Michael Rogers is the owner of Chandler Properties, a real estate investment portfolio that focuses on self storage and residential rentals in Cleveland, Tennessee market.
Tools / Books / Resources mentioned:Resources: Dan Barrett Facebook Ads course
Michael shares his entrepreneurial journey from an accountant to real estate over a span of 20 years. He saw at least 2 real estate cycles of ups and downs.
When he started with real estate, he used to buy to full price and do all the work himself and make some money when he sold for higher price. But Michael realized that he had to buy at value prices and possibly pay others to do services to really scale his business.
We talked about financing and how relationship with local banks is key.
Michael said his analytical background helped in this business. But Michael also talks about how real estate transactions are different because of all the emotional attachments above and beyond just financial transactions.
Michael explained how digital marketing was a huge game changer and how he learned digital marketing (Dan Barrett classes) and did Facebook ads, retargeting all by himself.
Michael talks about some of his learnings namely importance of value investing, knowing your circle of competence, and the importance of patience.
His advice is to start with a side hustle, follow value investing principles, and the importance of value investing.He is a huge fan of Warren Buffett and Charlie Munger (who is not).
Episode Transcript (Click to expand)
Ramesh: Hello everyone. Welcome to the agile entrepreneurial podcast. This is your host, Ramesh Dantha. This podcast is about starting on building your own business with purpose, passion, perseverance on possibilities. Today we have a guest who has branched out into an area we all somehow will participate in our lives. Michael Rogers. Michael Rogers is the owner of Chandler properties, a real estate investment portfolio that focuses on self storage and residential rentals in Cleveland, Tennessee Market. Hi Michael. Welcome.
Michael: Hey, Ramesh. It's good to be here. Thank you.
Ramesh: All right. So I have to admit, I have seen your ads on Facebook and where ever I go the ads seems to be following me. So you are a prolific advertiser.
Michael: Yeah, yeah. So you've been on my website somewhere and I’ve cookied you and that's why you're, that's why you keep seeing me.
Ramesh: Very good. Very good. So that whenever I see that it's following me, that tells me that they're doing well, so that they are able to spend at advertising. Okay, excellent. So, Michael, so in your own words, what is your business about?
Michael: Well for the, I’ve kind of got two main things to do. One Chandler properties, like you mentioned there we've got self-storage. I got started in doing selling short probably eight or nine years ago. And then we also got some residential rental properties. And then I’ve got a website that I use also where you're probably seeing those, those Facebook where you're getting retargeted for some like your house.com where I'm looking for motivated sellers and I’ll buy houses and fix them up in rent them or I’ll wholesale them to somebody else and let them fix them up and flip them. But those are the kind of two big parts of my business. And my background is I'm a CPA. I sorted out, I graduated college in 2001 and went into public accounting, split out five years in public accounting. And then I went into corporate accounting for about 10 years doing internal audit, basically insurance companies. And the whole time I was doing that, I was on the side kind of as a side hustle, doing real estate, you know, buy a duplex, a house and just rent those on the side until eventually it got big enough to be about 15 years. Got big enough to where I could do it full time.
Ramesh: I see. That's great. So actually interestingly I interviewed another podcast guest as she was an internal audit as well, and she called it the dark side of accounting.
Michael: See all the interesting things what people are doing.
Ramesh: Yeah. Yeah. So then she also did a side hustle like you. So that's excellent. So, all right. So yeah, accounting background. You could have gone many different ways. Why real estate?
Michael: I’ve always been pretty entrepreneurial. And real estate is something I understood. I'm a big Warren buffet fan, Berkshire Hathaway, Charlie monger, value investing. And it was something that I could understand. You know you can figure it out what something's worth and then buy at some sort of discounts. The basic idea of value investing as sums worth a dollar and you can buy for 75 cents or 50 cents, whatever. That's what you want to do. And you can sell it later. And ii found real estate is one of the things it's easier for me to Value and look casual. So when I got really big into is when the economic downturn of 2008, 2009, I bought a lot then, you know, I was able to look at one of these things, sell for how much cash kept bringing on rent. It was kind of a no brainer to me, to buy as many of them as I could. And so that's really where I bought a lot. I'm not buying as much now as I was then just cause from a value investing standpoint, I don't see things as good now as they were in real estate.
Ramesh: I see. So Michael you've been in the business for what, 20 years.
Michael: Yep. Right about 20 years.
Ramesh: Okay. So in this 20 years, that means you started probably around the 2000- 1999 kind of stuff.
Michael: Yep. Yeah right around. Yeah, that's Fair. 2000, 2001.
