George McCleary: 0:00

And here we have Mike Nuss

Mike Nuss: 0:01

Right so,

George McCleary: 0:02

and a bunch of dogs.

Mike Nuss: 0:03

so after George has treated me like a fucking rookie like I've never jumped in cold plunge before,

George McCleary: 0:10

I didn't realize you're not a rookie.

Mike Nuss: 0:12

let me teach you how a cold plunge happens. Yeah, yeah.

George McCleary: 0:16

Here we go.

Mike Nuss: 0:16

One, you don't get all fucking psyched. The hardest part of a cold plunge is the first part of getting in. So like Dustin Miller, I'm going to call you out dude you fucking

George McCleary: 0:23

Yeah, yeah! pansy ass. Coward, getting a cold plunge to get the fuck out. You're gonna go on. I probably setting myself up for failure right now. If you're gonna get a cold plunge, stay in the fucking cold plunge once you get in it because that's where the value is.

Mike Nuss: 0:40

And here's how you successfully do a cold plunge. you calmly get in, you calmly stay in and you breathe. Right here's how, you just get in and you just breathe you know it's gonna be cold. It's fucking cold. Fuck, it's cold. So it's like, oh God it's cold, oh God it's cold. No, that triggers your fucking lizard brain. You just breathe hard...and then you dunk down. Here's the key, you listen to Andrew Huberman, you gotta get your face, got to submerge, if you don't submerge your face it's worthless.

George McCleary: 1:13

Debatable, but go on.

Mike Nuss: 1:15

Not debatable at all. It's fucking scientific.

George McCleary: 1:21

Oh my God, that's gonna flood the basement, How do you feel?

Mike Nuss: 1:24

I can't doing that I feel better, but I'm fucking cold.

George McCleary: 1:28

Welcome to frozen millionaires The show where we submerge successful people in ice cold water, then sit them down to talk about how they've achieved success. I'm your host George McCleary, and I have a pension for ambition for entrepreneurship, and for watching my friends suffer in cold water. No tech CEOs or Wall Street Titans here. These are the Self Made Millionaires next door, and they're fresh out of the cold plunge and telling their stories. What's up friends and welcome to episode number three of frozen millionaires. That was my Mike Nuss, and yep, he was genuinely cold that 40 degree water is real. He told me earlier that he ince did a cold plunge for 18 minutes to beat a friend's record. And while we don't recommend doing that, you got to love the competitive instinct and these entrepreneurs. So Mike Nuss is a real estate investor and developer and he and his partner Tyler Combs built rare bird, a real estate company that specializes in acquiring, renovating and managing residential assets. They also run Investorlab barn on the biggest and best real estate meetup in the Portland area. Mike is a big believer in the growth mindset and the growth of his real estate portfolio is only part of the picture. Listen in and learn from a veteran who has witnessed the downturns and upswings of the market over the past 20 years of activity, and hear how he's approaching the challenges that we face in the market today. Here's Mike Nuss. Welcome to the show, my friend Mike Nuss. If you live in Portland, and you're in real estate investment, you have heard of Mike Nuss. He and Tyler, Tyler combs are part of the dynamic duo of Rarebird, Investorlab, I guess those years guys, two main brands, you guys are investing in real estate really mainly in town. You've built an empire, a big one. And we're here today to talk to you and learn the story behind the whole thing.

Mike Nuss: 3:22

Thanks for the intro. Let's get back on track because I can totally relate to the change of season. So I literally had a group text chat this morning going

George McCleary: 3:29

Yeah.

Mike Nuss: 3:29

about the change of season, especially summer to fall motivates me to get my ass in gear. Yeah, yeah, I think that like that relates a lot. This business, this podcast is about being business owners and whatnot, right?

George McCleary: 3:43

Yeah, yeah.

Mike Nuss: 3:44

And I think one thing that like what's helped me be a business owner is understanding that I have the seasons in life when I am really effective, and I'm really productive, and I'm really on top of it and have the seasons of life were not necessarily that not lacker by any means but average, maybe good. And so like part of setting life up is setting it up so you understand when you're on point when you can really accomplish things and get momentum and understand where you need momentum to drag you through seasons. Summer is a great example of that.

George McCleary: 4:12

Oh, exactly. And I'm glad I'm glad you brought this up because you know whether it's a day, an hour a week or an entire season, so a literal season of summertime, just for the past several years, I've really taken summer to really kind of just have a good time. I'm still working, still getting stuff done still, you know, still trying to be my best self. However, I am not working nearly the grinds that I do during the rest of the year. But when sub September rolls around, kids start school that is sort of like my alarm clock going off. It's like okay, you know, I was able to fuck around during the summertime because I worked so hard during all those other months and everything and so not everybody loves the alarm clock blaring in their ear but it's been happening needs me lately. And, you know, in part of me welcomes the change because you know, I like living in the grind. I like I like being immersed in it, it makes me feel good. It makes me feel productive and strong. And that's part of this podcast.

Mike Nuss: 5:13

I want to go to one statement that you said, and I Right? want to talk about the myth of work life balance. Because you said in the summer, I'm still trying to

George McCleary: 5:18

Yeah, right. be the best I can. How do you measure being the best you can? Because you're not trying to be the best you can in business, because you're not focused on business, you're focused on life and family, right? Right.

Mike Nuss: 5:34

And that's where I really don't believe in work life balance. I think that's the fucking myth, right? The, the idea of a balanced being means you're

George McCleary: 5:38

Right. doing one you're not doing the other. And this is not how life works. I believe in harmony, which is you have different strings, you play on your guitar to create a chord. And all those strings represent something you have going on in life. Sometimes you take your finger off that stream to play different chords, sometimes you put more fingers on more strings and play different chords, right? And so part of life is just harmony, finding where it's good to dig into life, which again, winds really up well, a fall, you have a sea change of season, you have a change of sunlight, you have a change of schedules, you have kids in school. When kids are in school, and I was part of that group text, which is I feel more motivated, I think, partly because I get to ship my kids off to school for the day. Yeah.

Mike Nuss: 6:21

Like now you're not distracted, and so like being, having the life that you really enjoy is understanding how to have harmony with all those different strings that you have going on.

George McCleary: 6:31

Totally. And one thing I think that successful people do is that they get that tunnel vision to absolutely dig in to the certain thing that they're trying to cultivate at that time. So if, if it's like a business thing that you just can't get out of your head, and you've got energy that's really motivating you to stay up and really works on something really dig into it. You know, there's a part of me that always kind of chimes in, especially as I've become an adult, and sleep has become so important, I think to myself, like oh, my God, tomorrow is going to be completely shut, it's gonna be all fucked up, if I don't get to bed, you know, it's half past 12, I'm usually like usually hitting the sack by

like, I don't know, 10: 7:09

30, 11, something like that. But I'm in the zone, I'm in a flow state, and I'm getting shit done, and this is an extremely productive use of my time. I think that one thing that successful entrepreneurs do is that they don't give in to the conventional wisdom, of like, oh my God, I need sleep. Because what they're trading at that time actually is for is for more flow state, more productivity, and being able to have that tunnel vision, to not eat, not sleep, to completely devote themselves to that thing. And when I look back on times my life when I've done just that, those are the times when I've accomplished things or made breakthroughs that have like set things in motion. And something like that is really powerful. And it runs completely counter to like work life balance, and it's in it and it's exactly like you were saying, it's it's a season it's I mean, that right there, it's less of a season more of just like a night, at an hour. It's digging in.

Mike Nuss: 8:10

Well, I love the fact you use the word flow state, right? Because I think one of the downsides with kind of what came out of our generation was hustle point, right? Like you gotta hustle, you gotta hustle everyone fell in love with if you're not hustling you're not doing, it is not a good way to live a complete holistic lifestyle that you're happy with. Now, to the other end of that, getting in flow state and staying up all night because you are in flow state and you literally can't turn off the productive side of your brain, to me, that's not like that's not hustle, that's part of the harmony thing. That's just understanding you don't have any, like, this typically happens in the middle of the night, right? You can't sleep, you don't have any distractions, you may as well be productive, you may as well get some of those thoughts out of your mind and that's where a lot of entrepreneurs can really thrive purely because they don't have distractions and they can get into that flow state.

