Mikey Taylor 00:00
Once you realize what you are good at, I actually believe that it can be applied anywhere. But there’s a caveat to it, you have to be willing to humble yourself. To start over two years ago, I ran for city council, I’m going to do everything that the other people running are going to do plus more. So one of those things was door knocking. And I remember the car drove by stopped reversed window down, Mikey Taylor, you’re knocking on doors, you are way too famous and way too successful be knocking on doors. If I thought that way, I would never get elected. People kind of go wrong with this one is they feel like anything they do they need to be the business owner in it. And most of them put themselves in a position where they’re the ones driving it. I actually think that’s a terrible way of going about opportunity. If your goal is how do I build the largest system that runs without me, the correct way to do it really is
Brad Weimert 00:57
Congrats on getting beyond a million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine and even 10 figures. I’m Brad Weimer. And as the founder of easy pay direct, I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week because I dig in with experts in sales, marketing operations, technology and wealth building. And you’ll learn some of the specific tools, tactics and strategies that are working today. In those multimillion eight nine and 10 figure businesses, life can get exciting beyond a million.
Brad Weimert 01:38
Mikey Taylor, thank you so much for carving out time. I’m glad we navigated some tech difficulties here.
Mikey Taylor 01:42
Thank you for having me. It’s always something
Brad Weimert 01:45
Before we get into business, skateboarding is a bizarre sort of upbringing that I have a million questions about. Where’d you grow up and what led you to skateboarding in the first place.
Mikey Taylor 01:56
So born and raised in Southern California grew up in the 80s, baby. So 90s is where I did kind of the majority of my figuring it out. And at that time, skateboarding was very small. It was it was kind of still felt, raw and core. And in California, you know, it was if you were going to do something outside of the conventional sports, it was surfing, by and large, but I don’t know I was growing up, I saw one of the cool kids riding a skateboard and wanted to be cool when I was 12. And so I got one, and just completely fell in love with it, it very quickly became became an obsession, didn’t want to stop skating. And so as I started getting older, and started getting more pressure from my parents to get a job and start making money, I wasn’t totally ready to stop skating. So I tried to figure out a way to have both. And that was to convince sponsors to give me free product so that I could sell that product to my friends. And that would be my side hustle while I continued to skate. And then fast forward. You know, in my early 20s, it became an all out like career, I became a professional skateboarder started traveling the world, I was top 10. For almost a decade, it became something I didn’t initially plan for. But I was not mad at it either.
Brad Weimert 03:16
For a lot of people in the larger aligned sports, there is a point when their family, their friends, culture, finally embraces their pursuit and says, Oh, yeah, fuck it go after it, man. Did you ever hit that point with skating? And if so what was it?
Mikey Taylor 03:34
I did hit that point. It was it was more of a financial kind of benchmark. And prior to me becoming Pro, my parents were like really concerned that I was going down the path of being a pro skateboarder and not going to college. Right. And to like, really add to it. Like, if you would have asked me in middle school, in my first couple years of high school, I would have told you, I’m going to be an attorney. Like, very early on, like, this is what I’m going to do and move on to college. School was easy for me. And so I think my parents found some comfort that like their son is like very clearly knows what he’s going to do. And that’s a job that, you know, can give you some type of quality of life. And so when I told them, I wasn’t going to college, and I was going to skateboard, they kind of panicked. And then I got to a point where I started making like pretty good money. And then at that point, my parents were like, looking at my little brother going, you can do this, you could be a pro skateboarder. And so I think that was probably one of those big pivotal moments like, oh my gosh, there’s actually an opportunity here. And if my parents are now promoting that to my little brother, which five years prior to that they were trying to convince me to go back to college. something’s changed or our outlooks dead, one or the other. It’s go time.
Brad Weimert 04:49
Did you have any reservations at that point? So you felt like you had made it right? You felt like you had made money? And that is a I mean, from rental perspective, I can understand that right? I have no kids. But when you think about parenting, when I think about parenting, of course, if your child’s going down a path, you’re concerned that they’re not going to be able to sustain life. Right? Did you have any concern from that moment forward? Maybe I should have gone to school. Maybe I should also have a contingency plan? Or did you think like, hey, you know what I’m all in. And this is the game.
