Insider Secrets Podcast Episode #84

Featuring Guest: Brock Mogensen

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Guest Bio:

Brock Mogensen has been investing in real estate for over three years. He lives and invests in the Milwaukee, WI market. He holds a masters in Information Systems and comes from an analytical background. Brock specializes in underwriting and incorporating data models for asset management. As a principal at Smart Asset Capital, the firm currently has over $10 Million in assets under management. The portfolio is comprised of multifamily, office, retail, industrial, and self-storage. He is also a co-host of the largest monthly multifamily meetup in WI, which is the Wisconsin Apartment Investors Meetup.

SHOWNOTES

Key Takeaways

Brock lives and invests in Milwaukee, Wisconsin. He holds a master’s in information systems and comes from an analytical background.He specializes in underwriting and incorporating data models for asset management at Smart Asset Capital. The firm currently has over $10 million in assets under management. The portfolio comprises of multifamily, office, retail, and industrial self storage. He also is the co-host of the largest monthly meetup group in Wisconsin, which is the Wisconsin Apartment Investors Meetup.

Brock started out his career by buying a duplex. That’s when he saw the potential in real estate and pursued more.

The benefits of investing in industrial is that the leases are longer. However, once the lease is up the vacancy period can be much longer than multi-family.

Underwriting is a very important process to make sure you know what you’re getting into, what the projections are, and making sure you’re getting a decent deal.

The biggest hurdle is getting that first deal done. Once you get that done, no deal is easy, but the rest of it tends to domino and each deal becomes a little bit easier. 

Standout Quotes

“You don’t want to get caught in the analysis paralysis where you’re over-analyzing everything, but you have to find the fine balance. Between being conservative in your underwriting, but also, willing to take a little bit of risk to make a deal happen. I think is the fine line you have to balance when it comes to underwriting.”- Brock

“This is a relationship business, you have to build relationships with people…people don’t care what you know, until they know how much you care.”- Mike

“You just got to prepare for stuff like that. And I think that’s where running different stress tests and different vacancy assumptions and rent growth assumptions. You got to run all that stuff and kind of play out the worst case scenarios because when you’re buying a deal and holding for 5 to 10 years, everything’s not going to go as planned in your spreadsheet. There’s going to be some stuff that pops up that you didn’t know about and you just gotta be ready to handle it.”- Brock

“I’m not an economist either, but I see something coming.It doesn’t mean don’t do something though. It doesn’t mean sit on the sidelines and there’s people sitting on the sidelines and I always tell people, get up. Listen, I’ve made money in bull markets, bear markets. When there’s a Democrat in office, a Republican in office, it makes no difference. You can go make money, just follow the fundamentals.”- Mike

“The underwriting is just a fancy word for analysis, that’s the process of analyzing a deal. Banks will use the term underwriting for their analysis. It’s kind of a term you’re gonna hear a lot. But really it’s just the process of analyzing a deal.”- Brock


Timeline
[00:46] Introduction to guest, Brock Mogensen.
[02:12] Brock’s bio and current professional roles.
[03:00] One word that describes Brock.
[05:08] Putting in the work to get where he is today.
[06:26] Brock’s backstory and how he landed in real estate.
[08:31] Explanation on syndication and underwriting.
[09:49] Where Brock’s currently working and investing and what the market is like.
[11:37] Brock’s favorite asset class.
[14:13] Cap rate differences between multi-family and industrial.
[14:58] Underwriting strategy.
[17:21] Underwriting differences between multifamily and industrial.
[19:51] Brock’s underwriting course.
[21:22] Raising private equity as a beginner.
[24:05] Favorite technology platforms for business.
[25:20] Opinions on where the market is potentially headed. 
[27:15] How to get ahold of Brock, best resources.
[27:52] Bonus question round.
[29:01] Closing remarks.


Contact Info

Instagram: @brockmogensen 
Education platform: capital club.io 
 

TRANSCRIPT

84 Brock Mogensen

[00:00:00] Kristen: Welcome to this edition of insider secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of my core intentions and would like to help you make your real estate investing dreams a reality.

[00:00:22] Mike coaches you to buy investment real estate, creating short-term cashflow and long-term wealth, your host and real estate coach. Mike Morawski has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.

