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Financial Freedom One Rental at a Time, with Michael Zuber

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People often ask, “what’s your response rate on your direct mail marketing to Sellers?” It seems like a simple question, but the answer is not as simple as one might think. The counterintuitive truth is this: good marketing is hard to measure. In this episode, Jeff explains what good marketing is—and what it is designed to accomplish—and explains that good marketing should be difficult to track because it is relational in nature, not transactional.

Episode Transcript

Real Estate Investing is a get rich slow or get rich for sure business, it’s not get rich quick. It starts as a trickle that becomes a stream that then becomes a raging river. Our journey to financial freedom the first 12 years were interesting but not outstanding. It was those last three or four years like it’s like oh my God, we really can do this thing.

Welcome to racking up rentals, a show about how regular people, those of us without huge war chest of capital, Welcome to Racking up Rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting “We Buy Houses” signs are just looking for quote, motivated sellers to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out Win-Win deals without agents or any other obstacles and buy properties nobody else even knows are for sale. I’m Jeff from a Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.

Thanks for joining me for another episode of Racking up Rentals. Show Notes for this episode can be found at www.thoughtfulre.com/e122. Please do us a big favor by hitting the subscribe button on your podcast app, it really helps you make sure you don’t miss any shows and it helps other fellow Thoughtful Real Estate Entrepreneurs to find us onward with today’s episode.

I’m really excited to share with you an interview I did very recently with Michael Zuber, in today’s episode. Now, I think I might have been the only real estate investor on the planet who had not read his book, One Rental at a Time, but I kept seeing people reference it in Facebook groups and forums. Then I was chatting with our mutual friend Deon McNeely, a guest from just a couple episodes ago, who mentioned Michael and him were collaborating. Deon was gracious enough to make an introduction between Mike and I and I started checking out his book and I thought, wow, I can see why people are really into this. I was really excited to get a chance to chat with Michael, we had a great conversation and you are about to hear it. I will shut up now. Stop blabbing. Let’s get right to the interview with Michael Zuber.

Jeff Stephens:

Michael Zuber. Thanks for joining us on the racking up rentals.

Michael Zuber:

Oh, thank you, Jeff. This should be fun.

Jeff Stephens:

Yeah, no, I’ve been looking forward to this. I want to give a public thanks to our mutual friend Deon McNeely, who was also on my show recently, for this great introduction. You two have known each other for a few months.

Michael Zuber:

Yeah, we have. He is a big part of my channel. We actually have a Thursday conversation called the three amigos where Deon is a part of it. Actually, we recorded that this morning. So every Thursday, we spend an hour together. And yeah, it’s a lot of fun.

Jeff Stephens:

That’s awesome. That’s awesome. If I back up before Deon introduced us, I first heard about you through Facebook groups. And here’s what kept happening. Somebody would ask a question, and then somebody else would respond. And they would say something to the effect of, ‘Well, Michael Zuber would say, “blank,” you know, and I was interested. I saw that again and again and again. Then it came up with Deon. So my first question for you, Michael, is that you are clearly doing something that is striking a chord with people like what is it about you, you’re smashing good looks? Your book? I don’t know, whatever it is, what is that is resonating so well?

Michael Zuber:

Well, I think there’s a couple of things. First and foremost, One Rental at a Time is nothing more than our story of living below our means, one rental at a time. We actually do the business. We don’t just talk about it. There’s lots of people out there that just read books and talk like they’re an expert. We’ve been doing this 20 years. We were buying before the bubble during the bubble after the bubble, and we’re still buying today. You know, so people appreciate that. I believe real estate success, investment success, is really a couple of things. First, its focus. Most new investors don’t focus. I believe in daily discipline. Like Dion I bought my entire portfolio out of the multiple listing service or MLS or today’s realtors: Redfin, Zillow… things of that nature. Since retiring I have certainly bought off market and done those things, but our portfolio was built one deal at a time and I think people like that. I don’t preach high leverage. In fact, I think it is very dangerous. Why? Because again, I’ve been doing it 20 years and I saw people worth $10 million go bankrupt in under a year, because they had high leverage. You know, people see Dave Ramsey today. He’s worth $300 million. But again, he went bankrupt in real estate, because he wasn’t even highly leveraged, right? He had $4 million in real estate, $3 million in debt. But he had the wrong debt. He had 90-day debt. And I talked about 30-year money only. Right? I hope it’s resonating because people see my path is achievable. Right? Dion’s path is achievable. We’re not selling smoke and mirrors. And again, we do this business every day, I look at my market every day, even after 20 years. So I’m hoping that’s the reason.