Mikey Taylor 05:25
Yeah, I was concerned, like 100%. Like I, the thing about it in the 90s. And the early 2000s, like, it was pushed pretty heavy upon us, way heavier than it is now that you have to go to college to make money. And so definitely, like, I was like, Oh, dude, Am I blowing it by doing this? Like, am I taking like the short term, like, high? And you know, as the long term future, am I sacrificing there because of it. I told myself in the beginning, I could always go back to school, if this doesn’t work out. But something kind of changed in my life. Once I realized that I had a skill set that I could apply outside of skateboarding. And I would say the the dynamic, or the challenge that skateboarders have is, the longer skateboard career you have, the harder it is to move out of skateboarding and into real life. From me, when I started my first business, I was still skating, I was in my late 20s. And it was probably the most freeing thing ever. Because I realized that mean, riding a skateboard wasn’t the only way I can make money. Like I actually had a skill set to go much beyond that. And then there was no looking back. Like, I never had to think about college again. And now you know, I promote a whole different message. Like I’m not very bullish on college, I’m actually trying to tell kids figure out what you want to do first, and then pick the best path to get there. And if school is in that, then do it. But if it’s not, don’t waste your time, and don’t waste your money that came more through my experience of the last 20 years.
Brad Weimert 07:01
Yeah, I mean, in fairness, I’m 43. I’m the same boat, as you, you know, grew up through the 90s, very, very much. My youth was go to college, so you can get a good job. And that was it. And I chose to go down the path of sales. And I was making 100 grand when I was 19. thinking, why am I going to college. But contrary to your path, I kind of did it anyway. Because I’ll be in largely because I was contingency planning, which is part of my MO. The message today of you can figure it out. You don’t have to go to school, figure out what you’re interested in and then learn that way is it feels like a safer path than it did then, you know, there are a lot more resources today to learn on your own to create a business on your own, et cetera. What was the business that you first started through skating? And did you do it alone? How did that come to be?
Mikey Taylor 07:57
The first business I started was a craft brewery full blown production brewery did not do it alone, there was three of us total. So two of my friends that were co founders in the business. And as we started building out our business plan, we started hiring people before we launched, I think we launched with about eight people total. And then we grew that to just around 50 employees within three and a half years. And then we ended up selling our business to MillerCoors in 2015.
Brad Weimert 08:26
I love that I am terrified of participating in a business that has a vice for me. So I refuse to get involved in alcohol, coffee, or any other such thing.
Mikey Taylor 08:38
Feel that? Look, you know, I had a fully stacked fridge. For years, it’s it’s that could be a challenge for sure.
Brad Weimert 08:48
I just if I need to unplug for some reason, if I need to disconnect. I don’t want my business to be directly tied to me walking away somehow.
Mikey Taylor 08:55
Nuff said I’m tracking.
Brad Weimert 08:58
Okay. So I want to talk real estate. But there’s this gap between skateboarding and diving into beer. What was the most important element of being a professional skateboarder? What made you good there as a human?
Mikey Taylor 09:11
I have a business mind. And in that you move over to like the brand side of things. I’m really good at building a brand or a message or a story that drives people in beyond the skill or the product or the service. And I kind of discovered this while I was skating and kind of how it worked. At that point. I got my first shoe. So I had a signature Mikey Taylor shoe. And in that, you know, I started working with the designers to build out what my shoe was going to look like once it got to the point of us having something to you know, hit the stores, then we had to go into marketing. And this is when I really kind of put it together. I started thinking about concepts and ideas where kids could resonate with me more than they currently are which in turn would sell more product which then you know I would make more royalty off of and when I started looking at skateboarding through that lens, like how do I build a bigger brand? How do I build a bigger audience? What is my ultimate funnel structure in, everything changed? And without that I think my career would have gone the, you know, normal seven years. And I ended up going 14, I think just because of this idea that I was approaching it as if I were a business, not as if I was a pro skateboarder.
Brad Weimert 10:25
Yeah, I think that that the focus on attention and personal brand, and exposure is way higher today than it was 20 years ago, and 20 years ago to think through that is very unusual. So that’s a, that’s a great insight.
Mikey Taylor 10:42
Yeah.
Mikey Taylor 10:42
So I would say, that’s the reason, then I’m obsessive, like, I hate losing, I will, I will do more than the person next to me to win. That was a good quality to have when being a professional athlete.
Brad Weimert 10:54
That’s the through line with people jumping from one space to a totally different space to a totally different space. Is these personality traits that drive through? And so, and I imagine, and maybe you have another answer to this, but what is it out? Maybe it’s just that, but what is it that makes you good in skateboarding makes you good and selling beer, and makes you good? As a real estate investor? What is the common thread there?