[00:00:39] Mike Morawski: Hey everybody, welcome back. It’s Mike, your host of Insider Secrets, and I am so excited about today. First I’m excited about my guest, Brock Mogensen, and I am really just excited about the day. Here we are in November, recording this, and it is a beautiful day outside, great fall day and just life in general. I always tell people, get excited, get up, enjoy the day, enjoy your life, enjoy where you’re at. It doesn’t make any sense to get crazy or setback on the difficulties and things, because we always have life on the other side of it. So take advantage of that.

[00:01:17] My Core Intentions sponsors Insider Secrets, and I always ask what’s your intention today? What are you up to today? What did you plan this morning when you got up? The three daily disciplines, what are they for you? Gratitude, going to the gym, spending time in prayer, whatever that is, make sure that you’re dealing in your own daily disciplines to start your day off on the right foot.

[00:01:40] I ask all the time, I’m going to ask you again now, please follow us on social media, wherever you hang out you’re going to find us. You’re either going to find Mike Morawski or My Core Intentions on Instagram, LinkedIn, Facebook, Twitter, wherever you hang out. If you like this episode, subscribe to it, download it, go back to YouTube and subscribe to our channel. All right, enough commercials, Brock, welcome to the show.

[00:02:07] Brock Mogensen: Thanks for having me, Mike.

[00:02:08] Mike Morawski: Yeah, I’m glad that you’re here. So let me tell everybody about Brock a little bit. Brock lives and invests in Milwaukee, Wisconsin. He holds a master’s in information systems and comes from an analytical background. This ought to be good guys. Brock specializes in underwriting and incorporating data models for asset management at Asset Capital. The firm currently has over $10 million in assets under management, the portfolio comprises of multifamily, office, retail, and industrial self storage. He also is the co-host of the largest monthly meetup group in Wisconsin, which is the Wisconsin Apartment Investors Meetup. Wow Brock, that’s a healthy bio for us. We appreciate you being here today and, with all that kind of stuff going on, you must be pretty busy.

[00:02:56] Brock Mogensen: Staying busy, but loving it. It’s a fun business.

[00:02:59] Mike Morawski: Good. Good. One question I ask everybody is in one word, what best describes you personally and professionally?

[00:03:07] Brock Mogensen: I would say motivated.

[00:03:09] Mike Morawski: Motivated. What motivates you Brock?

[00:03:12] Brock Mogensen: Sometimes I think about it. I don’t know if it’s just, I think I just naturally caught the entrepreneurial bug, 4 or 5 years ago and ever since then, I just have the motivation. You know, everyone has slumps where you lose some motivation, but for the most part, every day of the week trying to work on stuff to make my goals happen. I think that’s a huge part of being an entrepreneur is when stuff comes up, you have to be willing to sit down and work for 4 hours on the weekend. There’s just a lot of nuances that a lot of people don’t think about behind the curtains when it comes to entrepreneurship. I think just staying motivated in whatever capacity, to me that’s a huge part of it.

[00:03:46] Mike Morawski: You know, I’ve been an entrepreneur my whole life. I consider myself being unemployable, I don’t think I could work for somebody. At 20 years old, I remember working for a contractor and I was in the swimming pool business. So I would go to work, and I remember watching how this guy organized people and got things together in the morning. And I would think to myself, “Man, I could do a better job than this guy.” Finally, somebody challenged me a couple of years later and said, “Well start your own company then, quit bitching about it.” And I did, I went out, I borrowed $5,000 from a friend of mine, and 30 years ago $5,000 went far starting a business. I went into business for myself and I really never looked back.

[00:04:27] A couple of times I’ve had to go get a part-time job for a little bit, but I’ve never looked back. You bring up a good point, entrepreneur, the guy who puts in 16, 17 hours a week. The guy who rolls his sleeves up and say, “Hey, you know what, regardless of what’s going on in my life, I got to do this right now and I have to spend the time doing this and building this out.” What’s that like for you in your life? You probably let some things go to the wayside because you can’t be there or don’t want to be there because you’ve got an email to send or presentation to get ready or a course to write. What’s that like for you today?