Jeff Stephens:

Yeah, yeah, that makes sense. That’s kind of what I was thinking, if I had to have my own theory. Even from the name of the book through some of the ideas I’ve heard, you know, you express already today, and then some other people reflect in some of those groups and whatnot. It does, I think you’ve done an amazing job of making it seem very doable, very real for a regular person who’s not suddenly going to just given their notice. And then the next day like, well, I guess I’ll figure it out real estate investing.

Michael Zuber:

Yeah, I’m a full-time real estate investor, well, did you know that you’re not bankable, you have no emergencies, you’re soon going to be in so much stress that your family relationships gonna blow up. I’m far more conservative, right? I believe bust your butt during the day. I work 60, 70, 80 hours a week, but I still found time to look at my market every day. You know, we were raising a child. So I had all the demands that most of us have and it still worked. It did take 15 years. But you know, retiring at 45 is certainly better than 65 or 70.

Jeff Stephens:

I think I would agree. I think most people would, would you mind giving us a little snapshot of some of the daily disciplines that you that you like to advocate?

Michael Zuber:

Yeah, again, but I think step one is focus. So, it starts there. I call it a “buy-box.” I tried to simplify everything and create stories because stories, people remember stories. So first off, with a lot of new investors, they’re all over the map, right? They can’t even they can’t even decide on what market, let alone what asset type, right? If you’re a new investor, and you’re looking in Texas one day, Ohio, the next day, Michigan the next day, then Washington, you’re not going to get anywhere. Because all of those markets are different. All those states are different, let alone the submarket of each area. So, the first thing I say is get laser focused. I always use my example because when in doubt, I tell what I did. I live in California, California is huge. I live in the city of Mountain View, which if you don’t know where that is, that’s generally called the Bay Area or the Silicon Valley. It’s ridiculously expensive here. It doesn’t make sense for cash flow. So I had to find a market two and a half hours away and I found Fresno California 20 years ago, and I never left. But even Fresno is too big. So Fresno, let’s call it a million, right? It’s a million houses. I had to pick a zip code. I chose 93703. It’s called the Mayfair and even that was too big. I had to pick three bedroom or four-bedroom homes between 1200 and 1600 square feet. That is all I looked at for three years, Jeff, everything else didn’t exist. I didn’t look at duplexes. I didn’t look at quads. I didn’t look at apartment. I didn’t look at condos. I didn’t look at lots. I didn’t look at mobile homes. I looked at three or four bedrooms between 1200 and 1600 square feet in one zip code for three years. That’s focus. That’s daily discipline. And then I looked 20 minutes a day, seven days a week in 20 years. Jeff, I may have missed 10 days. That’s it.

Jeff Stephens:

Well, you made it easy and doable for yourself, right? Because your focus basically facilitated less friction, right? Because Yeah, you didn’t have to decide every morning. Like I wonder what I should look at today.

Michael Zuber:

Yeah.

Jeff Stephens:

Okay. Yeah, I love that. And I too, I hear a lot and always makes me really uncomfortable. People who talk about doing business, like all over the place, all sorts of people said,” Well, if the numbers work, I don’t really care where it is,” or this or that. I think, man, I just paraphrase what you just said in a way that I think about like, I want to be like the world’s foremost authority on my tiny little sandbox, and that can be a geographic, a tiny geographic sandbox, it could be a product type within that sandbox. It could be a, you know, I know a tenant type even within that sounds, but it’s like you got to be the world’s foremost authority on something and that focus results in that.