George McCleary: 8:58

Exactly.

Mike Nuss: 8:58

The other thing is like I get into this a lot specially, typically like the night before one of our meetups or big meetings, I don't sleep. A lot of it's maybe I haven't had my presentation done maybe it's halftime maybe I'm thinking about that it doesn't matter where it's at, I'm probably not going to sleep the night prior, but at the same time I am on fire the next day I don't necessarily need that sleep to sustain me through.

George McCleary: 9:20

No man, you rise to the occasion, it's not I mean, I've had, like most people of 43 years old, you had evident. I've seen these presentations that you do and these times when it's like you are you're the guy, you're the center of attention, all eyes on you and if you told me hey I didn't sleep the night before, I almost be like nonplussed by I'd be like oh, like you know cool and you're on your shirt is also blue, you know? I know that you are going to summon the energy to be able to perform and to be a gamer. And that's what high performers do. And it's whether you sleep, you don't sleep, you eat, you don't, you don't eat. It's what's happening. It's what's in front of your face, you know the you can't delay it. So I I'd imagine so if we get to your story about how you for how you started in real estate, you formed Rarebird, you formed this juggernaut. Take me back. Because I know you got into the game, what was it like, a decade ago? Start from the beginning. Give me, Give me the whatever version you cared to give. multiple variations of yourself. Like there's like pre real estate developer, pre Rarebird, Pre Rarebird. And actually, sorry, letme interrupt real quick.

Mike Nuss: 10:37

Yeah.

George McCleary: 10:37

Give us a quick synopsis of, of who you are and where you are right now. Because you know, before I take back, I want to get people to present.

Mike Nuss: 10:44

Yeah, good, good call. So I mean, I'm an entrepreneur ever since I started just because I didn't want to work for anyone else, right?

George McCleary: 10:50

Yup!

Mike Nuss: 10:50

Like, the questions you're asking honestly, probably won't resonate with true entrepreneurs, because the true reality is maybe this is a limiting belief. I'm just a lazy motherfucker that doesn't want to work for anything else. I don't have a lot of discipline.

George McCleary: 11:02

Raise your hand if you're awesome.

Mike Nuss: 11:03

Right. So like, I got it, I remember this fourth grade, it's like Career Week, right? Like, this is what a fireman is, this is what a teacher is. And then on Thursday, they said, this is what an entrepreneur is, right? On Friday, right, what do you want to be? You know, well, I wrote an entrepreneur because I didn't want to have a boss.

George McCleary: 11:21

That's a big word for a third grader.

Mike Nuss: 11:23

Fourth grade.

George McCleary: 11:23

Fourth grade.

Mike Nuss: 11:24

Miss Slutsky, Slutsky was awesome. Yeah. So that's like where it started. And then like

George McCleary: 11:26

Oh, good for you. I started, you know, I had a paper out I worked for myself in sixth grade, I started a lawn mowing company when I was in high school. And then really, for me, I got into real estate appraisal in high school, full time into real estate right out of high school. Six years later, I started my first appraisal firm, hired my first employee, like within six or eight months of that I learned some lessons there then hired a better employee six months after that, and then hired like, in these are employees where I need to train, then I hired a licensed appraiser where now you don't need to train I like a contractor and right so built this business based off like to other employees and kind of business principles, right? So that was my entry level and to like being an entrepreneur with actual books, QuickBooks, and tax returns and CPA on retainer and all that stuff. And that was essentially from 2004 to 2010. I shut the company down in 2018, but effectively stopped putting effort into in 2010, which is when I switched over from being an appraiser and a shitty investor who lost a lot of money to now gonna be a full time developer investor and learn how to do this right. How do you be a shitty investor when you're an appraiser when your livelihood depends on exactly

Mike Nuss: 12:41

Pretty fucking question.

George McCleary: 12:42

knowing what just work.

Mike Nuss: 12:43

And here's the thing, this is like, I always have like, oh, you're an appraiser, this has to be easy for you. Because a big portion of being successful in investing in real estate is knowing what value is.

George McCleary: 12:54

Sure.

Mike Nuss: 12:54

Right? There's so much more to real estate investing than

George McCleary: 12:55

Yeah, yeah. values. So I made the typical mistake that most people make, and a lot a lot of appraisers make going into it was I didn't know anything about actual profitability in real estate ownership. I knew value, I knew equity, I have really good income, I have really good credit, I could get along really easily. And I thought buying something for 90% of what it was worth, it was a good thing. Sure.

Mike Nuss: 13:21

It's like, things worth 400 I can buy it for 340. Those, that's great, 60 grand. Reality is...

George McCleary: 13:28

Wait, are you gonna try and tell us, that's bad.

Mike Nuss: 13:30

It's fucking terrible, but I thought it was great.

George McCleary: 13:33

Go on?!

Mike Nuss: 13:33

I thought it was great because like, so you buy it for 360, we're gonna have closing costs when you buy it.

George McCleary: 13:38

It's 340 a minute ago but go ahead.

Mike Nuss: 13:40

340 ok. So you buy it for 340, you've got closing cost when you buy it, if you use other people's money finance charges on top of it, you whatever renovations you have to get to market ready when you do sell it, then you have 6%, the cost to sell it which is 5%, if you negotiate good listing it.

George McCleary: 13:56

Lot of costs, a lot of mouths to feed.

Mike Nuss: 13:57

Exactly. So that 60 grand quickly gets down really low. I even remember like the first and here's anti-tax, the first really bad decision I made was anti-tax. And so like in the mid 2000s, I did my first acquisitions and housing were between 2003 and 2008. I think my second or third acquisition was new construction presale, that was a really good business model, where you essentially get into escrow before they ever shoveled dirt anything and when the market is going up 10, 15, 20% per year, and it takes 90 days to break ground, six months to build now you've got nine months, anywhere from 10 to 15% of appreciation in before you actually have to buy the home.

George McCleary: 14:38

Right.

Mike Nuss: 14:39

Okay, so I did this twice on new construction, one for personal residence, which I really shouldn't have bought looking back because I wasn't financial savvy enough and I just don't understand personal finance. The other one was an investment. And it was I think my escrow price was like 220 When I was done, the day I closed on it is worth like 300 and this was in like,

George McCleary: 14:59

What year was this?

Mike Nuss: 15:00

This was 2006.

George McCleary: 15:01

There, there it is, ok, yeah.

Mike Nuss: 15:02

Right? So the reality is is of that 220 I might have put 10 or might have cost 10 or 15 grand, I could sell it for 300 even if I pay 10% in fees netted 270 I'd make 50 grand.

George McCleary: 15:14

Yeah, yeah.

Mike Nuss: 15:15

Great. It's a great, I'm really good with that.

George McCleary: 15:17

Yeah. Maybe not sustainable over the long term though. I mean...

Mike Nuss: 15:20

Well, I mean, if you can, like write a check for 10 grand on day one and go get a check for 50 on day 30, that's fucking amazing.

George McCleary: 15:28

But I thought that wasn't the timeline like

Mike Nuss: 15:30

Nine months.

George McCleary: 15:31

Nine months? Yeah.

Mike Nuss: 15:31

Yeah, but it was five grand earnest money.

George McCleary: 15:34

Oh, yeah. So, yeah.

Mike Nuss: 15:34

Seven grand to record. So that to me, those are real values Yup!

George McCleary: 15:38

get into it for this. It should work. And if you're acquainted with value, like you are a real estate appraiser, then you can be like, Okay, They're smart. Appraisers don't think like that. First of all, I well, they're building to the top of the market in this area, top of the market is about this, I'm gonna have no respect, I have very little respect for the appraisal industry. Oh.