Ramesh: So it looks like you have seen at least two cycles of ups and downs during this time. So how was it when you started? How challenging was it? I know it's a side hustle, so if you could talk about your starting journey.
Michael: Well, I was just about to graduate college and I bought a duplex and I didn't know; I took my first five years, I did not buy them right. I didn't do anything wrong. I didn't lose money on any of these investments, but I paid, you know, I thought getting a good deal was if I could, if something was worth a hundred grand and I could buy it for 95 grands, that's a good deal. And the thing I’ve learned over probably five or six years, was I ended up working my tail off to really make very little. I learned a lot, but I was doing everything. I was the property manager, I was the landlord, I was the painter, I was the plumber. I was the carpenter. And because I would look at my financials or when I would look at buying a property, I'd look at it and say here's what the projected revenues are and here's what the expenses cash outflow. But I was estimating, I'd be doing everything. So I wasn't counting on labor and I would say four or five years into that I had five or six units and I was working my tail off every weekend and I was like man, you know, at the end of the year I'm looking at my cash and be like, I just don't, you know, this isn't making any money. This is crazy. I really would be better off instead of putting several hundred thousand dollars in investment. And all these side jobs for free. I'll be better off just going and getting a part time job and blows or something. Not investing all this money. And I would turn out just as well cause that's what I'm doing is $10 $15 an hour jobs all the time. And so that kind of came to me, I got really into the value investing, watching Warren buffet at that time frame. A couple of years after that, that's when you had the big stock market, you know, or the recession. And that really presented a good time for me to apply that and say, okay, I can buy these things at prices to where I can afford to pay people to do all these things. You're really treating it as an investment, because there's kind of two parts roles. So you've got, you've got the investment itself, almost like a mutual fund. You buy it, you do nothing other than you just, you get the reports every year and see how it's doing. And you've got all this active work that goes into managing them. And you really, you know, I got into buying at that point, I realized I need to buy these things like I was buying an investment. And be able to pay people to do all that other stuff. Otherwise I can't scale and I'm not going to make any money.
Ramesh: So Michael, tell me, so when I look at it, I'm not really much into real estate investment other than my home and a rental property. So it's a capital-intensive kind of stuff right. So then do you rely on external funds or you're primarily working through your own funds? You're working off a syndicate, how does it work?
Michael: Have a relationship with the banks, local banks, if you're going to do real estate investing, you're probably going to needing private funds. You know, you've made some, you get a family member or something. There's people that do that usually there's a little bit higher interest rate, but you can go if you get pretty good credit. And that's a good thing for your audience members that are working a job and doing the societal. So if you've got W2 earning job, you're much more likely to get a bank to lend you money. And I would recommend you go to a local bank as opposed to a big, you know, us bank or bank of America or something like that. Because they're much more the real state launch driven off a smaller property. They're much more flexible and they are more willing to work with you. So if you've got a local bank, I would work with them and get started out and borrowed a lot of money. As time has gone on, I’ve been able to build up some money and set up lines of credit and buy more with my cash. I've been trying to do, as the market's gotten warmer, I’ve been trying to almost in the last year or two, start paying down debt, getting in better cash positions you know, for, you know eventually we'll have another recession and that'll be the time in my opinion, really I’ll probably buying more.
Ramesh: So, Michael, is this at this point of time, is it still a side hustle or this is your main thing?
Michael: This is my main thing. About two and a half years ago, I left corporate audit and just did this full time. And so that's managing these self storage facilities, of some small block of residential rentals and then buying properties and whole selling.
Ramesh: Okay. So Michael, so how was that switch? Like what kind of numbers you ran, how did you feel comfortable that Hey, this is the time I can make this switch?
Michael: It was good. I had no issues. I was pretty, you know I'm an accountant by trade, so I looked at the numbers, you know the big thing is that you're going to have, they're different. Health insurance is going to be more expensive. You're going for all of your insurances. I've got a family, I’ve got four kids and a wife, so I had to make sure that I had life insurance. You've got all these expenses, you got to pay self employment tax as well. So those are some things that I kind of knew about those and I just budgeted for it and it took me a while. You know, like I said, I wanted to do this run rundown to college, but it took me 15 years to get in the position where I had something that was producing enough cash that I could do that and feel comfortable stepping off. But for me, I stepped off and things went really well. You know, we've done projections, what are we expected to make, I made that and then sum, so it wasn't like I had a bad experience, but I prepared for it for awhile and had a solid 15 year base of doing this as a side hustle before I stepped off.