[00:05:06] Brock Mogensen: Yeah, taking it back a step, you’re totally right. There’s that period of time, anyone that wants to make it to be a full-time entrepreneur, where you have to make a lot of sacrifices. For me, working a full-time corporate job, in the middle of getting my MBA and that’s when I decided to, great timing, to try to start launching this real estate stuff. So I was doing all three of those at once. I would say 2 or 3 years of just every day, it was putting in the time, but that was my thought process the whole time, this next couple of years are going to suck, just sacrifice, doing all that stuff to build the future of being able to work for yourself for the rest of your life.

[00:05:39] That’s really what I did, looking back, that’s what built the framework to start doing what I’m doing now and be able to become a full-time real estate investor. For the rest of my life, I have all these opportunities, obviously it’s always a roller coaster, but I have the framework and experience I’ve built over those few years, it made it a lot easier now.

[00:05:56] Mike Morawski: Married? Kids?

[00:05:57] Brock Mogensen: Neither. Living the bachelor life.

[00:05:59] Mike Morawski: Kind of gives you a little bit of freedom. Have you lost friends along the way?

[00:06:03] Brock Mogensen: Absolutely. Yeah, I think it’s weird looking back, your friends you had in high school and at that time it’s like always your man, best friends for life. There’s still friends and stuff, but it’s your circle changes and that’s a big part of it too. You gotta be hanging around like-minded people. You lose friends, you gain friends along the way, I think it’s just all part of the journey.

[00:06:19] Mike Morawski: One thing I always say is if you’re the smartest guy in the room, you probably should go to a different room.

[00:06:25] Brock Mogensen: Exactly.

[00:06:26] Mike Morawski: So let’s back up a couple of steps here and fill some gaps in for people, your backstory, where’d you come from, your history. Why don’t you fill in some gaps?

[00:06:35] Brock Mogensen: Sure. Yeah. So my dad owned two duplexes, both my parents were very middle-class jobs and I saw just what the power of simply owning two duplexes. Anyone can go out and save up money and buy two duplexes over their lifetime, not hard to do. It kinda opened up my eyes like, wow, okay, that allows you to buy the boat and kind of have some more fun out of life by simply having some extra cashflow coming in each month. That was in my mind growing up. So out of college, it was the only thought I had was, “let me just save up some money. I’m gonna go buy a duplex.” Didn’t really think of anything beyond that, that was the goal. Did that, bought a duplex. I did the house act thing where I’m living on one side, rented out the other.

[00:07:13] And within the first few months, I get that first rent check and I had roommates in the unit I was living in, so I’m actually living for free. I think I was making like 100 or 200 bucks a month and I was just like, “wow, this is sweet.” I’m leveraging the bank’s money, collecting cash flow, paying down my mortgage each month. Instantly I was like, all right, I need to figure out a way to scale this much larger, I no longer just want a few duplexes, how can I build something big. So spent some time trying to flip houses, the wholesale thing, I was diving into that, didn’t really have much luck with it.

[00:07:45] That’s when I came across this concept of syndication. I spent some time really learning it. I decided to learn one piece of it, which was the underwriting and then go out and partner with others that had more experience. Cause obviously I wasn’t gonna go buy a big apartment building on my own at that time with no experience. That’s really what I did, networked, connected with two other partners. A year after buying that duplex, we close on an 89 unit apartment building and kind of the rest from there, it was just continuing to grow and do more deals.

[00:08:12] Mike Morawski: So listeners, listen to what he just said, a year after making a decision to go into multifamily business, he closed on an 89 unit building. Now that’s because he wanted to, he made the decision that he wanted to go do that. People always say how do you get started? I always say, just get started, go do it. Back up for a minute, a couple of things I’d like you to explain: syndication and underwriting, explain those two things.

[00:08:36] Brock Mogensen: Sure. So syndication in its basic form is creating partnerships with other investors to buy larger deals. That’s the way I look at it, you go out and you’re gonna have a general partner group, maybe that’s two or three people. You’re going to find a deal, maybe you have to put a million bucks up for that deal. You don’t have the down payment for the million bucks, so you go out raise money from limited partner investors. They provide a portion of the capital, maybe all of it, depending on how you structure it, you go out and buy this deal.

[00:09:04] Now that you, yourself, the general partner group is in charge of everything on the deal. You’re managing it, getting the financing, and then you’re giving these limited partners a passive return. So for the limited partner it works out for someone that’s trying to get into real estate that doesn’t want to necessarily be involved with the day-to-day tasks, they just want the benefits of real estate, that’s where it works for them. So it’s a great way for both parties, for the general partner to scale quicker and for the limited partner to invest in real estate without having to take tenant calls on a weekend. That’s how I generally describe syndication.