Mike Nuss: 15:54

I didn't think like that, because I wouldn't train like that.

George McCleary: 15:56

That's a hot take as as investors...

Mike Nuss: 15:58

Don't get me started on appraisers. Like do you want to go down that rabbit hole?

George McCleary: 16:02

I mean, an appraiser talking about appraisers. I mean, yeah. Sounds like good content to me.

Mike Nuss: 16:06

It is one of the least qualified professionals in this world for what they do, or what they're expected to provide service up to us.

George McCleary: 16:10

Don't they go to school and get licensed

Mike Nuss: 16:12

No.

George McCleary: 16:12

to know that stuff?

Mike Nuss: 16:13

Yeah.

George McCleary: 16:13

Yeah, yeah.

Mike Nuss: 16:14

So learn how to fill out a form.

George McCleary: 16:16

Yeah, yeah. It's like a book report, basically, right?

Mike Nuss: 16:19

Yeah, but that book report in the bank size, when you hire an appraiser, you expect that book report to come with a lot of theories, backs, principles, application of stuff in the real life world.

George McCleary: 16:30

Yeah. Appraisers don't do that. They fill out a form, they make up math, they make it happen. That can be another podcast. Well, I can't remember where we started on this. But Yeah, so you're an investor, you

Mike Nuss: 16:41

Yeah so what I want it

George McCleary: 16:41

come out of your appraisal company.

Mike Nuss: 16:43

Anti tax, so many people are so fucking anti tax. So on this decision in and of itself, I could have bought it, put it on the market, 30 days later had a $50,000 check.

George McCleary: 16:52

Yeah, yeah.

Mike Nuss: 16:52

But my CPA is like, Oh, you're gonna pay 25, it's income tax, it's not gains.

George McCleary: 16:58

Yeah, it's ordinary income.

Mike Nuss: 16:59

Yeah, exactly. So you're gonna pay 25 grand and tax. I was like, Oh, I don't wanna do that. So I held it as a rental.

George McCleary: 17:03

Oh. I mean, I wouldn't even say cash flowed. I think my rent, my mortgage payment was like 14, 1500 bucks in the rent was like 18 or 1900 bucks. That's pretty good.

Mike Nuss: 17:18

And the mortgage payment, included taxes and insurance. Vacancy, property management, maintenance, like all those other factors that come into it.

George McCleary: 17:28

Right.

Mike Nuss: 17:29

And the other part of it is, well, this was 2006 2007, so the market hadn't turned, right?

George McCleary: 17:33

Right.

Mike Nuss: 17:34

And here's where it's really important to make sure you're cashflow is positive. That sounds like a good deal, 1800 rent your mortgage payment PITI is 1400, that's not cashflow. And the other part of it is so now the market changes in my rank goes down to 1600. Okay, so now maybe it's not as negative is it's not, maybe instead of breakeven, it's a little negative. It was the 12 months of fucking vacancy that killed me.

George McCleary: 17:57

Ohhh.

Mike Nuss: 17:58

And that's what we don't factor in is

George McCleary: 17:59

Where was this house?

Mike Nuss: 18:00

This was on fucking Wilsonville, Villebois.

George McCleary: 18:02

Huh?

Mike Nuss: 18:03

Yeah.

George McCleary: 18:04

Yeah. I mean, the new construction that makes sense.

Mike Nuss: 18:07

So because I wanted to avoid tax, I put myself in a poor financial position. And then the market changed.

George McCleary: 18:15

Right.

Mike Nuss: 18:15

And whenever it comes down to real estate, like, we're going into real estate when his business podcast, but everything in real estate comes down to controlling

George McCleary: 18:23

It's going to endup in that direction a lot of times. I am a real estate guy, that's no secret and so are you. So yeah, no, we're speaking the language people understand that.

Mike Nuss: 18:30

This applies to business too, is like everything comes down to when you you have in control, when you come to the market. You have no control over market conditions that's 100% outside of your purvey, but you can sell yourself up to make the choice to bring something to the market when the market conditions say this is a good time to bring it to market.

George McCleary: 18:51

Right. Right.

Mike Nuss: 18:51

You never want to be in a position. Think of all the So now you have to have the means to be able to startups that have been having and they're planning on IPO in 2022 or 2023, they're fucked because the market changed, right? come to market at a time where it's appropriate. If you don't have the means to come to the market, when it's time to be appropriate and you have to come to the market when it's not a good time, that's when you get slaughtered. And so I made a bad decision because I wanted to avoid tax. I looked at it as avoiding tax instead of making 25 grand. That put me in a position where I no longer had control of when I was coming to the market. Huge lesson for me. Huge, huge, huge, huge, huge lesson for me in that aspect.

George McCleary: 19:29

But you didn't learn that right away. You learned it after the market change and you had a massive vacancy. And you were just feeding into that alligator.

Mike Nuss: 19:37

Yeah.

George McCleary: 19:37

Month after month. So that stuck with you. And so then going forward, what, what were your big takeaways on from that? Other other than like, hey, you know, feed the market when the market is ready ready for, for a house like this?

Mike Nuss: 19:48

Yeah. Yeah.

George McCleary: 19:51

What else?

Mike Nuss: 19:51

That's a really good example. And I think right now is a really good analogy to add to that. So myself in 2008 when this was happening, it was pay every expense, pay the HOA pay the property like it was pay every single expense, I had no mind to cashflow. I just didn't want to be in debt to anything.

George McCleary: 20:09

Right?

Mike Nuss: 20:10

Fast forward to the lessons I learned in 2022 or how I manage '22 as a real estate developer with a 52 unit, $26 million condo pipeline.

George McCleary: 20:19

Right? I didn't care about debt as much as I care about cash flow, right? Because at the end of the day, cash flow is what gets you to the end of the tunnel. And if all you're doing is eroding your cash flow to stay out of debt, or to stay in the good graces of the fucking tax collector, that shoots you in the foot to get you to the end of the tunnel. But in cash flow in that in that respect in terms of like what you're doing in 2022 and three with development, that's a different type of cash flow. That's, it's, that's that's sale of units, right?

Mike Nuss: 20:51

No, I'm just talking about literally cash flow, right? So in the heart of the summer and fall of 2022, sales weren't happening, right? So it's not like you're managing all this cash coming in, you're looking at it, like I have this amount of expense to get to the cash to the end of the road. And so that means those rare occasions like in a good market, cash flow coming in, and it's not a rare occasion, just fucking happens all the time.

George McCleary: 21:18

Sure.

Mike Nuss: 21:18

In a down market, like we saw in 2022, which is literally 2022 was worse than 2008. 'Cause 2008 you didn't feel till 2011. 2022, you didn't feel it in May you felt it in July.

George McCleary: 21:32

Right.

Mike Nuss: 21:33

Right. So 2022 in all reality, people won't believe this, but '22 was harder than 2008

George McCleary: 21:39

Wow

Mike Nuss: 21:39

for a lot of reasons.

George McCleary: 21:40

That's a hot take.

Mike Nuss: 21:41

We can unpack that if you want we can get into but...

George McCleary: 21:43

Yeah, yeah.

Mike Nuss: 21:44

The what the lessons I learned from 2008 and all that part in 2022 was, you can always make people whole as long as you can get to the end of the road.

George McCleary: 21:54

Sure.

Mike Nuss: 21:55

So using your cash flow to make people whole in the short term, and not keeping your eye on getting to the end run is actually worse for everyone. And then...

George McCleary: 22:04

When you say making people whole, you're talking about like servicing your debt paying off, you know,

Mike Nuss: 22:11

write the $110,000 tax bill? Or you say, you know what, they can't fucking foreclose on me. They can't...

George McCleary: 22:28

It takes some several years anyway.

Mike Nuss: 22:29

Yeah and we're gonna hit a five year timeline, right?