Ramesh: Yeah. So actually let's talk a little bit about Michael Rogers as a person. Right? So I mean, for something like real estate I’ve seen people, whether the agents or whatever, they definitely need to be an extrovert, right? So, and then people generally see them pretty positive kind of people. So Michael, if you could describe yourself, what kind of a person you are and then what characteristics, attributes of your own personality either helped or hurt your business?
Michael: I would say I'm pretty analytical. I'm pretty, I tend try to think things through. You know, the all CAPs, we don't tend to be particularly extroverted. I'm probably among, you know, maybe a cohort of CPA's. I'm probably a little more on the extroverted side and compared to marketing people, I'm introverted. So I think though, if you're going to be buying and selling real estate and you know, buying from a motivated seller, I think you need to have some people understanding people, being able to talk to people, you know figure out. One of the big things you're doing when you are buying real estate is, it's not so much about the piece of property you're buying when you're buying from motivated sellers, cause you're interacting with them directly. It's about understanding what their need is, you know what is their pain point, what are they trying to accomplish? Because a lot of times, you know their thing isn't, do they just want to sell houses, do they got this property they've inherited from their mom and dad. There's a lot of emotional baggage there. They have three or four brothers and sisters they're going to have to split the proceeds with, but they're the one that's having to do everything. And they really don't, you know, they live five hours away from this house. They just want this thing gone, you know? And they want somebody that'll come in, clean it out, do everything, make it as easy as possible. And it's really not about, you know the house and getting this maximum amount of money. As much as it is, they want to know they've got somebody that's going to be straight with them. That's going to close on whatever date they need to close and be flexible with them, buy it as is, take care of their problems and make it really smooth. And so I think having that ability to understand and listen to what they're saying and figuring out what it is they need, come up as sort of win win situation. I think in real estate it helps you. It's about solving problems more so than it is about just looking at a piece of land.
Ramesh: That's actually fascinating Michael. I mean it's not just a financial transaction. There is a lot of emotions, a lot of human relationships. That actually makes a lot of sense to me. So Michael you said you always wanted to be an entrepreneur right from college. It's like where is that drive coming from? Why you want it to be an entrepreneur at some time, at some point in your future.
Michael: I think it was the idea of just kind of that freedom. There's a lot of freedom in the building to kind of do what you want to do. Now you suffer the consequences of what you do. So if you're not doing what you're supposed to or you make a bad decision, you get more of the consequences. But you kind of eat what you kill, you know? And I like that. I like that ability. You could, you know, if you did things and you set things up, you could make more money and have that financial freedom. I think the financial freedom to be able to do what you want is most of entrepreneurs at the end of the day. That's really what they're getting at is they want to have that financial freedom to do what they want to do with their time and not have somebody, a boss immediately overwhelm it. You know, you never know. You can have a really good boss at a job. And then you know, some sort of corporate restructuring happen and you end up with a different boss that maybe you don't fit with, whether or not you agree with them or not, you've got a total on and do exactly what they say when they say. If they're having a bad day, you're going to have a bad day too. So that part of it, I never loved that about corporate. I was fortunate, I had a lot of really good bosses and very few negative experiences. But I think that's something I didn't like that about corporate. I saw so many restructurings, I saw so many downsizings. I saw corporate politics. That's all things that you really didn't have a lot of control. You didn't have as much control of your destiny as you do in being an entrepreneur.
Ramesh: Yeah. Actually a things that are out of your control, not just a financial freedom that you're looking for. Yeah, I myself have gone through it and then things that you really want to do, you can do. That's good. So Michael then let's talk a little bit about the business itself. Definitely, as I said at the beginning that you do invest into the promotion aspect of it. So if you could talk about how did you grow your business, what kind of strategies that you implemented to grow your business. In the beginning you talked about after five years you learned about value investing. I know are beyond that. Like how did you get to know new properties? How did you get to know about sellers who may be buyers who may be interested in your properties? So how did you grow your business?