[00:09:32] The underwriting is just a fancy word for analysis, that’s the process of analyzing a deal. Banks will use the term underwriting for their analysis. It’s kind of a term you’re gonna hear a lot. But really it’s just the process of analyzing a deal.

[00:09:46] Mike Morawski: Interesting. Where do you invest right now?

[00:09:49] Brock Mogensen: So all of our stuff is in the greater Milwaukee area. We’re about within an hour radius of Milwaukee. My partner has an in-house property management company over here. So it’s been helpful to stay in that radius because we’re able to leverage a vertically integrated platform essentially. So far that’s where it’s been. Eventually have goals of getting into some more fun, high growing markets, but for now it’s just building here in the home base area.

[00:10:11] Mike Morawski: You’re a big underwriter. Let’s talk about the fundamentals a little bit about Milwaukee or the greater Milwaukee area. Rent growth, population growth, job growth, tell me about those traps.

[00:10:21] Brock Mogensen: Yep, good question. Being honest, Milwaukee you’re not going to see the huge population growth, the huge job growth, like you’re going to see in Tampa or in Austin, Texas. Those markets have huge numbers and that translates almost directly to natural appreciation. Here in Milwaukee, you look at population we generally try to find some pockets, suburbs of Milwaukee that do have some decent population growth, decent job growth, nothing crazy, but steady and growing.

[00:10:47] Overall in Milwaukee, you look at population growth, it’s pretty flat. They got some decent job growth but there are some sectors across Wisconsin that have some pretty good numbers, it’s just trying to find those pockets. That being said, as you look at other markets. I mean, Milwaukee, you’re going to find higher cash flowing deals, higher cap rates. You can find deals where you can walk in at a 10% cash on cash year 1. You’re not going to get that huge, natural appreciation if you go to some of the larger markets.

[00:11:11] You might be buying at a 5 or 6 cap, but you’re going to get, that natural appreciation where three years later because of all the growth going on, you just naturally went up a million dollars in value. It just really depends on what your strategy wants to be. If you’re trying to target more of that high growth value, add appreciation, then maybe you want to look at some of those higher growth markets. But if you’re looking for more stable cash flowing deals, there’s a lot of good opportunities in the Midwest I think.

[00:11:34] Mike Morawski: Favorite asset class right now?

[00:11:37] Brock Mogensen: Whew. Personally, I like industrial the best right now. We’re looking at quite a bit of industrial. I think where we are, there’s a good growing industrial scene here in the Midwest, we’re finding more favorable cap rates there. We look at several different asset classes. Multifamily, the fundamentals of it I like the best I would say, but just really tough to find those large deals that make sense. They’re out there, just we’re seeing some more opportunity in industrial right now.

[00:11:59] Mike Morawski: So when you talk about industrial, if you buy this piece of property, what’s going to happen inside that piece of property?

[00:12:07] Brock Mogensen: Yeah. We’re looking for good tenants with long-term triple net leases, is our buyer criteria there. The biggest benefit of industrial is the triple net. Those not familiar with triple net, essentially it means the tenant is paying for all the expenses. So that’s a huge benefit, compared to multi-family. Obviously the negatives to it are, if you’re buying a single tenant industrial building and their lease is up in 5 years you have no way to really tell if they’re going to renew or not. What’s your fill rate going to be, or is it going to sit vacant for a year or are you going to find a tenant the next month?

[00:12:40] So those are things you have to play around with in your underwriting that make it a little bit more difficult compared to a multifamily deal where you can just use 5 6% vacancy rate flat and you’re pretty safe there. There’s a little bit more unknowns in industrial, you’re gonna have a stable 4 year period where it’s just collecting the same amount of rent each month. But then there’s going to be that unknown in year 5 where their lease expires, what’s going to happen? There’s definitely some nuances that I’ve learned along the way in underwriting, having underwritten several different asset classes pretty extensively. I think the fundamentals are the same, but there’s a lot of differences you have to look at when you’re analyzing these deals.