George McCleary: 22:31

Yeah, yeah.

Mike Nuss: 22:31

And what do they charge you like 1% per year? So it's like, the finance costs and fees on my $110,000 of property taxes is nothing compared to just trying to get to the end,

George McCleary: 22:43

I'll never forget that text, that photo Well, and that's a great thing, because you also have to rather, that you sent to the group thread. It was like it was in the fall when all the tax bills came out. And it was with all of these tax bills, because all the envelopes are very distinctive, I get a handful of them myself, fanned out like you were like, you've taken a deck of cards and kind of just fan them out. But it was like a stack of what looks like 50 of them or something like that. And with a caption of from you saying something like "tax time!". compartmentalize in business, right? So I'm talking about specifically our development company, that was like 15 to 17 properties. Yeah, yeah.

Mike Nuss: 23:20

I paid all the taxes on our rentals, right? Because the development company needed cash needed liquidity to get to the end of the table.

George McCleary: 23:28

Yeah.

Mike Nuss: 23:29

Right? Compartmentalizing our rentals don't need that our rentals have month to month rent coming in and it's baked into the performance. So it's like you make hard decisions like in so paying taxes in your rentals is a really easy decision. It's built into the business model. 2022 is not built into our condo pipeline business model.

George McCleary: 23:48

Right.

Mike Nuss: 23:48

And so now we have to make decisions. In the, in the thought processes is like, well, I can use that 110 grand to work with our lenders to ensure none of our properties get taken,

George McCleary: 24:00

Right.

Mike Nuss: 24:00

and get to the end of the pipeline to some profitability. So then I can go back and pay those property taxes, or I can pay the property taxes, be good with the government, who I really don't care about anyways, because they've never really done anything for me to then be bad with my lender, who then takes my properties away, which are the only thing that lead me to profitability,

George McCleary: 24:18

Right. And plus, you have an equity position. And I there's a there is a cushion.

Mike Nuss: 24:22

Yes.

George McCleary: 24:22

And so essentially, what you're doing is kind of borrowing money at a pretty

Mike Nuss: 24:26

Exactly what you're doing.

George McCleary: 24:27

pretty favorable rate from the government. So not really borrowing because it's essentially an obligation that you're choosing not to fulfill, just kind of kick the can down the road.

Mike Nuss: 24:36

But that's essentially what in your performance, that's what it becomes.

George McCleary: 24:39

Right. But if you did that with a lender, it would be extraordinarily more costly.

Mike Nuss: 24:43

Yep. And why and this is great. I was getting to real estate, it's hard for me to just talk business and real estate.

George McCleary: 24:49

Dude, talk to real estate man

Mike Nuss: 24:50

Okay. So timelines, right? One to four unit residential world, golden right now because it works on 30 your timelines.

George McCleary: 24:54

Right.

Mike Nuss: 24:57

Commercial world? Fucking terrible right now because it works on one to two, five or 10 year timeline,

George McCleary: 25:07

Right. Yeah, all this bridge stuff that's kind of fucked right now.

Mike Nuss: 25:09

So the property tax assessor, work on a five year timeline. Our lender? works hold my timeline. It's really easy to deliberate who you pay based on the timelines like and that's one thing I really love like Alex Hormozi, for example, like if you put things on timelines, just stress test things by timelines, it really gives you clarity and the decisions you should be making in your business.

George McCleary: 25:29

Totally. So tying that ends to sort of like your just your, your full arc, you know, how you how you came up and everything. So you learned some hard lessons in 2008 it sounds like and so taking that knowledge with you, like, you know, 2011, 2012 the market starts coming back. So, had you been sitting on the sidelines? Were you picking things up when things were cheap? Or like when did you really kind of get back into the game in earnest? Because I know you've been you've been at it like interest for like, a decent amount of time.

Mike Nuss: 25:56

Yeah, so 2009 is when I signed up for Rich Dad Poor Dad wasted 26 grand on, never fucking do that. And that was like the entry to my transition

George McCleary: 26:05

Wait there was like, a mastermind back then or what what was that?

Mike Nuss: 26:07

It was just any guru fan marrow. Any fucking guru that comes to town take this free course. I'm gonna I'm looking for 12 motivated people. No, they're looking for 12 people, they'll write them a$20,000 check, regardless of they're successful or not.

George McCleary: 26:20

Yeah.

Mike Nuss: 26:21

Avoid that shit. Go to your local meetups, all that's stuff, right?

George McCleary: 26:23

Yes, would be a great one.

Mike Nuss: 26:24

So 2009 was when I wrote that check, so I wrote the$26,000 check. Do you know the one thing that gave me value out of that?

George McCleary: 26:30

Whats that?

Mike Nuss: 26:31

It was after it. And the reason I wrote 26 is because I needed a mentor. But the mentor was three states away didn't even actually know my state, another problem. But that mentor was like, before he even came into town, he's like, hey, you go into your your local area. I was like, what's that? Meetup you gonna go meet other people that do what you do in your area? It's all it is. Networking.

George McCleary: 26:51

So your so your impetus to joining the local area cost you 26k?

Mike Nuss: 26:56

Yep. Yeah, yeah, it cost me 26k to go write $100 check to have your access to these meetings.

George McCleary: 27:02

That's great. I love it. Yeah. And worth every

Mike Nuss: 27:04

Which is why we created the meetings that we do, penny. right? So 2009 is when I wrote the $26,000 check. Early 2010 is when I went to that first RIA meeting. And literally, that's when everything changed for me. So for, in 2010, like I had a short sale, so that not paying the tax bill turned into a short sale.

George McCleary: 27:23

Right.

Mike Nuss: 27:24

So like, my credit wasn't good. Didn't have I cashed out my 401K to write that$26,000 check. So I had no, like, I just was worthless, human being on a piece of paper. But I know real estate really, really well. So it was like, where everyone goes, when you don't have any money. And you don't have credit, you get into wholesaling, you get into flipping, you create partnerships, you create relationships, and you create experience to get to the point where now you become bankable,

George McCleary: 27:49

Right.

Mike Nuss: 27:50

And so 2010 to 2012, 2013 was that period of time, started buying rentals in 2012. And then 2014 was like the next iteration. That's when we actually in my mind became a company.

George McCleary: 28:05

You say we so at what point did you meet Tyler and decide that you guys were going to hit your wagons to each other?

Mike Nuss: 28:11

Yeah, 2010. And that was inside of another partnership, which those guys that ran and were crooks. And so August of 2011 is when Tyler and I broke off of that.

George McCleary: 28:20

Was that Pineo? Or was that...

Mike Nuss: 28:22

It was local guys that are just crooks. So August 2011, we break off from them. So what that meant for Tyler breaking off was that man, he had to ask investors to come off properties they were land on, go to an unsecured debt of position, so we could sell a property and then figure out a way to pay you in the back. So Tyler brought bad debt to the table. There are a couple of bad projects that those guys mismanaged that we actually then own and how to finish. And then on top of that, I didn't have any financial loss because I didn't have any financial value to gain to that partnership, but I had years worth of time during that period of time, so I was based on getting paid on the back end. So I negotiated like 26 transactions in a year. All bought, all sold, seller, living rooms like that's where I became a ninja inside of a living room was that period of time. I didn't get any income from it. But I got all the experience I needed so that between 2011 and now.

George McCleary: 29:15

But you're in partnership, certainly, certainly there are some there are some skin again to be had on the end of these deals.

Mike Nuss: 29:21

Partnership is just partnership agreements. It wasn't an LLC, right. So there's no ownership component. There is a piece of paper that said I was owed this if there's profitability, but when people are crooks, profitability so easy to hide.

George McCleary: 29:37

Ahh, so they fudge the profitability, make it look like it makes nothing and therefore you're entitled to nothing.

Mike Nuss: 29:42

100%

George McCleary: 29:43

Ouch.