Mikey Taylor 11:23
I think once you realize that what you are good at what your superpower is, I actually believe that it can be applied anywhere. But there’s a caveat to it. You have to be willing to humble yourself to start over. And my real test was actually going it wasn’t going from skateboarding to beer, it was actually going from beer to private equity. And the reason why I say that when I built the brewery, I was still skating, I was on the tail end of my career, but I was still known as a pro skateboarder. And so a lot of doors were opening for me still. And I still had that mentality of I’m the guy and opportunities coming to me, when we sold the brewery. And I stepped into a space where there truly was no crossover, I had to start at the first floor again. And that is very hard for somebody whose head had already succeeded in a different industry at my case, let alone two. And so what normally happens is I have a you know, very successful professional skateboarding career, I step in to do the new thing. And I keep myself at let’s call it level 10. But in the new industry, I’m not level 10. I’m like seriously starting over. And if you’re not willing to go through the beginning stages of building again, you’re actually never going to grab traction. And then you’re you’re basically going to be the guy who wants did something cool, and now lost steam. And so now I know, I know what makes me great. I know what my superpower is, if I’m going into another industry, I’ve got to spend the year of figuring out what it is figuring out how to apply my idea, building relationships, going to events, like doing the early stage grind stuff again. And now I’m at the point I like I know, it’s like I can be successful in any category. The humbleness is the big factor.
Brad Weimert 13:18
Yeah, that’s beautiful. The way that I frame that internally is, if I set my own expectations, realistically, it makes that initial phase easier. Meaning if I know that it’s going to suck in the beginning, and I expect it to suck in the beginning, then it’s okay. When it sucks. Yeah. If you lack the self awareness, and you walk into a new thing, thinking it’s going to be easy and it ends up sucking. That’s when people usually pull the ripcord and get the fuck out.
Mikey Taylor 13:45
That’s a good outlook, as you just said that it just reminded me of something. So two years ago, I ran for local office, city council in my area. I don’t live in a huge city. It’s about 130,000 residents. And in that one of the things that that candidates do, they knock on doors, door knocking, right. And I went into it thinking, You know what, I’m going to do everything that the other people running are going to do plus more. So one of those things was door knocking. And I remember coming out of this neighborhood, I just knocked on somebody’s door. I’m Mikey Taylor and running for city council gave him the whole pitch walked out to go to the next house as a car drove by stopped reversed window down. Mikey Taylor. I’m like, yeah, what’s going on? Dude, I’m a huge fan. And then he looks at me goes, What are you doing? And I’m like, Oh, I’m running for city council. And right as I said that he goes, you’re knocking on doors. I’m like I am. And his response was, you should not be knocking on doors. You are way too famous and way too successful be knocking on doors. And basically my you know, my message at him was, if I thought that way, I would never get elected. And my goal is to win this thing. And if you’re gonna win this thing, you have to be willing to do what everybody else is doing. And so that is hard to do once you’ve established yourself in another category. So that’s been my experience, it’s uncomfortable, I’m not going to tell you it’s easy. I hated door knocking. It is, it is not a cool feeling. But it’s absolutely necessary.
Brad Weimert 15:25
The idea of participating in City Council makes me want to jump off a cliff. What made you want to participate in the city council?
Mikey Taylor 15:40
So it’s a that’s a good one. It came from my wife, actually, like my wife and I were up one night talking, we were having glass of wine. And she kind of just mentioned that she felt like our city was missing a lot of things like, you know, and to go more into the weeds where I live. If you’re, you know, a baby to like 20, it rips, like it’s so good. And then we like have a gap. If you’re like, 20, to like, 35, not much here for you. And then you know, you get a little bit older and you’re having kids, it opens up again. And so we were talking about the what went missing? And I don’t know, I was like feeling positive that night. And I was like, Babe, instead of us just talking about what we’re missing. Why don’t we go create it, let’s be part of the change. And she just looked at me and goes, Yeah, all right, what are you gonna do? And I was like, What did I just What did I just get myself into? And so basically, after about 10 months of thought, we decided I’d try to get involved locally, and city council, I felt like that, you know, I felt like my skill set could be applied there. And it was it’s very part time. So my current business that I’m running, I didn’t think had to, I didn’t have to sacrifice any time there. And so I ran, I know that winning. And, you know, I’m about to finish out my second year of a four year term.
Brad Weimert 17:05
Love that. Well, I am very grateful that there are people like you willing to do that, so that other people aren’t filling those seats.
Mikey Taylor 17:14
Yeah, look, we can have a whole long conversation about how the incentive structure is not there for normal good people to get involved. That’s gonna be that’d be a podcast on its own.
Brad Weimert 17:24
I look at city government, or you can go up the ranks, right? Very similarly to an HOA. And this will be our gap or bridge to real estate here. I feel like HOAs are full of 90% are people that have no business running anything, but don’t have anything else going on in life and need some sense of meaning and power. And then 10% People that are way too fucking busy to be doing a yet another thing, but cannot let themselves sit with these 90% making decisions for the community that they live in?
Mikey Taylor 17:58
I didn’t say you said.