Michael: Okay. Yeah, it's kind of evolved. I would say if you're looking back at 2008 to 2012, 2013, it was just look on the internet and look at LoopNet or MLS listings or any of these foreclosure websites. There's so much of it that you can just reach out there and you'd find something that was selling at a good deal. Now that's not the case and everybody's into real estate. Everybody's wanting to get in to sell storage. So it's push the value of these assets up to a point once you get to pay for it and the amount of cashflow you receive for it is at a different level. So you really have to, in my experience, you have to find things off market. If you're looking to buy things to where you can get them a cashflow, this is probably where you've seen me is, you know look for that website. We do some SEO, which is search engine optimization where you're really, for instance, you know, doing this podcast here and you all probably get a backlink to my website and Google looks out and they say you know, this website here, you know, I can see there's, you know, 25 different other websites that link to it. And all of these websites linking to are good websites. They tend to have good, they tend to be well received. They're not bogus, they're not a bunch of, using a bunch of black hat methods. And they look at you and say, well you know, if a lot of these really well regarded websites are recording a link to you, sending people there, you must be okay too. And the more and more of that you get, it gives you what’s known as domain authority. So that's one way. Otherwise pay per click advertising. So like Google, you can those little ads top iand you'll look at the first three or four links up there will be paid advertisements. And then below that you'll have the organic listings. And but those, those top four you pay for them. And it just depends how popular they are for a self storage ad, that’s so many times this will be in need a self storage in Cleveland, Tennessee. You might pay $2 a click for we buy houses, Cleveland, Tennessee, $20 a click. And then like you saw, you got, you got Facebook retargeting where once somebody is on my website or, and this happens all the time, but you get a little cookie and then every time you go to Facebook or you go, you're searching a different website, you'll get re-targeted with an ad from our, for some 30 days or something.
Ramesh: Yeah. Okay. So Michael it looks like you are definitely an experienced advertiser, promoter. So do you do all these things yourself or do you rely on outsourcing to build your business?
Michael: I do. I do it all my myself as far as the implementation of it, I did take Dan Barrett with AdWords nerds as a class and I followed him for a couple of years. And then I'd say in February and March I took a class, he got like a little boot camp where he really got in explaining Facebook retargeting and also optimizing Google ads. And so I’ve taken classes as well, but I manage it on my own. But it's something that interests me. I really think you know the...
Ramesh: The digital marketing side.
Michael: Yeah. The digital marketing side. That is a major shift. You know, if you look back 15,20 years ago, you didn't, you know, you didn't have this 20 years ago, it was all yellow book. So if somebody wants a self storage unit, you had to pay the yellow book $1,000 a month to have a this page ad. And so, you know, for self storage now that's, you know, that's gone. Internet flip that on the air and kill that, you kill bad business. So it's all about, you know, if somebody types in self storage, Cleveland, Tennessee, I want to be, I want to be all over page one in Google. That's what matters. You know, we all have an ad, I’ll have several organic kids on that first page and then I’ll have a bunch of reviews on the Google maps page. And so that way people over all, they just keep seeing you over and over and over and over and well, this must be a reputable business.
Ramesh: That's good actually. So along the way, I think you used a lot of tools. I mean, you've talked about a course. What kind of tools that you use either specifically for your real estate business or for your digital marketing side of the world.
Michael: A digital marketing primarily Google products. You know, they'd have a profound grill on it when it comes to digital marketing. They've got almost all the servers, you know, 80,90% of it. So, you know, we use Google ads. Facebook, you know, you use Facebook retargeting. So there's marketing there. On the self storage for easy storage solutions, which is our software for our storage. I keep up with all my leads from a house buying business using Podio, Podio is a free CRM system that you can kind of build. You can kind of build it. It's not perfect, but it allows you to have a free database of keeping up with all these leads. Cause there's a lot of following up. And you know, I’ve got one lead, I’ve been working for two years that I'm just, yeah I just keep staying on it. So you got to have some way to track all that information and make all your notes and when you talk to them. So those are probably big pieces of software and then I’ll use, you know normal Gmail and Google photos and stuff like that.
Ramesh: Okay, great. Great. So very quickly before I have a few more questions, but why Chandler properties? Is it a place that you live in and that's why you call it, or is it, there's another some personal attachment association with the Chandler?
Michael: I would say 20 years ago I was starting, you know, I had my first rental property. I thought, Oh you know, I’ll tell Chandler properties, Chandler's my middle name. And I made it that and I’ve got more questions about that. I think if I would have been really thinking about it, probably to call it Rogers properties. If I had it to do over, but I’ve had it for so long, I just kind of left it where it is.
Ramesh: Okay. So great. I mean, looking back at your own journey if you were to restart what kinds of things would you have done differently?