[00:13:12] Mike Morawski: When you talk about industrial, is there manufacturing going on in there or is that just a housing hub for package deliveries? What is happening in that space? From a business standpoint, what generates the revenue to pay you your rent?

[00:13:28] Brock Mogensen: Yeah. It varies for us. Most of our industrial right now is just like Flex Space, more like Workspace. We have some automotive tenants and stuff that are using it as a shop, stuff like that. We’re looking at deals where there is a manufacturing tenant in there. It varies and that’s something else to look at, you’re gonna look at the business. How healthy is their business? Are they in a dying industry or are they in a growing industry? If they’re manufacturing automotive parts, it’s a good industry to be in right now. You can feel pretty confident knowing that’s not going anywhere anytime soon. A big part of it is analyzing what does the tenant do?

[00:13:57] You really have to dig into that. Again, comparing back to apartments where you’re gonna look at a tenant’s credit and everything like that. You don’t have to dive as deep into each tenant and look at how much is their business? How much are they making each year? You need to look at an industrial and really dive in and analyze that tenant.

[00:14:13] Mike Morawski: How about cap rate differences between multi-family and industrial?

[00:14:18] Brock Mogensen: That’s why we really like industrial, there’s is a pretty big spread, at least that we’re seeing multifamily, high B class deal. You might, you’re find around a six gap year, maybe six and a half. You’re lucky. We’re industrial, we’re seeing, eight to nine caps on a lot of the, class B industrial sort of stuff. So there’s a good spread there still.

[00:14:36] Mike Morawski: Interesting. So talk about your underwriting strategy a little bit again and then we’ll circle back and talk about the pressure that we look at, when we do a stress test, but let’s leave that till last.

[00:14:48] Brock Mogensen: Yeah. The process of underwriting is you’re going to get your P & L from the seller and the rent roll. That’s really all you need to initially underwrite a deal. You’re going to plug numbers in, make your assumptions. For me, I really learned the most by just practicing, just throwing numbers in there, start practicing on deals, just trying to figure it out. Questions are going to call up along the way on what assumptions they use. And I always err on the side of being conservative in all my projections.

[00:15:14] At the end of the day, you can make the numbers look really good in a spreadsheet really quick by just changing two numbers. It’s real easy to do that and make a deal happen if you’re really excited to get into it. On the other hand, you don’t want to get caught in the analysis paralysis where you’re over-analyzing everything, but you have to find the fine balance. Between being conservative in your underwriting, but also, willing to take a little bit of risk to make a deal happen. I think is the fine line you have to balance when it comes to underwriting.

[00:15:38] Mike Morawski: Yeah. So let’s say, what are the metrics that you can look at? What are the levers we can pull to see if the deal will withstand the stress? High vacancy rate, a drop in core value, a drop in production and whoever’s living in there, and not as much rent growth. What are those levers you look at?

[00:15:58] Brock Mogensen: Great question. That’s something I always look at and I don’t think enough people look at, my favorite one is probably the breakeven occupancy. So just looking at if it’s 70% occupied, do you still hit your mortgage payments? Running the number to see at what percent vacancy do I still make my mortgage payment? Because that’s really the most important part at the end of the day is, conserving, not losing the principal. As an investor, that’s always going to be thing Warren buffet talks about all the time, where it’s you got to protect the principle.

[00:16:22] That’s the most important part about investing. So for me, that’s something I always look at is, if I’m looking at a deal and it’s at 85% occupancy and all of a sudden we’re not able to cover the mortgage, I might not like that deal. I usually like to see at least 75%. So that gives you some room if COVID hits and 10 tenants decide not to pay rent because of the eviction moratorium, are you still covering your mortgage? That happened to us on a building. Luckily we had enough buffer in there where we’re still hitting our mortgage.

[00:16:49] You just got to prepare for stuff like that. And I think that’s where running different stress tests and different vacancy assumptions and rent growth assumptions. You got to run all that stuff and kind of play out the worst case scenarios because when you’re buying a deal and holding for 5 to 10 years, everything’s not going to go as planned in your spreadsheet. There’s going to be some stuff that pops up that you didn’t know about and you just gotta be ready to handle it.

[00:17:11] Mike Morawski: The fundamentals are the same but there’s gotta be some differences in the underwriting between multi-family and industrial. What are 1 or 2 of those differences that really stick out that you would look at underwriting either a multifamily or an industrial deal and what would you look at differently?