17:59
So this is on to your real estate chapter. So one of the things that I found interesting through our conversation so far is you have self identified as getting into private equity, not getting into real estate. Do you look at those two things differently? And do you see the private equity position as versatile where it could be real estate? Or it could be any other thing? How do you view those two things?
Mikey Taylor 18:29
I didn’t get into real estate, when I started this company, I was already in real I was already investing in real estate, there’s a difference between you being a real estate investor and you building a business in real estate or real estate investing. And so the company that I built and why we say it’s a private equity real estate firm, we raise money from investors who want to invest in apartments or want to invest in storage units without doing any of the work. So my firm comes in, and we will, you know, find the opportunity. A lot of times we’re building so we’ll you know, get it through maybe entitlements or permits, we’ll scrape it, manage construction, lease it up all of those activities my firm does. And then in that we get to participate in what’s called a profit split, or profit share. And that’s kind of more in line with just the private equity dynamic. In private equity. There’s multiple different things you can invest in, there’s business, you can be in tech, in real estate. But the idea is all the same year, the firm does the work, you pay a percentage to your LPs and you capture some of the profit as a GP.
19:37
So what brought you into private equity in the first place?
Mikey Taylor 19:41
When I sold the brewery, there was an element of it that I really enjoyed, which was having to have a business plan, having to raise money. And then we got to see the investment go full cycle, meaning we sold it and then we got to pay our investors a return. I really liked that whole point. process. And so for my next business, I was trying to figure out a way to have both like, I really like building business, like I love the entrepreneurial side of like an idea. And having to bring that idea into reality and the team you have to build to actually manage it correctly. Plus, I like having investors like, being able to put money in people’s hands is a pretty cool feeling. And so I was trying to figure out what I wanted to do to have both of those. And kind of where I landed was, when I looked at my portfolio, I was very confident in the investments I was making in real estate, the stuff I was investing in, in storage, I felt very confident in, I was investing in a lending portfolio felt very confident in that, then even like what I was investing in the stock market, right. And that’s not to say, like the stock market, especially when you’re investing in funds is ultra risky. But me personally, I was way more comfortable in real estate than I was the stock market. And so I’ve kind of wanted to bring to market and investment that I felt was stable, and could be there for the people that I was going to bring into my company. And so I originally landed on multifamily, I wanted to start building out apartment portfolios. And then tied to it, I wanted there to be an educational component to our business, like I was given great guidance by a mentor at an early age. And I felt like it put me levels ahead of my peers. And so I wanted people who followed our business to feel like even if they weren’t investing yet, they were capturing a bunch of knowledge and a bunch of tools, that would get them to a point of being able to invest in the future, whether that was by themselves or investing with others, and actually having the tools to do the correct due diligence on the groups they are investing in. So
Brad Weimert 21:52
What does that look like is that kind of top of funnel education, and then use that attention and education to find investors for the funds?
Mikey Taylor 22:02
If you go to our social media, it’s pretty much going to be all education. So YouTube, you’re gonna have your long form content, and it will range from, you know, creating a budget and building credit all the way to, you know, waterfalls, and profit splits, like, there’s a lot there. Do we get investors that way we do. So we will have people that follow our company, learn about real estate, and then hear what we do. And you know, we get a good amount of people that ended up coming in investing with us. And then we have people that you know, invest on their own, they have real estate businesses or real estate portfolios, that probably will never invest with us. But they like hearing about what we’re doing as an actual business. And we’re doing some pretty cool stuff. I think that adds value to the mom and pop investor as well.
Brad Weimert 22:50
Yeah, no question about it. I mean, I think kind of back to your comment before, if you feel like you’re too far along in life, to learn from other people and learn the fundamentals, you’re missing a huge opportunity to get better, which is kind of why I’m talking to you. So tell me about why. Tell me about why you pick the asset classes that you pick. Okay,
Mikey Taylor 23:12
So prior to that I was pretty heavy in storage. I love storage. I loved it back then I still love it today, because of the performance of it. Right? Like storage is I mean, the cash flow? Well, they appreciate they perform very well during recessions. But they’re a little bit boring. Like it’s a boring business model.
Brad Weimert 23:31
It’s very boring.
Mikey Taylor 23:32
It’s very boring. It’s, you know, a bunch of garages.
Brad Weimert 23:35
Yeah. And so just for anybody that doesn’t know, we’re talking about self storage units, correct?