Mike Nuss: 29:43

Yeah. So learn a lot of lessons there and then from August 2011 to then when we, we created our brand launched our

George McCleary: 29:49

Right. brand may 2014. So August 2011 to May 2014 is kind of that incubator phase where we established the momentum needed

Mike Nuss: 29:59

We're future iterations. to become the iteration that we are now.

George McCleary: 30:07

Very cool. And so and that iteration is you and Tyler and you guys are acquiring rentals. You are doing a lot of seller financing. You're also a development company you're building, mainly with the residential infill and within the residential infill plan, and that's infill residential development, essentially. Is that it? Is there more?

Mike Nuss: 30:31

So '14 is when we started our property management company in our brokerage, right? So up until that point, we're flipping a lot of homes, which meant we were selling a lot of homes, we were buying a lot of homes, were holding some but selling the most of them. So at that time, I think 2014 we maybe had 11 units, and then between 2014 and 2015, we went from like 11 or 12 to like 40

George McCleary: 30:52

Wow.

Mike Nuss: 30:53

So in that year span, we already had this sales activity, well brokerage makes sense to just keep that expense inside of your company? And then going from 12 units to...

George McCleary: 31:03

So you started a brokerage?

Mike Nuss: 31:04

We started a brokerage. That makes sense, right?

George McCleary: 31:06

Sure.

Mike Nuss: 31:06

And And honestly, I don't even think we launched that brokerage until like 2017. So we created in 2014.

George McCleary: 31:12

And this is under the Rarebird flag? So that's when you brought everything in house

Mike Nuss: 31:14

Under the Rarebird, so Rarebird Incorporated Development Company, Rarebird Property Management, Rarebird like property management, you have enough doors at this point Brokerage, it's all same name. actually have an in house property manager. Yup, exactly.

George McCleary: 31:27

Got it.

Mike Nuss: 31:27

Yep. So now, like we were an internal company that public knew nothing about then branded to become this external public facing company. And so now it's Rarebird acquisitions, a development company, property management, brokerage, and then we had Rarebird investor network, that was the meetup type stuff that we do.

George McCleary: 31:46

Where was your energy going? Because if you've got a you know, you got a lot of different hats, you got property management, so you got a guy for that, and you've got brokerage, and from what I've gathered, Tyler is more of like the brokerage guy. He's more like, just to the real estate brokers. And you're more on like the investment and acquisition side of things. So is it fair to say like, during this time that you've got, you know, you got your eye on all the different parts of this thing as it's being built. But you're mainly, are you mainly focusing your energy just on like, the development flipping acquisition part of the business?

Mike Nuss: 32:20

My energy? Yes. Right. So that's the beauty of having partnerships as you can divide and conquer, and then employees, you have leverage, right? So the property management company, we had Katherine at the time, she did a really good job, like getting the start in that,

George McCleary: 32:35

Right.

Mike Nuss: 32:36

So the way property management company started, Katherine and I both got licensed. She ended up getting a job offer like a year and a half later, that was just a dream job for her. So she didn't stay with us long term

George McCleary: 32:47

Dream job in property management, that exists?

Mike Nuss: 32:50

In property management that's why she was no longer with us.

George McCleary: 32:52

There it is.

Mike Nuss: 32:53

So but she was president at the beginning. So like she did a lot of the stuff I'm not capable of doing, finding the software, really the all that stuff. And then we shared up, we shared lease up duties, we shared all like vendor coordination, doing the management agreement, doing the lease, like we just shared all those roles. So like in the company's infancy stages in the owner, there's two ways to build a company in my mind one, you just hire someone that isn't gonna go run it for you, and do everything. So you hire a top and then they do it all,

George McCleary: 33:22

Right.

Mike Nuss: 33:22

we're then you're involved in the bottom and workup, right. And now the first routes the best route to go, but it requires capital,

George McCleary: 33:29

Right

Mike Nuss: 33:29

And we just we just didn't have that at the time based on all the other stuff we were doing. So now your ground is sweat equity, right? So you either have capital and you pay someone to build it. You're you build it with sweat equity. So we built property management through sweat equity, from 2014 to '17. We didn't even start our brokerage because Tyler didn't have your principal license requirements, right?

George McCleary: 33:48

Right.

Mike Nuss: 33:48

So was hanging the license at another company. And then we built a team inside of that company and then ultimately started our brokerage in the team with our brokerage

George McCleary: 33:57

So the team was doing what now?

Mike Nuss: 33:59

Just buying real estate our brokerage is in a brokerage. It's just investors. It masquerades as group coaching, our agents are just investors and we just coach them. That's all it is.

George McCleary: 34:08

And basically they're what they're paying for is kind of just like proximity to you guys. And you guys is knowledge base so that they can become you know, they can they can continue to grow their portfolios and become better investors.

Mike Nuss: 34:18

We give them nothing from support from a brokerage standpoint.

George McCleary: 34:21

No business cards, I mean, what a brokerage is even to like give a website I don't know.

Mike Nuss: 34:23

TC and training and all this other bullshit that people need but investors don't. Like the brokerage is providing education is worthless to an investor because an investor doesn't want to be a broker, they want to be an investor.

George McCleary: 34:38

Right?

Mike Nuss: 34:38

And that's the value we do have is we have a license, we understand everything that comes with the responsibility and requirements of having a license, but we're investors,

George McCleary: 34:48

Right?

Mike Nuss: 34:48

And so the reality is, there's a lot of commissions out there when you're buying and selling properties. And if you know how to navigate that fine line of being a licensed professional and an investor, there's a lot of money to be saved,

George McCleary: 35:01

Right.

Mike Nuss: 35:01

And so think of it this way, like saying, for example, a guy bought 20 plus million dollars of real estate in a three month period of time.

George McCleary: 35:08

This is one of your brokers, investors, yeah.

Mike Nuss: 35:09

One of my brokers, one of our brokers, he would probably pay 10 times what we charge them brokerage fees just for proximity to us, right? Because he understands that one piece of advice for me can be worth 10s of 1000s of dollars,

George McCleary: 35:22

Right.

Mike Nuss: 35:22

It's like, wait, you wrote this as a cash offer. Let's just structure this differently, like, instead of cashing them out in 10 days, can we cash them out in 60 and set something up? And now you saved 60 days of or 45 days of mortgage costs, like

George McCleary: 35:41

Right.

Mike Nuss: 35:42

Or like, let's do six months of seller financing and save five grand in origination fees. So that's the beauty of being really good at understanding everything in real estate is like one good decision can literally save you 5, 10, 20 grand,

George McCleary: 35:55

That's true.

Mike Nuss: 35:55

And so that's the value of being at our brokerages, we've got enough experience that it's like hey, saying no just structure this way. Save 20 grand, he's like, oh, thanks, Mike, you just paid for two years of our commission fees.

George McCleary: 36:06

Yeah, there you go.

Mike Nuss: 36:07

So that's what our brokerage is.

George McCleary: 36:08

I like how he puts it in those terms.

Mike Nuss: 36:10

Yeah. He doesn't, I love it, I love it.

George McCleary: 36:13

And next day, he just, you earned your key for the next seven years.

Mike Nuss: 36:15

Well, yeah. And here's the beautiful thing about it is like I have monthly coaching clients that pay me every single month, and then there's months, we don't have any meetings like I'm supposed to have one today with Dustin, he's like, I gotta cancel, I gotta, put another two hours of fucking tattoo on my leg. They're not not...

George McCleary: 36:32

Hashtag priorities.

Mike Nuss: 36:33

Yeah. And it's not like they're not going to pay me because we didn't have a meeting today. They understand that essentially, they committed to this year's worth of coaching, like, ideally, it's a year's worth of coaching, and it costs x and you get 24 meetings. Well, if we get 20 meetings, that's not going to change what they pay me because the reality is, is the value I provide them whether we meet or not, is significantly greater than what's charged.