Michael Zuber:

I couldn’t agree more, especially if you, the people that resonate with me typically have full time jobs and are raising kids. You really only have one option because if you choose not to be this focused, you’re, you’re actually going to get what I call negative leverage, because trust me, when you look at Texas, and then Michigan, you’ll be confused. It’ll actually be negative, as opposed to positive because oh my god, what was Texas tax rate versus Michigan tax rate? What’re section eight limits? I’m confused. Yeah. Most people do it to themselves. So I preach. Talk about step one. ‘Buy-box’ focus. And again, I looked at that one little buy-box for three years before I felt comfortable expanding it at all.

Jeff Stephens:

Yeah, yeah. The only thing that focus does, of course, is it either preempts or solves the idea of overwhelm. And I don’t know what your experience has been. But mine is definitely that if there’s if you can sort of broadly pin, you know, procrastination, or stalling or whatever, on one thing, it’s probably overwhelm for many investors. And that’s what I love about what you’re saying there.

Michael Zuber:

Yeah. What do you do with focus is by like day 10, or 15, you’re like, Okay, I’m starting to get a rhythm by day 45 or 60. You’re actually knowing that buy box better than 99.9% of agents in that market? And yeah, you call it a sandbox. I agree. I want to know that sandbox better than anybody else. Because my whole goal with teaching or mentoring or whatever it is. I want you to learn average, I want you to know what the average deal is inside that sandbox. Because the power in what I’ve done over the years is I never do average. I learned average, but I only learned average so I can find good or great deals. Right? Deon says, and I agree, it’s always a great time to do a great deal. I don’t believe in timing the market, I believe that’s just foolish in real estate. It’s always a great time to do a great deal. But you don’t know great until you’ve looked at the sandbox. And you could say, ‘hey, Jeff, for three bedroom/four bedroom house in the Mayfair district between 1200 and 1600 square feet, the average yield is 6.5%.” Yeah, then you can go find eights, or nines or create eights and nines by negotiation or seller financing or seller seconds, or whatever it is. But until you’ve spent the time and no average, you’re gambling at best.

Jeff Stephens:

Yeah, you’ve got to have that point of reference to know how to judge new things that come into your radar screen based on like, what that middle marker averages. Yeah, I like that a lot. So I just thought of a question I did not plan to ask you. But you know, you just mentioned I know, my focus, my buybox better than the realtors. So I know that you’ve bought a lot of properties through realtors. And so my question actually comes out of this is like, if you know better than the realtors, I think that’s a great, great, great thing. So what role in your mind do realtors play in your overall efforts? Because in a way, it’s sort of like we’re saying, it’s not necessarily market expertise of that exact product type in that exact area? Because you know better than that. So if it’s not that, what is the role that they play for you that adds tremendous value for you?

Michael Zuber:

Well first and foremost, the number one thing you should be doing with any real estate agent, and frankly, any investor is telling them what buy boxes. So every real estate agent I ever meet, like the third thing we say is this, I basically tell him what I bought, because real estate agents will get access to deals, pocket listings, they want walk in appointments, past relationships, they hear things, and they get paid for telling other people what’s happening. So I want every agent in Fresno, California to know what I buy. Most of the deals I’ve done through this pandemic came from relationships, not on the MLS, it’s been impossible to find a good deal on the multiple listing the last 18 months. But you know what, I spent 20 years telling people what I buy, and I closed eight or 10 deals, because people go ‘Hey, Mike buys that stuff.’ So real estate agents are tremendously valuable for investors like me, because again, in the beginning, I would say I buy in the Mayfair district threes or fours between this, one story. And they would call me, they would call me first. They don’t want to put it on the MLS, they would love to double in and I let them know, right? So that’s mainly what it is. And then they obviously I don’t live in my market. And you know, again, Fresno is two and a half hours away. So I’ve worked with some agents and we’ve done it enough times where they can be my initial walkthrough and they’ll now do that FaceTime for me, right? I haven’t been in Fresno and almost two years, and we’re still doing 1520 deals since then. So agents are hugely valuable to me. Yeah.