Mikey Taylor 23:40
Yeah. So basically the go more into the weeds, what we do, we buy big box retail that goes vacant, so your Kmart or your Bed, Bath and Beyond. And then we basically leave the shell and fill the inside with anywhere from 1000 to 1500 storage units, super boring. It’s been a phenomenal investment for me. But when, you know, it was my turn to build a business, like I am a purpose driven founder, like I have to be excited about it for me to put myself in a position to succeed. If you just told me like, Hey, Mikey, you know, there’s a big opportunity with men’s, you know, hair product, go take it and run with it, I’m gonna fail 10 out of 10 I’m gonna fail because I just don’t care about it. And so when I started, you know, there was an element that I want to be able to use some of my creative, what I think is creative skill set. And you know, with apartments and this goes all the way down to single family. When you think about it, like somebody’s home, like where they live. This is the ultimate experience, like talking about a client experience like this is the one that matters. And so I really thought I could not only add value to building out apartments that were done, very tastefully in in really created something for this next generation. And at that time, it was like early in millennials, and now it’s, you know, some tail end Gen Z. I thought there was a strategic advantage there. But it also seemed more purpose driven. Like, you know, we’re in housing crisis and a lot of states throughout the nation, I see it as a great opportunity. I felt like I can add my creative juice to it. That’s all I needed for me to be like, hell bent on winning.
Brad Weimert 25:23
What I heard and correct me if I’m wrong, but what I heard was the choice for asset class for you was less about an increase in ROI and more about what you saw as an opportunity to engage yourself and align it with your own superpower?
Mikey Taylor 25:38
The answer is a yes. But I would say the caveat is, I would not do this for mobile homes, or, you know, like, industrial, like I want, I wanted the asset to fit inside of a certain box first. So a big thing for me is I want assets that can withstand adversity, like I want to be investing in an asset class, that when we go through future recessions, they do well, that’s like a non starter for me. And so I started with that one multifamily performs very well, during historically during downturns, once I got that in the box, then it became everything you just said, like, what am I driven by? You know, where do I feel like I can drive the return further than my competitors. And multifamily was that, like, I’m not gonna personally like, you know, mobile homes is probably like the best one, like mobile homes, that it does have a really good return profile, actually, my skill set cannot be applied there. And so if my skill set that I think separates us from everyone else can’t be applied, then I don’t think our business can be the best, and I am here to be the best.
Brad Weimert 26:51
When you say your skill set can’t be applied. I’ve heard lots of things that indicate otherwise. But the thing that rang true to me right there was, you wouldn’t be excited about it.
Mikey Taylor 27:01
Okay, I wouldn’t be excited about it. But look, I’m the like, I drive the culture here. Like, I’m the one that gets the team fired up to do stuff. If I’m not fired up, the whole entire organization feels it. And so even though I have a great team, that, you know, by and large is good at all the things that I am not at, if you don’t have somebody driving the energy forward, I think you’re putting yourself in a position of losing or not competing, which is probably even worse. And so yes, you’re correct. But you know, I don’t know how I look at mobile homes, or even store it, like there’s an element of storage, like you’re playing the efficiency gain, like, how do we get in cheaper than everybody? How do we run our expenses more efficient? You know, how do we have more systems in place, and we have that all, that’s just not my skill set. And so I got to make sure that I’m all on board. And I would say the other part of that is, if I’m not I run the risk of doing something for a short amount of time and then bailing. You got to have a 10 year outlook to succeed, and you put yourself where you only got two years, I don’t even think it’s worth doing it for a day.
Brad Weimert 28:12
Yeah, well, we’re very aligned there. I have a very, very close friend, Justin, Donald, who I have had on the podcast who’s big in mobile homes. And he introduced me to mobile homes years ago. And I just I went through, I went through the whole gig, like I went through a DD on this stuff, learning how to invest in learning how to assess them, looking at a bunch of deals, and then I thought, I don’t want to fucking do this. It just isn’t the category that excites me and very similar to you. There’s something about the aesthetics, and how real estate is being used. That is exciting to me. And so when you talk about multifamily and the people that are living in the multifamily and creating the community and environment that excites me personally, it excites me most if I’m also participating in that area, but that’s a different conversation.
Mikey Taylor 29:09
100% Is it Justin Donald Lifestyle Investor Justin, Donald?
Brad Weimert 29:12
You got it. Yeah,
Mikey Taylor 29:13
I spoke to him yesterday. That’s cool.
Brad Weimert 29:15
Oh, did you really?
Mikey Taylor 29:15
Yeah, I did.
Brad Weimert 29:16
Oh, that’s wild. That’s wild. Yeah, he’s a very, very good longtime friend. Oh, epic. The one of the things that I’ve talked to him about is 95% of my investments are things that I do personally, and I drive. And I’m not interested in participating in a fund. Most of that is because I might have a control issue. But what is it that you like about investing through this vehicle, in this case, your private equity, versus you going out and doing the investments independently, and set another way, I guess, two questions, but why would somebody invest in the Fund versus going out and doing it themselves?