George McCleary: 36:55

And that's one of your streams of income now is coaching. So you become a real estate expert, you're, you know, in the investment arena and seller finance in development. So So you're taking on clients, give yourself a quick plug when it comes to Mike Nuss the coach.

Mike Nuss: 37:09

Yeah. I think like, going back to that bad partnership, always remember this from one of the guys who I respected the time I no longer respect, he really kind of broke me down in a way that I never thought of it till that period of time is like you do a really good job of understanding how things work. I think if there's a gift that I was given, I can see how things work. I can't do any of these pieces, I can't swing a hammer, I can't see a screwdriver. I don't fucking hang drywall, none of that bullshit, I can tell you the entire construction process. Without going any type of resource, right, so I understand how things work, which means I understand how things rely upon each other and how you can pull one lever to get another lever, right. And so when you understand all the little pieces of mechanics, rearranging the mechanics that the world tells you you should be in typically adds a lot of value. So I'm pretty contrarian, and how I think I like to challenge people in their thought process. I like to challenge why you're doing things a certain way. And that curiosity and that mindset in my life. And now, specifically in real estate, when you challenge how real estate, retail real estate is supposed to be done inside of this world that the stupid brokers of the world tell you to do things.

George McCleary: 38:20

Yeah.

Mike Nuss: 38:21

And you say, Well, no, this is just stupid tradition telling you, you should do it this way. But if we do it this way, we can still do it. And you can make 10 grand more, the seller can make 10 grand more and everyone's happy. Like isn't that great? So that's one thing that's for me, as a coach, I can see all those things.

George McCleary: 38:37

That's your value proposition.

Mike Nuss: 38:38

My value property proposition is seeing things that other people don't to allow them to be successful. Specifically, when it comes to our brokerage coaching is recognizing where you should spend your time and where you shouldn't,

George McCleary: 38:49

Right.

Mike Nuss: 38:49

I've done this so many times where one of our brokers like I'm working on this seller, I'm working on this seller, this isn't worth anything. I'm not even going to call him back. But this one, I'm going to hell. And I'm like, that's the dumbest thing I've heard you say today. I've said this a lot is like, well, that's dumb. Why would you spend all your energy at this? Because this really isn't good opportunity. For these reasons, I can see why you think it's a good opportunity for all these other reasons. This is why it's not a good waste use of your time, stop doing that.

George McCleary: 39:15

Right.

Mike Nuss: 39:16

I can see why you think this is not an opportunity. But for all these other things you're not seeing this is a golden opportunity. Don't call them back for six months, call these people every single day.

George McCleary: 39:26

Got it.

Mike Nuss: 39:27

And that just comes from 20 plus years of experience and understanding the motivation. This is really the beautiful thing about appraisal for me is understanding, everyone has their own motivations. And our job as a business owner, as a leader of people as an acquirer of real estate is to understand people's motivations, so you can lean into their motivations and their biases.

George McCleary: 39:53

Right.

Mike Nuss: 39:54

Yeah.

George McCleary: 39:54

Got it. And so is this like the next chapter for you? Is this to focus on coaching or are you going to focus More on development or more acquisitions? Because it sounds like the whole arc has been kind of like appraisals, acquisitions, kind of building the portfolio, building, building the, at the Rarebird empire, if you will. And, and then it's been more on development and then to coaching as well. We've talked about a lot of different ways to skin the cat here. You know, real estate is a very multifaceted business, but all of this has just been within the realm, in the realm of essentially residential and multifamily real estate, correct? So then today, you're focused mainly on on

Mike Nuss: 40:29

Ahuh! development, isn't that right? I wouldn't say that's right, I'd say, It's a really shiny distraction right now, because of you just the pipeline you got to get through, right. And getting through that pipeline is the key to unlocking some other things you want to do in life.

George McCleary: 40:50

Sure.

Mike Nuss: 40:50

I would say this, like, if you look at my track record, like from 2009 to 2010, moving forward, it was be developer, get into debt, learn some skills, start a business, grow that business, learn some more skills, acquire some assets. During that period of time, still developing properties, making lump sums of cash.

George McCleary: 41:08

And when you say, well, I guess what we're classified as development is like flips

Mike Nuss: 41:11

Yeah, short term projects.

George McCleary: 41:12

and new construction.

Mike Nuss: 41:13

Yeah, think of it this way, to me a development is something it's short term less than two years, ideally six months or less, right?

George McCleary: 41:20

Right, ideally.

Mike Nuss: 41:21

With the whole goal of creating a lump sum of cash or a taxable lump sum of cash, okay? That is now you use that taxable lump sum of cash to put food on the table, pay all your bills, and buy other real estate.

George McCleary: 41:35

Right.

Mike Nuss: 41:36

And then the buying other real estate is now acquiring assets, right? So now it's getting out of debt, creating income, creating cash, and then or net worth via cash, and then trading that cash and net worth for assets, and then getting enough assets and building those assets to the point where your assets work for you. We all know this, but the reality is, is if you don't have fucking penny to your name, no credit no cash, 0.0001% of people that get into real estate will replace everything they want with cashflow within a year, the reality is is you not only need to acquire assets, which takes a period of time, you need to seize in assets, which means you have a time period after every one of those acquisitions. So like for us 2012 to 2016 is when we went from zero units to like 70. So there's our asset acquisition time, which was two years. And then from 2016, I don't think we started actually taking cash until 2020. So another four years was the seasoning time. So like six to seven years, we never took a dime of cash flow from our asset portfolio. Because it's

George McCleary: 42:52

All reinvesting it.

Mike Nuss: 42:52

It was all reinvested, it was all repositioning the assets to create equity in cash flow is a byproduct of equity. So the first thing is acquire the asset. The second thing is reposition the asset. So now you have equity. And then the third thing is now letting that equity grow and work for you. And so there's a process to get there to the end of the day, at least in the low cap markets like we're in maybe you go to Memphis or Kansas City, and it looks different.

George McCleary: 43:16

Yeah, in a place like Portland, though, it's an appreciation market versus a cash flow free cash flow market. And there was a whole investor lab like devoted to cash flow of cash flow versus

Mike Nuss: 43:25

Yeah, the battle.

George McCleary: 43:25

appreciation. Yeah, no. And I remember it was it was really good.

Mike Nuss: 43:28

Which and the thing is, is like, there's no right or wrong, there's only right or wrong for you.

George McCleary: 43:34

Right?

Mike Nuss: 43:34

Does that makes sense?

George McCleary: 43:35

Right? But that was, but that was your strategy essentially, is build up your asset base. And when you say seasoning, so a lot that is different in different contexts. But in this context, it sounds like your seasoning is holding the asset long enough to let it stabilize, let it actually, you know, let the rents increase, let the cash flow actually happen. So that when you either reposition that equity elsewhere, or do something with it, you have options,

Mike Nuss: 43:58

I literally had one of my employees the other day

George McCleary: 43:58

you've got ways to you got ways to cut it up,

Mike Nuss: 43:58

Yeah. especially if you've seller financed it. And one of the greatest things I learned from Mike Nuss was how you move seller notes around and so we won't get into like the nitty like he literally asked me why are you so middle class? gritty, necessarily of all these little intricate real estate practices and everything. But I will tell you one thing, this is one thing that Mike told me, I got it two or three years ago, I think we were on the golf course. And and so if you know Mike Nuss, you know that like you know, he's he's a regular guy and the whole point of this podcast is talking to quote unquote, "The Millionaire Next Door". And I can't think of a better example than Mike Nuss. He drives a shitty ass car, he's a normal plain spoken guy.