Jeff Stephens:

So we’ve talked a little bit about your acquisition strategy then. Can you tell us a little bit about what strategy you are using for financing? Because you’ve gotten to a scale and a pace that you don’t just walk into a Fannie Freddie type loan, right? What’s your approach to that these days?

Michael Zuber:

So these days- I’m lucky enough to be doing this 20 years- I have equity lines that I can use. If it’s very short-term money, I can go get non-qm money, which is non-qualified mortgage, like five and an 30-year fixed. So that’s cool for me. Yeah, I can’t get Fannie Freddie. I can do commercial financing portfolio loans, I have options. I also have access to millions of dollars in private money. I’ve done this, so long that I have a list of people that are willing to lend to me. So money is not a challenge. I just can’t get three or 4%. Right, the lowest rate I can get pretty regularly is five and a quarter.

Jeff Stephens:

I see. And are you mostly buying properties where there’s some kind of value-added component like physically or managerially? Or are they a little bit more turnkey or a mix or?

Michael Zuber:

I will buy whatever makes sense, I would say in the last 18 months they have been seller situations. You know? I bought a portfolio about a year and a half ago. seller financing, right? It was actually before the pandemic right before it started. I think it was November of ‘19. And he needed to close in December. So seller financing was the only way to do it. We bought, I want to be right, so it’s two-four plexes, a triplex and four houses. So for 1115 Yeah, 15 units. One guy seller financing. He’s like, hey, Michael, you bought one of my units two years ago, you’re manning your words, you closed on time at price didn’t retrain me. I want to sell everything and I’m willing to give you a great price meeting with huge equity. But I need a 10 year prepayment penalty, because he just wants to, he wants payments for 10 years. So I’m like, Cool, let’s work something out. So lo and behold, he got his payments for 10 years at the number he wanted, and I walked away with half a million bucks in equity. Because I won’t sell any of them for 10 years, or I won’t refi them again. Conversations with sellers. It’s important to listen, stop talking most. I’ve been selling for 20 years. Most people talk too much. Right? The whole you have two ears in one mouth. Shut up and listen. Yeah, it’s amazing what happens.

Jeff Stephens:

I couldn’t agree more. I wish I wish we had 10 ears and one mouth, because that’s about the ratio it should be, you know, like, you should be talking about 10% of the time. I actually also tell my audience and my like coaching clients that in any meeting with a seller, I want you to learn 10 items about them, as they learn about you like and that goes right along with the listening side of things, too, in terms of just like knowing your audience.

Michael Zuber:

Yeah. And again, a little word of advice. Whenever you can don’t ask yes or no questions. Right? Yeah, get a story, feelings. And again, I’ve been selling for a long time, and people don’t really understand this. If you’re not a salesperson, you may not get it. But it’s true. People buy emotionally, but justify logically. People think selling, right, a lot of salespeople I meet that are horrible. Want to make it about ROI, or the return or logic. Right, you don’t start with logic, you got to grab their heart first. And then their mind. Most people do it backwards.

Jeff Stephens:

Yeah, I totally, totally agree with you on that. Okay, so Okay, so you started doing this, and it was doing very, very well for you. What made you want to transition some of your focus to then helping show other people? How you do what you do? Like what made you want to write a book and do all the things you do?

Michael Zuber:

Oh, that’s a great question. So. So again, I was a sales guy for 20 years, I live in a profession that you literally can be fired every 90 days. In addition to that every year, we get new accounts, we get new technology, new quotas. It came to a situation where I did not like what I was getting. I went to work that day thinking I was gonna have a great year, because I’ve had 20 great years, and it came out and I’m like, nope, you don’t like me, I don’t like you. We’re done. I’m out. So I retired on a day that I didn’t expect to. So then you spend two days wildly excited, right? You’ve been sacrificing for 15 years, it’s finally time to recoup the rewards. I smiled so much, Jeff, my face hurt. However, then, the mind starts doing what the mind does. I’m a type A, highly motivated, goal oriented individual and now I have nothing to do. I start getting depressed. It starts to spiral. I’ve never been a negative person. You can’t really be in sales as long as I was being negative, right? You always have to keep leaning forward like it’s possible. It’s possible. It’s possible. And I was I was in a dark space. It finally came down to a Friday I just came back from some meetings in San Francisco, where I was I was going to get a job Monday, not because I needed the money, but because I wanted to stop being depressed I wanted to feel like I was contributing. So I had to self I had to self reflect And I remember reading Rich Dad, Poor Dad, when I started and as I talked about in my book, and I’m like, there’s not a book out there about a full time employee who reads Rich Dad, Poor Dad does it for 15 years, and wins or finishes, or whatever that is. I’m like, you know what, I need to write that book, I need to write that story. So that became the thing to do. So you write a book, it takes whatever it takes. Out of that book came, hey, maybe I can talk on, maybe I can do this YouTube thing. I don’t know what it is. But I’ve experienced, I have questions. Let’s try YouTube. So basically, what it came down to is, I found a way to feel like I’m contributing in the morning, my mornings usually are over by 10:30. And then the rest of the day is mine to do with what I want. So the book, YouTube, a second book that’s coming out in another couple weeks is really my way of giving back and feel like I’m still contributing, as opposed to that horrible feeling of being depressed.

Jeff Stephens:

Yeah. Yeah, I totally understand that. somebody pointed out to me many years ago that the word you know, retire, really means like to take something out of service. And it’s like, Yeah, I don’t want to be taken out of service. Yeah, it’s like being put out to pasture. You know, like, No, no, I don’t want that at all. I might want to stop doing what I’m doing now in favor of doing something else. But yes. Yeah, that’s cool. I can definitely relate to that, that desire. Well, I think it’s safe to say there are 1000s if not more people who are glad you made that decision.

Michael Zuber:

I hope so.

Jeff Stephens:

So I guess one of the things I encounter a lot is people who feel stuck, right? Stuck, like taking the first step. Maybe they’ve taken a few steps and they’re stuck at the, you know, the fifth Fannie, Freddie loan, maybe they’ve gotten 10 they’re stuck there. Maybe it’s a mentality stuck. What do you find from you guys? You get to talk to a whole lot of people to where do people get stuck most and then how do they get through that?

Michael Zuber:

Oh, I think most people get stuck because they want it too fast. Right? Real Estate Investing is a get rich slow or get rich for sure business. It’s not get rich quick. It starts as a trickle that becomes a stream that then becomes a raging river. Our journey to financial freedom the first 12 years were interesting, but not outstanding. It was those last three or four years. Like it’s like oh my God, we really can do this thing. I think most people, especially today and again, the beauty my journey starts really before social media, right? All right, I actually had to go to a bookstore to buy books, not Amazon, right? So, I think too many people let social media instant gratification microwave wealth, lying- frankly, distort them. That’s why I talk about daily discipline, focus moving forward. Lots of people get stuck with money, but you know what? Slow down. You know, save a little money. I tell the story right? At 30 years old before I buy our first house. I was making six figures and spending it all by the time we’re 32 we’re living on 50% of our income. And we did that for a decade. Yeah, you know it takes discipline to do this. The financial being having a better financial future is actually pretty easy. It just takes choices and daily disciplines. Financial Freedom is hard because that is also time but having a better financial future really isn’t that hard. It’s just nobody wants to do it.

Jeff Stephens:

Yeah, yeah. Okay, thank you. So to wrap it up, I thought for fun I want to give you a couple like rapid fire questions just a bit on the lark I’ve never done this before. So at about 20 minutes before you and I got on here. I posted on Facebook and I said hey, I’m about to interview Michael Zuber What do you want me to make sure I asked him responses. Sweet so first one comes from Samuel and he’s asking if you’re willing to share how many units do you have now and what is your recommendation on cash reserves per unit?