Mikey Taylor 29:57
There’s two questions there and they both have to different answers, I’ll answer the first one, why I chose to build this company versus just building out my own personal real estate portfolio. When I started coming up with the idea of wanting to do this, I started reaching out to people that I knew that had already built either businesses or large real estate portfolios themselves. And I had a family friend who owned, you know, north of like 2000 units all, you know, his own personal portfolio to this day, I mean, do the things got to be worth half a billion dollars, right? And I’m running him by this idea I’m having with just starting a business. His advice was, why would you start a business, you can go do all this on your own, like, don’t start the business, you don’t have employees, payroll, investors. And for him, that was the right path. For me, personally, it would have been too boring only because I like building business like, that is a big element that drives me the idea to having to figure it out, you have limited cash, and how do you grow with limited cash when you need more people to come on and help? I love that process. So I felt like I would be bored. If I didn’t do that in two, I felt like I wouldn’t be using my skills to really kind of, you know, hone in on them and build something with like a God given talent. I felt like I’d be wasting that if not. So for me, this was the right path.
Mikey Taylor 31:26
Now, when it comes to like the individual, that for you, the correct answer for you is, you will maybe just not right now. Right? So like most entrepreneur fund, but just just diversifying out of sure you driving your entire net worth, right like, right, it’s a normal profile for an entrepreneur and entrepreneur build stuff, right? And they like control, I’m not going to tell you I don’t I do as well. And so in that you see the majority of that their net worth inside the opportunity that they’re building, right, you will get to a point where you will actually want to start creating vehicles, to where you have the choice to continue doing this or not. And you will never have that choice. If you don’t delegate with your business and build a business that runs without you or build investments that are generating wealth, appreciation and cash flow without your time sacrifice, you are only able to do that passively. And so, you know, for for entrepreneurs, it’s usually just a time scenario. Usually when they exit a business, or the business is generating so much cash flow, they’ll start diversifying. That’s usually what we see.
Brad Weimert 32:41
I agree with you on all fronts. There. I have a you can’t see it. But I have a giant thing on my wall that says focus. Yeah, and that very much speaks to that. And I will say people operate differently. So there are people that through their path, spin up new businesses to execute different things. So for example, a real estate investment brokerage that then spins up a mortgage company that then spins up a title company, right, it’s et cetera, et cetera, as opposed to investing in one, it but it’s a completely different, you still need drivers in all cases. And so I think the point that you’re making is a very good one, which is if you’re investing purely somebody else’s handling literally everything else, and you only have so much time.
Mikey Taylor 33:29
That’s exactly it, like you know kind of all goes back to Kiyosaki’s Cashflow Quadrant, right. Like what’s the highest position you can be its investor, right? So where where people kind of go wrong with this one? Is they feel like anything they do they need to be the business owner in it, or they need to spin up the business. And most of them put themselves in a position where they’re the ones driving it, right, you see all these side hustles and all these entities, I actually think that’s a terrible way of going about opportunity. If your goal is how do I build the largest system that runs without me? Right? The correct way to do it really is I guess there’s two options. One, if I’m going to create businesses, who’s running them, I’m not right, you have to you have to have the drivers that are going to run the organizations or you’re just becoming a slave to multiple businesses instead of one. The other one is like you got to be pretty real with yourself to know what you’re good at and what you’re bad at. It takes 10,000 hours to succeed at one given thing. And so, you know, to your point, you know, if you’re a real estate investor and multifamily, and somebody goes, Let’s go start a FinTech company, is that really where your skill set should be applied? Or should you be maximizing the opportunity in front of you? And that’d be the thing you’re great at and then go put dollars with somebody who’s succeeding in the other industry. So I think there’s a couple couple ways to do it. The big thing though, and you said it, and look, I had to learn This one and I’m still working through it at times. For entrepreneurs, we typically are control freaks. And control is going to be the one factor that limits how big you build something. And if you’re an entrepreneur that ultimately wants to scale a business, and or build a business that runs without you, you have to start working on letting go of control, it’s absolutely impossible to do this without it.
Brad Weimert 35:25
It’s hard, I think it’s worth it, that’s inevitably something that all small business owners are confronted with have to think about. And the perspective has to change routinely. Because if you look at what is expected from leadership have a 10 person team versus a 50 versus 100 versus 1000 versus 10,000 or 100,000 employees, necessarily, the behaviors are different. And so your association to control versus delegation also have to be different. And I think looking at the investment side of it is a I mean, obviously a very good parallel, but a good consistent lesson for me to go through.
Mikey Taylor 36:03
For sure.
Brad Weimert 36:05
That’s awesome. So let’s talk about your specific company, and how investments are structured for anybody that might be interested in it.