George McCleary: 44:50

Hopelessly middle class Mike Nuss is living a regular life but so I didn't really know this yet because I just gotten to know him a little bit. And so I asked Mike, I was like, hey man, because he did not like he was not one to flex, he was not one that I could tell right away like, hey, this guy, this guy's really crushing it. I really had to dig a lot and, and even after digging, I'm not entirely certain how all the digging is actually revealed, like all the information I wanted to get. But I asked him at the time I said, I said, hey, Mike, I can't tell, maybe you can help me out here. So what do you do with your money? What do you do to like, enjoy yourself? What is it that you do after you, you know, make a deal, sell a property flip something, you know, you've just put 30, 50, 100 150k in your pocket, what do you what do you do with that? And I was expecting to learn about like Mike's hobby, or, you know, the fact that he like, you know, owns exotic pets or like really likes cars or you know, has a place in Mexico. He loves to go down and go surfing out or something. No, you know what Mike told me? He said, buy more real estate. And with like, no hesitation just turn to me just like like dead stare in the eye, like, buy more real estate. And, and I was like, haha, yeah, that's good. No, no, really, what are you doing? He's like, he just kind of stared right back at me like he is right now. And, and I was really taken aback, I'm like, this motherfucker is serious. This is really what he does, he will just earn a bunch of money and then just plow it back into into real estate. And that's another kind of like, pillar of this podcast is kind of the delayed gratification. It's the building up of assets. And and what I heard you describe before, it sounds a lot like and correct me if I'm wrong, where you build up your asset base, and then slowly but surely, sort of swap it for cash flow in a manner that you see fit. And the cash flow, once you begin doing that can come you know, really quickly in a small amount. Or if you hold on for the long term, you can have an asset base that has been tax advantaged and building up and compounding and compounding interest until it's absolutely massive. And then, once that at that point, you trade it in for cash flow, then you have freedom to the highest extent.

Mike Nuss: 47:11

Yeah, yeah. Because it takes a while for your assets to work for you. Let's go over a typical brrrr like I love to just like theoretically apply shit to reality, right theory, theoretical, right? Let's go over brrr.

George McCleary: 47:22

Yeah, plan to make a living.

Mike Nuss: 47:23

To be successful, so in Portland, low cap market to be successful in a brrr. And here's what I say about Portland, every brrr is a good flip. Because you have to create equity to make it work. Not every flip is a good brrr. Reason being is in order to brrr and like a couple years ago, you could be successful with a brrr, if you could have 70% of your value at the end of the day, right? So...

George McCleary: 47:44

Brrr is buy, renovate, refinance...

Mike Nuss: 47:46

Buy, renovate, refinance, repeat. Right? So in order to do that, you had to have your acquisition price and all your repairs and all your soft holding costs be no more than 70% of your after repair value, right?

George McCleary: 48:02

Right.

Mike Nuss: 48:03

So now you go to the bank, you get a 70% LTV, you get an amortized loan. And because you're paying down the loan because you're making principal payments at the end of the day, what that typically resulted in Portland, man, you're gonna get 100 Maybe $200 of actual cash flow, right?

George McCleary: 48:20

Right.

Mike Nuss: 48:21

So let's apply that to a $700,000 asset. right? So what's 30% is to 210. So you buy something for 400 you put 90 into it, you're into it for 490, it appraises at 700, you go get a $490,000 loan, 70% of the 700. Okay? So you have 210 grand in equity and you have $200 A month cash flow doesn't change anyone's life.

George McCleary: 48:42

Nope.

Mike Nuss: 48:43

At all.

George McCleary: 48:44

I have done this exact thing. I even made a video on it recently. Yeah.

Mike Nuss: 48:47

Yeah, right, so I'm literally thinking of a specific property. So that specific property brought in $3,500 a month after the initial reposition. Okay, and that creates $200 a month of cash flow and sucks.

George McCleary: 48:58

Oh 3500 in gross.

Mike Nuss: 48:59

30,000 in gross

George McCleary: 49:00

okay, I thought you meant was cash flow,

Mike Nuss: 49:02

No, no, no.

George McCleary: 49:02

I was like dude, how did you do that? It's amazing.

Mike Nuss: 49:04

Two units gross in. And it was probably more is more like 36 or 38, maybe 38 or 39.

George McCleary: 49:08

Right. But your your heads above water but not by law.

Mike Nuss: 49:11

Exactly. So we've got equity, which doesn't change your life because we're not putting equity to the use and we've got $200 a cashflow split against two people that hasn't changed anything. Right? That's 12 months after you've owned the property. Because you buy it, you buy it, you bought it, you renovated it, you leased it up, you got a loan, you've owned it for 12 months and you have nothing to show for it other than I'm like a fifth of the way to becoming a millionaire.

George McCleary: 49:37

Okay devil's advocate what you have to show for it is 210k of equity that you haven't paid taxes on you've increased your net worth your asset base is near Amina. What you're worth at the end of the day is assets minus liabilities. It's gone up $210,000 and yeah, your heads barely above water, you're not buying jet skis with it, but you haven't paid one cent to the government. And when you take that equity after you've seasoned it, so, you know, gotta wait a year to, Shoutout to Lorilyn, my accountant, and she, she'll tell ya, you gotta wait a little bit, you gotta season it, but then you take that equity and you put it into something, you know, you got three or four more of these, suddenly you got 800k that you're putting down on something cost a few million bucks that does cash flow.

Mike Nuss: 50:21

Let's evaluate here, because until that event happens, you don't have anything to show for it. You have bragging rights.

George McCleary: 50:27

Yeah, you just hold, you hold your nose and wait. Right?

Mike Nuss: 50:31

Yeah, but it doesn't do anything for you. Other than like, ha, I got this property has 200 grand of equity, that 200 grand of equity does nothing for you for your life, because all that 200 grand of equity does was give you a percentage of $200 a month of net cash flow.

George McCleary: 50:45

For that time.

Mike Nuss: 50:47

Yes.

George McCleary: 50:47

But for all time forward...

Mike Nuss: 50:48

Correct! And that's this easy solution of it. So for 12 months, it's done nothing for me. At 12 months, or what it may be nine months, I can say I'm going to sell that property.

George McCleary: 50:58

We can agree on that, for sure.

Mike Nuss: 50:59

Yeah, right. So now you can sell that property to then now have that equity work for you. But then is that a taxable event? You can't 1031? Right? So like, that's not a really great financial savvy move. So that's the...

George McCleary: 51:13

What's long term capital gains at that point whether, you know.

Mike Nuss: 51:16

It could be, sure, but you're paying, it's not a 1031 level, so you can't avoid those, you can't defer those taxes, you have to pay them, right? So that's the seasoning when you're seasoning your portfolio, you have limited options, So now let's fast forward another year, another 12

George McCleary: 51:28

Right. months, so that's 12 months after owning it, it's great. I'm not like complaining, this is fucking awesome. This changes most people's lives. But once you get into it, you realize this doesn't change your life, after 12 months, let's go to 12 months, 24 and 36 months, so 12 months later now we raise rent 10% $3000 now, or $200 a month of cash flow goes to 580. Okay, and in that period of time, that's $700,000 asset went up 10% Let's use 5% right? So went up 35 grand. So now that 210 turned into 245 of equity, and that 200 of cash flow turned into 580 of cash flow,

Mike Nuss: 52:06

Go another year. So now you raise your hand again

George McCleary: 52:06

Right. and now we're 43 now at 430. So now you're over $1,000 a month of cash flow, and then another 5%. Now your equities up to like 275. It's that seasoning period that now gives you the ability to change your life. Because after two years now you can do a 1031 exchange, you can take that 275 grant of capital tax free defer and move into an asset, but you can't do in the first 12 months. Now you have $1,000 a month of cash flow based on the asset you have. You do a 1031 exchange and you take that equity and put it into another forced equity property, you do that again. So now you double your equity from 275 to 550. And now that cash flow goes from$1,000 a month to 1200 a month. And then two years later that cash flows from 1200 a month 1900 a month and the equities from 550 to 600. Right? So it's that seasoning period, it's stacking of equity, it's stacking of cashflow. And so there's this period of time where you have to acquire it, you have to reposition it, you have to season it. And that's delayed gratification. This is where I love my dad like he always talking delayed, delayed, instant gratification. It's what I do with my kids. Never met Mr. Nuss but I can tell that's a spot on impression.