[00:17:30] Brock Mogensen: I would say the biggest thing is your vacancy assumption. So really looking at the leases on industrial is going to give you the information you need to model that out. You’re looking at the lease first, you’re gonna look at is there rent escalators built into the lease? Is it 2 or 3%? Maybe there’s none. You want to make sure you model that correctly into your spreadsheet, cause that’s gonna swing the numbers quite a bit. The most important thing for me is coming up with a accurate vacancy factor. If I’m looking at a deal and there’s 5 years left on the lease, let’s say it’s a single tenant deal. Those 5 years, we’re gonna collect rent, it’s gonna be 100% occupied. Then in year 6, I’m just going to naturally assume that tenant is going to move out.

[00:18:09] Who knows what the chance of them renewing is, you can try and do some due diligence there to see how connected are they to this building? What’s the likelihood they renew? 5 years out, you never know if they’re gonna renew or if they’re gonna need to go to a different space or maybe they go out of business. What I will do is I’ll use at least a one-year vacancy factor. So I’ll assume in year 6, that building sitting vacant for a full year is gonna take us one full year to occupy that space. Maybe it takes us a month, maybe it takes us the full year, but I’d rather err on that side.

[00:18:35] So obviously that’s a full year of just completely negative cashflow, right? You have to come up with money to make the mortgage payment. So that’s when you have to go back and put some more money into your reserves, build up more money. Modeling that vacancy factor and coming up with a realistic assumption, instead of just using a flat easy vacancy rate like you do with apartments.

[00:18:53] Mike Morawski: Yeah. That’s interesting. That’s a reason people have always said, “Hey, how come you don’t look at any other asset classes?” I’ve kinda just recently started thinking maybe we should be looking at some self storage, some mobile home stuff just because the competition in multifamily today is heavy, right? It’s like the sexy place to be, all the smart money’s there, all the big money’s there. The market’s going to change and one of these days, all that smart money is going to go retail or office or somewhere else and they’re going to bounce somewhere else.

[00:19:21] The guys that love multifamily are going to still be in multifamily. But what you just said though, is one of the reasons that I never really liked going to other asset classes. Because you’re going to go a year sometimes with no tenants, and I’m not going to go a year in an apartment without a tenant. I’m probably going to go 2,3 months maybe. Anyhow, you have an underwriting class, don’t you? That you offer?

[00:19:44] Brock Mogensen: Yes. Actually doing the official launch tonight on a webinar. So I put together just after learning the whole process on myself. Nowadays there are some other courses out there too. But a few years back when I was trying to learn it all, I couldn’t find anything. I was just trying to find a simple course on teaching me how to underwrite a deal, a syndicated deal. I couldn’t really find just a one-stop shop course. So I had to do a lot of reading, piecing stuff together from books, watching YouTube videos on this certain thing and kind of piece my education together when it came to underwriting. So that was kinda my goal and I ended up building my own model for analyzing deals and built out this course, ended up being like a COVID project.

[00:20:18] That’s what it is. It’s really just geared towards people that are trying to get into syndication. Always the first step in any business is understand the numbers, for me that’s always been the most important part and what I focused on. Naturally was like, “all right, let’s build a course and show other people how to do it.”

[00:20:31] Mike Morawski: One thing you said is tonight, you’re going to launch that, which good luck with that by the way. By the time this airs, about five weeks from now, you will have launched it and be pretty far out there. So tell people how they get ahold of you if they want to take a look at your course.

[00:20:48] Brock Mogensen: Yeah. Two ways, first there is a website for the course that is www.howtoanalyzeadeal.com. So that’s the page for where you can find all the information on it. Otherwise, reach out to me, my email is brock@smartassetscapital.com.

[00:21:01] Mike Morawski: Great. So let’s circle back in. I got a couple more questions for you. Couple things that I want to see how you as an operator operate. So talk about private equity. What is that pool like for you? How was it when you first got started in the private equity world? What did you do to build your investor base?

[00:21:24] Brock Mogensen: Yeah, that was definitely a big struggle. I’m going from, I own a duplex, right? What sophisticated investor is going to give someone that just owns a duplex, their money to go out invest in real estate. I read some books, spent that six months learning it, wasn’t like I had a ton of experience. So that’s where I leveraged partnerships. Syndication is, it really is a partnership game where I went out and found two other partners. One of them already had a portfolio of a few hundred units has been doing it for a long time.