Michael: I think I would have tried to, if I could have known about value investing and the idea of, you know I think Warren Buffett's teachings, I really like him. I've been to a couple of shareholder meetings. His basic key investing points are, you know, you need to know what you know, find your circle of competence. Don't worry about it. If you don't know something, you don't fully understand it, You don't have to buying it. If everybody else is buying Bitcoin and cryptocurrencies and you don't understand that, be perfectly fine. Let them make all the money they want in that, and you say fine, that's great. I'm happy for you. Don't get in to it. I was like that was something, you know, I totally don't understand. All people in the world around me are like, Oh this is great, blah blah blah. And I just said that, that's great. You know, don't worry, I don't understand it. I've got a fairly decent background in understanding investments, but I don't understand that. And, but I do understand real estate and there's some things I do understand and just stay within that circle of competence. And number two, the market, you know you don't have to do with more if marketing goes up every day. You don't have to form some opinion and find sellers who know that, if you don't want to buy something, don't buy it. If you don't understand something, don't buy it. Let it pass. And then when you find something you really do understand and it's selling at a deep discount, you know jump on it. I think that's really the key thing. I think I came to that and I was paying too much early on for probably the first four or five years in. If I could have started out and trying to find more off market deals and buying things at bigger discounts earlier on, it would have been better for me.
Ramesh: So I mean, throughout this journey I'm sure there are ups and downs where you really felt euphoric about what you're doing and then at times you felt, what the hell am I doing here? So let's talk through the downtimes because uptimes is easy to talk about, but the downtimes, how did you survive what strategies did you use? And then secondly the upcoming challenges that you're talking about. It's at the peak of the real estate like how do you, I mean, how long are you planning to set up yourself for potential real estate downside?
Michael: Yeah, I would say with the downside, you know, the things I’ve been doing is just pulling back a little bit and saying, let's have, you know, let's keep some cash on the sidelines. Let's pay down debt. You know, there's some deal I'm looking at, It's kind of a stretch that maybe I would have done four, five years ago. You know, make sure I partner up with somebody, you know, so I don't have to put up as bunch of money and because the last thing want to do, and you sell this a lot in the last recession are folks, they'd been buying lots of property and they were buying in old skinny margins. They were buying properties that were worth, you know a hundred bucks. They were buying them for $95. And then you had this drop in real estate values where they dropped 25%, and then you know what you ended up with that as you got a piece of property you pay $95 for it and it's worth you know $70. Two issues. One, you are underwater. And then when the thing comes ready to refinance, you know after 35 years, then the bank wants you to, they want you to, you're going to have to pony up some money. They want to have a loan to value of 80% or 85% or 75% or something. So now also you're having to put money into this thing and it's the worst time ever been putting money in it, cause the market's down and you know your business is probably aren't doing as well. They're not cash flowing as well cause you're the middle of a recession. And so it's kind of a spiraling issue that comes about. And so once you get, you know the joke about money as it's a lot like a cash is all like hair. It's not a big deal until you're out of it. And then when you don't have it, you know you go you know a minute or two without it. And it doesn't matter how much you've got five minutes after, once you're dead, you're dead. And so that's, I think that's an important thing for people, you know and is preparing themselves for a recession. Make sure you got plenty of cash reserves, make sure, if you got loans coming up that are going to be due in a year, go ahead and start refinancing those things. Making sure you have five years on them. That's what I’ve been doing, just to kind of prepare so that I don't get caught where I'm at, where a bank has gotten me been over where I have to get whatever they can. I try to stay ahead and then if there is a good deal comes about. I'll be in a position where I can borrow for it and take advantage and buy it at a really good price.
Ramesh: Okay. So it looks like any other business, this cashflow management piece of it is a big part and, but here it's much more so because of the financing involved in all that stuff. So Michael last question. So aspiring entrepreneurs, entrepreneurs in this area or outside of this area, what kind of advice would you have for them?
Michael: I would say, you know, for me what worked well is doing as a side hustle. You know, try something out. You don't have to quit your job, you know, do it on the side. See if you like it. Two things you find out one, you find out if it works, and two, you find out if you like doing it. And the great thing about that is, if its doesn't work out or you don't like doing it. You still got that normal W2 earning job. You can still pay for your mortgage or your, you know, take care of all those things. If it does work out, it gives you the ability you can transition into it. I even went from full time to stepping out completely in my journey. And for me that was great. And I would say the second thing would be, you know, I really encourage people to kind of follow, you know, Warren Buffett value investing. There's a ton of YouTube videos on him. You can, the essays of Warren buffet by Lawrence Cunningham and he's kind of got all this thoughts, but I think he's got some of the most sound advice on investing. You can apply it to stocks or real estate or really anything you get into.
Ramesh: Excellent. Hey, Michael, anything else that I have not covered, we have not discussed so far in the podcast?
Michael: I think you did a good job. I think you put a pretty wide ranging group of questions, so that's everything I know of.
Ramesh: Excellent. And Michael good luck with your business. Definitely you found your footing in this business, 20 years is not a small amount of time in the real estate. So best of luck. And then great talking to you.
27:26Michael: Alright, thanks Ramesh.