Mikey Taylor 36:14
The thesis to our business is really maximize upside and limit downside, we look for opportunities that have a very high probability of making good money. And we try to have a system that removes as many unexpected issues or maybe the better way to say is prepare for as many unexpected issues as possible, so that we feel very confident that when things go wrong, we’re still in a winning position. We do that through storage and multifamily, the stored strategy I told you about earlier multifamily right now in here, it goes into the contrarian thinking, we only invest in Southern California, California is a market that a lot of investors right now will not touch, I get a lot of blowback on social media that I do invest here, most of the reasons why investors don’t invest in California I agree with the regulation is through the roof, the politics, not great. It is not business friendly, the state markets that are tenant friendly, I actually don’t think they are. But anyway, they do a lot of things that dis incentivize investors to put dollars here, the contrarian view that I see all of those reasons that are driving investors out there, also keeping my competition out for me. And it has also created the most extreme housing crisis Our state has ever seen. And so we come in and find the cities that are the most under supplied, we look for distressed assets that we can scrape, and then we build multifamily on. So what we’ve seen in that is, we know how to build in difficult markets. Because it’s difficult, we don’t see a lot of people competing with us, when we get a new apartment online, they lease up fast. We see when rents continue to go up. You know, when in a lot of these Midwest are Sunbelt markets, rents are going in the opposite direction. And then we see appreciation happen at a higher level. So that’s kind of our thesis right now, I am on a buying spree I’m trying to buy as much as I can in this window that, I think is a very, very great opportunity. And then how we structure it, it depends on the offering. We we’ve had, I think nine different offerings so far. And it ranges anywhere from a 35% profit split down to a 25% profit split. Right now our current offerings is our company takes 25% of profits once the investor recoups their principal.
Brad Weimert 38:38
Can you break that down a little bit further, though, anytime people are investing in funds, the nuances of what it means to be a GP or an LP and who’s actually getting what it can be sliced 1000 ways. So you are the general partner in these deals, and you are raising money. And those are the limited partners.
Mikey Taylor 38:57
Yeah, so basically, limited partners just mean that you don’t have to do any work, sacrifice, anytime you are really making a return on your investment. Where GPs are, they’re typically active in the business there, you know, getting your financing, finding the project, etc. How an investor makes money, it can be chopped up a million different ways. We try to make it very simple. And so we have a management fee, that management fee basically keeps the lights on how our company really makes money is when we perform. So let’s say you’re an investor of ours, you give us $100,000. Right? Getting your principal back would mean we put $100,000 back in your pocket, that’s principal pay back then anything on top of that, my company gets to participate in those profits and we get to take 25% of whatever those profits are. And then that 75% that you’re getting, we are trying to target an old submit return for you that, you know, for us, if you like average annual return our new offering, we’re targeting about a 21% average annual return. If you like IRR, this is more of an institutional metric, it’s about a 17 little over 17% net IRR. So try to keep it as simple as possible.
Brad Weimert 40:20
Internal rate of return great, what is the number that keeps the lights on for the company for you?
Mikey Taylor 40:24
Okay, so the management fee will range anywhere from one to 2%, we have multiple offerings, one of them right now 1% management fee, two of the offerings we have open is a 2% management fee. And it really comes down to the deal. Like when deals are harder to find, there’s typically less room in the deal. So if we feel like we’re not able to hit the Return, that we’re really trying to drive for investors, we have to look at ourselves and go, maybe it’s time for us to bring our fee down. When we get great deals that have a bunch of room to make return, then maybe that’s a scenario where we can make a little bit more.
Brad Weimert 41:02
A couple quick questions for you. For a new real estate investor, what should a new real estate investor look out for or beware of.
Mikey Taylor 41:12
Okay, depending on if you’re active or passive, you’re gonna get two different answers. If you’re going to be active and you want to do your first deal, the biggest thing that you’re going to fight is emotion, right, you’re gonna get very excited about doing your first deal. And you will talk yourself into moving forward on a bad deal, you got to be careful with that. So what I would say is, when you’re doing your underwriting to move forward on a deal, and let’s say you’re looking at your targeted cash flow, or, or even takes that further, you’re looking at your targeted income, your target expenses, your, you know, targeted noi, you’re looking at your exit caps, you’re looking at all the factors that will show you if you have a good return or not add some adversity to every single one of those categories. If you think you’re gonna get $2,000 a month, give that a 20% haircut and see what that does the deal. If you think interest rates are going to land around seven and a half percent, drive them up to eight and a half percent. See what that’s going to do. If you think cap rates, when you sell this, they’re going to trade at five and a half percent tribe and up to six and a half percent. See what that does the deal. And the reason why you want to make sure that when things go wrong, you can still make money. If you’re putting yourself in a scenario where everything has to go right for you to make money, chances are you’re going to lose. And so be careful with that. If you’re a passive investor, you need to just get good at your due diligence and asking the people that you’re investing in the correct questions, experience is going to be a big one. How long have you been doing this? I would say one of the most valuable questions I learned to ask people that I’m investing in is tell me about things that went wrong. Like what was what was the last thing that went wrong? And what did you do to resolve that? And what was the impact to investor? And what I would say is if you’re talking to a group, and they say that something hasn’t gone wrong, they’re either lying to you, or they haven’t been doing this long enough for something to go wrong. In either scenario, I wouldn’t find a lot of comfort investing in that group. For the groups that tell you something went wrong. It’s okay for things to go wrong. It’s natural for things to go wrong. What you’re trying to gauge is, how do they problem solve? Like when they’re put in a scenario where there’s bad things happening? What was their decision making, like, and how did they resolve in? That’s probably one of the most valuable factors to investing in the group.