[00:21:50] I was able to leverage that and talking to investors, I don’t necessarily have all the experience, I’m strong in this part of it, but I have a partner that does. Just leveraging that. I think that’s a good way for someone to get started. This game specifically is to go out and partner with someone with more experience. Then after you do a few deals and a few years pass by, now all of a sudden you do have the experience to talk to investors and say, yeah, we’ve done this deal, and I can show you the returns we hit on this deal.

[00:22:14] It makes it way easier. The biggest hurdle is getting that first deal done is the toughest. Once you get that done, no deal is easy, but the rest of it tends to domino and each deal becomes a little bit easier I think.

[00:22:25] Mike Morawski: One thing I always tell people is this is a relationship business. You have to build relationships with people because I know if I walked up to you in the grocery store and said, ” Hey, what’s your name?” We just meet and now I ask you to put capital in the deal. You’re not going to do it, but if I meet you in the grocery store, and then we bump into each other, a couple more times, and we have a couple more conversations and we build a little bit of a relationship. I find out who you are, what you do a little bit, I always say people don’t care what you know, until they know how much you care.

[00:22:55] Brock Mogensen: I like that, yeah.

[00:22:56] Mike Morawski: You got to care about people, right? When I first started raising capital, I knew nothing and I don’t think it was anything other than my excitement that got people excited. I put a silly little ad in the newspaper. This is how long ago this was. I put a little classified ad in the newspaper that said real estate investors wanted. My phone rang off the hook. I wound up raising $500,000 from a $45 ad. Talk about a return. Over six months, but I did my first deal like that, wasn’t as big as yours, it was an 11 unit, still got my feet wet. I didn’t know anything. And then I didn’t know anything about underwriting. I didn’t have a tool, I didn’t have an app, I didn’t have a big fancy spreadsheet. I did it by hand and I can remember underwriting deals by hand doing ten-year spreads going, ” there’s gotta be a better way.” Then I met a guy who helped me kinda meet the learning curve. And that’s what you do, that’s what I do, we help people beat that learning curve and learn a little bit more. So that’s awesome. How about technology? What are your couple of, most favorite technology platforms right now?

[00:24:01] Brock Mogensen: Yeah, that goes hand in hand, like you were saying. 100% it’s a relationship business and nowadays compared to back then. Nowadays you have so much technology right at your disposal on your phone where it’s so easy. Social media for me, I spend quite a bit of time working on my real estate stuff through Instagram, you can connect with people all over the world with a simple message. And you have this platform to put out content and create education for people and bring them into your funnel.

[00:24:24] So I’d say for me, Instagram is where as far as promotion and stuff, I spend most of my time there. There’s also a great CRM tool, use HubSpot. I mean for email campaigns and stuff like that. There’s so many opportunities to integrate platforms and create automations to bring people into your funnel. The opportunities are literally endless when it comes to the marketing side of things nowadays.

[00:24:49] Mike Morawski: Yeah. You think Instagram’s the best platform right now?

[00:24:52] Brock Mogensen: For me it’s where I decided to spend the most time, I think LinkedIn’s a great one too for connecting with investors, especially, in real estate. For me, I don’t want to spread myself, I’m going to just try to master one platform and then branch out to other ones. So I’ve dabbled in other ones too, but for me, let’s just focus on one right now and Instagram has been where I’ve had the most success.

[00:25:09] Mike Morawski: Good. What do you see right now today as a greatest challenge in the marketplace and do you see an impending fall coming? Do you see a shift? Talk about that a little bit.

[00:25:20] Brock Mogensen: Yeah. I think for me the biggest thing is trying to find deals. I think there’s plenty of investor capital sitting out there. Maybe, a lot of people made a whole bunch of money in the stock market, or maybe trying to put some of that into real estate. I think there’s a lot of excitement around real estate right now. So finding the money is never easy I would say. But it’s out there. Just finding a good deal is the toughest part. I’m not an economist or anything, but I do think there’s something on the horizon. This growth can’t go on forever. Inflation’s obviously a big scare right now. But I think that it just further gives the reasons why people should be investing in real estate because real estate is a great inflation.