Mike Nuss: 53:27

And because we're able to delay gratification, now you're in a position you have so many options in life, right? Now you have a lot of equity, not just a little you have a lot of equity, not just a little cash flow, we have a lot of cash flow. And so now you can say well, portfolio maximization. And so like going on to like the coaching thing, where's my next return iteration of life is, I understand so much now how to build a portfolio, how to reposition a portfolio, how to season a portfolio and then how to maximize a portfolio. So many people need those skills and they don't have them that that's where I see my niche fitting in and kind of the next iteration of it.

George McCleary: 54:09

Dude, I couldn't agree more. That's the most that's the most valuable thing. Honestly, if I had to if I had to put you into into a hole it would be it would be that one it would be being able to maximize the portfolio and maximize the overall strategy. Like the the guy who sits up in the you know, up in the stands calling the plays from the top down view, not the sideline guy. You're the guy, you're the guy that's that's up there calling the plays. And that is that's an amazing skill. And so I encourage anybody out there who's listening and wants to really maximize their portfolio, whether it's one single house or you got 100 doors, talk to, talk to Mike because he will help you, he will help you maximize all those returns and give you a long term plan that's going to change your life in 5, 10 years, something like that, it's the long term. Real estate is the get is the get rich slow game isn't it.

Mike Nuss: 54:59

Here's the thing, I don't want to, I don't want to get someone started. Like...

George McCleary: 55:04

So don't call Mike, if you have one single

Mike Nuss: 55:06

if you're just getting started, don't call me house. because you need someone that helps you with lead gen, you need someone to help you with like those things, I want to shoot myself, like, I'd rather shoot myself and go over that,

George McCleary: 55:16

Right. But if you already have lead gen, if you already have a start, if you already have opportunities, that's where I'm really helpful. I appreciate the plug that you're providing. I'm a type of guy to help you go faster in a better direction. I'm not the guy to help you get started. No, that's fair. I'm glad that you qualified like kind of the person that you want to work with. Because you're not really a guy for noobs, you're kind of a guy who's looking for guys that are a little bit more experienced, guys that are a little further down the road to be able to maximize something that's already there. Is that about right?

Mike Nuss: 55:47

Yeah, 100% I don't like, you can't steer a car until it's moving. And I don't like starting cars.

George McCleary: 55:53

Right? Yeah, that totally makes sense. So you've come a long way. It's been it's been a great, it's been an amazing journey. Thanks so much for telling us all about it. What sort of like, I mean, what kind of mindsets and what sort of practices did you do along the way to kind of help kind of keep you in the game? Like keep engaged, like keep marching forward, like in the face of adversity, you went through the first the first real estate downturn, then you know, now we got high interest rates, you've seen a little bit of everything. How would you describe a what have you, what have you done to kind of stay in the game and stay engaged and keep your mindset right during that time?

Mike Nuss: 56:25

Yeah, two things. One, surround myself with people that are smarter than me. Like and even if you have to pay to get into a room to get in a room with people smarter than you both of us have done that.

George McCleary: 56:38

Shout out to gobundance!

Mike Nuss: 56:39

Some of the best money you ever spend, right? The other thing is, I do a pretty damn good job of living in the now, right, like one of my favorite books, Eckhart Tolle, Power of Now. It doesn't mean I don't think about the future. It doesn't mean I don't get worried about the future. It doesn't mean I don't think about 12 months of cash flow. It doesn't mean I don't think of those things. It doesn't mean I don't look at the past and it doesn't mean that those things don't affect me. But for like the majority of the time I do a decent job of saying like, I recognize what I can control in the future, which is nothing. And I recognize what I can change in the past, which is nothing. And so then that allows me to kind of focus of what can I do in the moment of the now to ultimately get me where I want to go. And in that's probably like, I'm not nearly as good at that as I want to be, but I think that I am decent enough at it that that it allows me to keep worry out of my brain to keep me more effective at what it is I need to do.

George McCleary: 57:45

I like it, man. So if people want to find you how do they do it?

Mike Nuss: 57:48

Fuck I don't know. I'm back on Facebook.

George McCleary: 57:52

Go to Salem and shoot up a flare,

Mike Nuss: 57:54

Yeah.

George McCleary: 57:54

in a bad neighborhood. And...

Mike Nuss: 57:56

Cross my fingers, knock on wood, I'm back on Facebook for the first time in almost two years.

George McCleary: 58:00

Oh, hey, welcome back!

Mike Nuss: 58:02

They let me back on and they kicked me off and now I'm back on, so it's my Mike Nuss, Facebook. Because I'm back on Facebook, I think I can now get back on Instagram,

George McCleary: 58:13

Crossing our fingers.

Mike Nuss: 58:14

Yes. which is@rarebird_mike. And then outside of that cell 503-789-98210

George McCleary: 58:22

Oh my God, you got your cell phone on here. Oh my god. Wow. Amazing.

Mike Nuss: 58:25

I can always refuse to respond to people. So make sure that you intrigued me in that first message.

George McCleary: 58:31

I do it all day. Yeah.

Mike Nuss: 58:32

Yeah, yeah.

George McCleary: 58:32

So yeah, it's totally understandable. Dude, thank you so much for this conversation.

Mike Nuss: 58:36

Yeah man.

George McCleary: 58:36

Super appreciate it. He's busy guy. He's out there. He's crushing it. Thanks so much, man. I appreciate it. This has been Mike Nuss. Oh, do you want to throw in a quick Investorlab plug as well?

Mike Nuss: 58:49

Yeah, anyone importantly, investorlab.com, it's actually more of a local in person meetup thing but if you're in Portland or anywhere near Portland, by far hands down, you won't find a better networking event.

George McCleary: 59:03

Is it less than$26,000?

Mike Nuss: 59:05

It's $50 at the door. And I will tell you like just coming to my market update. If you can legitimately tell me I didn't give you $50 of value in my economic presentation that lasts all of 20 minutes. First off, I'll tell you go fuck yourself. Second off, that just won't happen.

George McCleary: 59:23

It's true. I've seen many of these market updates and I'm always on the edge of my seat. I'm not even making that up. I do it every single time. Come for the market update. Stay for the presentation. But really come for the market update. He was up all night, the night before preparing it. I just found that out today. You guys all now know it now too. So give it up for Mike Nuss. So that was my Mike Nuss. What a character. What a great guy. Little anecdote about Mike, a while back I went to a real estate event where he was the keynote speaker. And when I was talking to him beforehand, I could tell he was in no mood to censor himself or put on a facade that day. So he gets on stage and right there, on the spot he negotiates with the organizers, the total number of F bombs he's allowed to say on stage during his presentation. True story. I can't remember how many it was. But Mike was basically ensuring that he could be himself. He's got a wealth of knowledge on the market on real estate investment. And he speaks with passion. And the whole point of cuss words is to emphasize what you're saying to drive the point home, right? So to me, the F bombs aren't gratuitous, or uncouth. To me, it's passion, and I love it. So you've probably gathered by now that this is not a censored podcast. This is raw, real conversations with successful people. And oftentimes, the brand of passion that breeds success results in a few F bombs. But honestly, that's the way I like these conversations to be authentic. I don't want to speak with somebody's representative or their PR team. I want the real deal. And if you're talking with Mike Nuss, you never have to ask twice for authenticity, for better or worse. And sometimes with Mike it's for the worst, I'm not gonna lie, but it's worth it. I hope you enjoyed this episode of frozen millionaires. Check out our socials by searching for me George McCleary. And if we've earned a five star review or subscription on YouTube, or a follow on social media, I love to see it. We'll see you next time and until then, be sure to embrace the call to ignite the dream.