Brad Weimert 43:36
And those are both great answers. And I think to shed light for new real estate investor, I want to add a couple things. One is inside the walls of easy pay direct day in day out. We are underwriting businesses, you for real estate, you are underwriting deals, that word scares the shit out of new investors because they’re like, I don’t know what the fuck underwriting is. And I’m supposed to do underwriting. So said more simply, it’s how you are assessing the deal. And you are looking just at the details of the deal. You know, what can you sell it for later? What is the cash flow that you expect? If you’re getting financing? What is the financing that you should be getting? And what if the interest rates go up on the financing in the parallel to your and that’s if you’re an active investor, the parallel to the passive investor question is, what questions are you asking the people that you are maybe investing into their fund? And the parallel between those two is either way you are digging into you’re asking questions about the deal, and trying to figure out kind of what the answers are around your assumptions. So you gave me a bunch of numbers just now for your fund, right? You want to take 25% You want to have a one or 2% management fee, then I would have to ask you questions to understand further what your firm is about how it operates. And you gave me a great breakdown. But I think your guidance there was really cool which is asked about a failure and ask about how they handle failures which I ironically, or maybe not so much is also at the core of getting to know new employees. And going through the interview process is, well, how do you handle adversity? What is the worst case scenario? Who are you as a human? Right? What are your core values and character that cause you to behave the way that you do?
Mikey Taylor 45:19
That’s good. And that’s correct.
Brad Weimert 45:22
How old is too old for skateboarding?
Mikey Taylor 45:24
In general, if you start getting like in late late 50s, it starts getting pretty tough. Tony Hawk still doing, you know, nine hundreds in his early 50s, that’s crazy. Competing wise it gets, it gets hard to compete north of 30. And your 20s is really your prime. And then in 30s, you can still like be a pro skateboarder. It’s just hard to keep up with the kids.
Brad Weimert 45:48
What do you wish that 20 year old Mikey knew that you know, now?
Mikey Taylor 45:54
Rifling off 3, 20 year old self, I would have tried to convince myself to to start looking at my goals and achievements on a longer time horizon, more legacy building even an early age, what am I going to look like 10 years from now 20 years from now excetera instead of being so focused on like, Am I making improvements tomorrow, that would have been one, two, I probably would have tried to tell myself at an early age not to get praise from others to like, actually find value in myself from like, a strong source, as opposed to trying to make people who I don’t even know and will ever know, like me that I would have been a big one for my personality. And then I would say the last one would be that I think I would have tried to answer the question at an earlier age. Why am I here? Like Well, what is the whole point of me being on this planet? And probably learning more about purpose early so that I could have put myself in a position of actually moving forward in alignment with with why I’m here that could have been pretty powerful as a 20 year old and then maybe last like buy bitcoin.
Brad Weimert 47:09
Love it, Mikey Taylor. It’s been awesome. Where do you want to point people you want to send people in any direction to find out more about you about the business?
Mikey Taylor 47:16
Yeah, if you want to check me out, I’m on all the social platforms just put in Mikey Taylor, shoot me a message. I’d love to connect with you. And then for our business, it’s called commune capital. You can find us on all the platforms as well or our website is commune. capital.com.
Brad Weimert 47:31
Awesome, Mikey. Thanks so much, man.
Mikey Taylor 47:33
Thanks for having me.
Brad Weimert 47:34
I hope you enjoyed the episode. As much as I enjoyed doing it. I need your help. There are three places you can find Beyond A Million the podcast itself beyond a million.com which has some cool free resources, including a free course and we finally launched the beyond a million YouTube channel. I would love it if you would go there and subscribe. And if you don’t want to, you still will probably enjoy seeing the visual content. Check it out. youtube.com/@beyondamillion.