[00:25:54] For me the biggest thing right now, it’s probably what’s scaring everyone the most for now is this hyperinflation we’re in right now. What’s that going to do? They’re talking interest rates are gonna go up, when interest rates go up. Is the spread between the interest rates and are cap rates going to go up in correlation? If interest rates go up 1%, cap rates stay the same. I mean, that’s huge when it comes to looking at your returns. So for me, the biggest thing is just monitoring the inflation and seeing what that does to the interest rates over the next year or two.

[00:26:19] Mike Morawski: Yeah. Anybody who just got lost in that little bit of conversation, call us and we can walk you through that. What that means when interest rates go up and cap rate shift and switch and things to watch for and be aware of. Cause I see shades of 2007, 2008. It was a tough time and there’s still people that are weathering that storm. It’s interesting. So I’m not an economist either, but I see something coming.

[00:26:44] It doesn’t mean don’t do something though. It doesn’t mean sit on the sidelines and there’s people sitting on the sidelines and I always tell people, get up. Listen, I’ve made money in bull markets, bear markets. When there’s a Democrat in office, a Republican in office, it makes no difference. You can go make money, just follow the fundamentals. So Brock tell people again how they get ahold of you.

[00:27:07] Brock Mogensen: So several ways. First is my email, brock@smartassetcapital.com. Instagram, I still try to put out a good amount of value there. That’s just my first and last name, Brock Mogensen. I dropped that course and provided the URL, which is howtoanalyzeadeal.com. We also have kind of an education platform built that we just launched recently, too. That’s capital club.io. Then we also have our investment arm, which is the smartassetcapital.com. So lots of different ways to get in touch. All of those ways, you hit the contact form on all those websites, it’ll funnel back to me.

[00:27:39] Mike Morawski: Always nice to make it easy for people. Three quick questions. Favorite book you’ve ever read?

[00:27:45] Brock Mogensen: Ooh. I would say. Favorite book I’ve ever read. Let me see let’s go with my bookshelf. One I really like is Ten-X. For me, it was a big mindset shift. Grant Cardone’s stuff. I know he gets a lot of different opinions by people, but I like his stuff. I find it really motivational and allows me to think bigger.

[00:28:01] Mike Morawski: There’s some great thought leaders out there, he’s one. I didn’t like Gary V the first time I read a book of his and boy, I really like some of the things he says today. I could tell you subscribe to some of that too, just by some of the things you’ve said. Best restaurant?

[00:28:13] Brock Mogensen: Ooh. I was just in Miami and I got to go to Komodo in downtown Miami. And that was that was delicious. So that’s one of my favorites. I like sushi a lot too. I get sushi quite a bit here in Milwaukee, but I bounce around.

[00:28:26] Mike Morawski: They actually have sushi in Milwaukee?

[00:28:28] Brock Mogensen: There’s a few good spots. Cheese curds are good. They never go wrong with a good cheese curd in Wisconsin.

[00:28:34] Mike Morawski: Your favorite tourist attraction?

[00:28:38] Brock Mogensen: Ooh. I’ll say destination, maybe. So I did a study abroad in Barcelona and they had a ton of fun tourist attractions there. Loved that place. Itching to get back out there and visit again, but that was some of the most fun I’ve had ever.

[00:28:51] Mike Morawski: Good for you. Listen Brock, it’s been awesome. I always feel like when I get engaged in some of these podcasts that the time just like flies by, and we’ve been at this now for about 45 minutes. It’s pretty interesting, like I said early on, if you’re the smartest guy in the room, go find a different room. I’m glad that I had you here today cause I learned a lot from you. That’s the thing about the business that we’re in and the space that we’re in is we can learn from each other. Heck I learn stuff from my coaching clients, about ways to do things. I think that’s great.

[00:29:23] So thanks for sharing, you’re a wealth of knowledge. I welcome people to reach out to you, call you, take your underwriting class, learn what they can learn. I always tell people you gotta be a sponge, absorb it, make it part of your DNA, who you are, and you’re going to get better at what you do. Brock, thanks for being here today. Everybody thank you for listening in. Remember: like us, love us, subscribe to us anywhere that you follow us on social media. Either My Core Intentions or Mike Morawski, and we’ll be here next Tuesday. Thanks.

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