Michael Zuber:

So I have a lot I have well over 100 units I don’t think in cash reserves per unit at that level. I have a I have a set of cash set aside that’s covers me just fine. However, in the beginning Samuel I wanted to have $5,000 for the first house then $4000 for the second then $3000 once I got to about 10,000 bucks in the beginning that was plenty of reserves. My reserves is more than that today but you know a lot more units so yeah, and again, I treat these reserves as money I don’t have I actually in the beginning I opened up a separate bank account in a separate location, only for the reserves. I think a couple of people in the past got in trouble because Oh, I got the deal of a lifetime. Using my reserves, and then they had a roof leak or a water heater blow up and they didn’t have the money. So I treat reserves as just what they are is for emergencies.

Jeff Stephens:

Okay, awesome. Thank you. And one more. From a Catarina she’s asking, do you have a favorite deal you’ve done? It’s something that you feel kind of most proud of.

Michael Zuber:

Yeah. So these people I remember reading books, right? Again, I read books bought an Amazon and everybody talks about a no money down deal. So I did a no money down apartment deal at the depth of the recession, right? We bought an 18 unit building that had once sold for $1.5 million. We bought it for $700 grand. We got it entirely financed by the lender, we got a reduced rate and all I had to do was put $50,000 in escrow so that we could rip the units they needed $50 to $60 grand. And we got that by relationships. We had done another deal on a house with the bank. The bank knew what we were looking for. Again, as I told you earlier, I tell everybody what we’re looking to buy and the bank called us up and says hey, we got this unit you know they wanted I think initially like $900k we walked it with the bank president that was really fun. I couldn’t believe he was walking through all 18 units in his full three-piece suit. It was, it got comical, and I didn’t need to see them all but I just wanted to see if he’d make it. So yeah, that was fun. And you know, five years later we re-fi them out but a bunch of equity away. It’s yeah, zero down apartment deals can happen. But they don’t happen nearly as often as people think.

Jeff Stephens:

Yeah, yeah, absolutely. That’s a great one. Well, any final words, I want to make sure people know exactly where to find you exactly how to get the book and everything else that you do and how to access the YouTube channel. What’s the best way to?

Michael Zuber:

Yeah, I think I’m out there pretty well. If you just go to your Google search bar and type in One Rental at a Time, you will see a YouTube, website, book, Instagram, that that should be the way and as far as leaving people with advice, all I’m trying to do is I want people to believe it’s possible. My first book is a story of two full time employees raising a child and getting there. The next book is 15 stories of other people from other situations, doing amazing things in real estate. You have to focus daily, discipline takes time, but it is absolutely possible. Don’t rush to keep going. You know one day at a time you can get there.

Jeff Stephens:

Yeah, beautiful. I love it. Thank you so much for taking some time to join us on racking up rentals. Think about it.

There you have it: my conversation with Michael Zuber. I really just, I like his approach and his mentality. He really, I think gives us all permission to feel like we don’t have to be blasting down the freeway of financial independence so we can get there in a very predictable, dependable, and safe manner by just doing things well you know, to use his words, “one rental at a time.” I think he made so many great points about the buy-box concept and the focus that, that brings and just the daily disciplines and so much more. I got a ton out of that I really hope you did as well. It’s been really fun to tell people that I was interviewing Michael and that this episode was coming. So many people say things like oh my gosh you know my worlds are colliding within real estate you know, I follow you Jeff and your message but I also been really listening and reading and loving Michael stuff. So I am very excited that those two worlds could collide in this way also.

So that’s it for today’s episode of Racking up Rentals. Again, show notes for today’s episode our thoughtfulre.com/e122. Please do us a big favor by hitting the subscribe button in the podcast app and rate and review the show. Did you know we have a Facebook group for thoughtful real estate entrepreneurs too? It’s called Rental Portfolio Wealth Builders. We’d love to have you join us over there. Just go to group.thoughtfulre.com and the magic of the internet will take you right to that page and you can hit the Join button. If you liked this episode, please take a screenshot and post that to Instagram and tag us we are @thoughtfulrealestate.

I will see you in the next episode. Until then. This is Jeff from the thoughtful real estate entrepreneur signing off.

Thanks for listening to Racking Up Rentals where we build long term wealth by being a win-win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.

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