutes? You do five minutes, 10 minutes, 15 minutes of that, and I was like, finally, you know something I can do. It was just some the books that have influenced me. Love it.

Stefan Aarnio: That’s fantastic. Now, final question today, Michael, what is the one thing that young people need to succeed nowadays? The millennials, the generations that all these new guys coming in and what’s one thing that they need to succeed?

Michael Blank: Really be clear about what you want. I really think it’s that fundamental because, and I even confused financial freedom with becoming a real estate investor and I worked really hard and it’s like a ladder and you’re going up this ladder and you become successful real estate investor. You get the top. Like my case, I flipped three dozen houses and then you noticed that the ladder is up against the wrong wall. Well, what is that wall? It’s not becoming a real estate investor then what is it? Well, its financial freedom. What does that mean to you?

Michael Blank: It means that you control your time. I found myself being controlled by my house flipping business and I really just, I just didn’t really enjoy that too much. And you can build a house flipping business from a passive income. You have to architect it correctly. I mean, you can do a mobile home park, then you can do a turnkey business. He’s going to be very clear about what you want. I had a mastermind meeting just last week and one of the members was very unclear about what they want it, I said I’ll leave his name out, but I said, dude, you got to be very clear.

Michael Blank: These are very accomplished people, but when you send mixed signals into the universe like that, nothing will come. You’re just crossing energy at that point. I remember when I got very clear about what I want to do, which is I want to help people find financial freedom. When I became clear on that, everything just kind of fell into place, right? It doesn’t really matter. What I’ve also found is when people really decide on what they want, things happen automatically. If you truly decide, you can’t help but take action, it will be inconsistent with your decision on something. I can talk about taking action or time management. It’s all horse manure. It’s all being very clear about what you want.

Stefan Aarnio: Well that it all starts with a vision. Well Michael agreed. Have you on the show today? How can people get in touch with you? How can they get your book if they want to know more?

Michael Blank: Thank you for that. I’m at themichaelblank.com. That’s t-h-e Michael blank that’s b-l-a-n-k.com. You can also type in apartment building west wing and that should be all over page one, and then the book is financial freedom with real estate investing. It’s a bright yellow book and it’s on Amazon now. That’s a few different ways that people can find me.

Stefan Aarnio: Tremendous. Thank you so much real to show respect to grind. Michael will catch you probably on the real estate cruise. What I see you again.

Michael Blank: Thank you so much for having me.

Stefan Aarnio: Thank you.