Insider Secrets Podcast Episode #88

Returning Guest: Paul Moore

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Paul Moore on Insider Secrets

Guest Bio:

After a stint at Ford Motor Company, Paul co-founded
a staffing firm where he was finalist for Michigan
Entrepreneur of the Year. After selling to a publicly
traded firm, Paul began investing in real estate.
He launched multiple investment and development
companies, appeared on HGTV, and completed over
100 commercial and residential investments and exits.
He has contributed to Fox Business and The Real Estate
Guys Radio and is a regular contributor to
BiggerPockets, producing regular live video
and blog content regularly. Paul also co-hosted a
wealth-building podcast called How to Lose Money and
he’s been featured on over 200 podcasts. Paul is the author of The Perfect Investment – Create Enduring
Wealth from the Historic Shift to Multifamily Housing as well as the forthcoming Storing Up Profits –
Capitalize on America’s Obsession with Stuff by Investing in Self-Storage. Paul is the Founder and Managing
Partner of Wellings Capital, a real estate private equity firm.

SHOWNOTES

Key Takeaways
Keeping your mind and heart open to a higher power can help you reach new levels and bring about new opportunities. 
Learning to delegate is an important skill that can make you and your business even more successful, more importantly is learning how to delegate to the right people. 
Due your due diligence and really educate yourself before getting into any sort of deals or investments.

Standout Quotes
“Boy integrity, that is a big word. A lot of people throw it around and it doesn’t mean much to them, but I think when you really dig in and you really think about what it means, not to you, but to somebody else.” – Mike
“We had a bunch of waterfront lots at a resort, so they were not cash flowing one penny. They were just sucking cash. To make a very long story short, I was meditating that morning, on a Sunday morning, and I really felt like God said, “what would George Mueller do?”- Paul
“Amazing when we’re open, humble, living a life of integrity, when we’re vulnerable to the Lord what happens right around us, among us to people around us.”- Mike
“We try to see what type of people these are at their core. We also try to figure out if we want to be in a bad deal with this person for the next decade? If things go south and we check their debt structure, we check the type of debt they want to use and that they have used, we check their track record. We just look for really objective measurements like that.” – Paul
“Holding over a long period of time, a lot of people who’ve been in commercial or other real estate for 10, 20, 30 years say their biggest regrets are all the properties they sold.” – Paul
 
Timeline
[00:05] Introduction to the episode.
[01:43] Introduction to today’s guest, Paul Moore.
[02:22] Paul’s professional experience.
[04:04] One word that describes Paul personally and professionally.
[05:48] A defining moment in Paul’s life/career.
[11:20] How living a life devoted to Christ has helped Paul.
[12:19] How Paul got involved in real estate.
[14:22] The goal of Wellings Capital.
[15:37] How to vet potential operators.
[17:31] Underwriting and analyzing cap rates.
[23:35] Adding value to a property.
[25:20] Expenses in self storage.
[25:47] Holding onto assets for a long period of time.
[29:11] Paul’s new book, Storing Up Profits.
[31:43] Paul’s health and how he’s doing personally.
[33:21] Paul’s “Insider Secret” for new investors. 
[34:10] Bonus questions round.
[36:19] Resources to learn more about investing.
[37:05] Closing remarks. 
Contact Info
Paul’s book: 
Social Media: @paulmooreinvest
More resources on investing: wellingscapital.com/resources

TRANSCRIPT


[00:00:05] Kristin: 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. 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.

[00:00:45] Mike Morawski: Hey, welcome back everybody. It is Mike, your host of Insider Secrets brought to you by My Core Intentions. I ask this question every week, but what’s your intentions today? When you got up this morning and you started to look at your day and your daily disciplines, what were your intentions? What’d you decide to do? What were you going to accomplish today? And better yet, what are your intentions for the year? How are you going to change where you’re at today to where you’re going to be tomorrow? It’s often said that if you make one little change in your day, 1% little change on something every day, you will grow 365% throughout I’m glad that you’re here today. And, I never ask for anything except that you would just please go to wherever you hang out on social media, like me, love me, whether it’s My Core Intentions or Mike Morawski. Instagram, Twitter, Facebook, I’m everywhere. Like us, love us, follow us, subscribe to us on YouTube. We try to continue to bring you great relative content, just like today. I am so excited about today’s guest, cause I’m joined for a second time by my good friend, Paul Moore. Hey Paul, you want to say hi real quick?

[00:01:51] Paul Moore: Hey, good morning. Great to see all of you and Mike, I’m just so honored to be here.

[00:01:56] Mike Morawski: Good for you to be back. I’ve been really looking forward to this, I’m really glad that you’re here. Let me just tell the listeners a little bit about you as I dig in here, but Paul’s with Wellings Capital. He’s a true real estate veteran, he’s learned a lot over the years and knows a lot. I know that if you just sit back, pull out a notepad and if you’re driving pull over and pull out a notepad.

[00:02:16] Paul Moore: Did you just say I was a know-it-all?
[00:02:18] Mike Morawski: Yeah, I did. That was something I was thinking about, but thanks for bringing it up. Paul’s experience has been from the multifamily space into the self storage space. He’s raised over $71 million in private equity. He has been in the business 21 years. He’s an author, loves to speak, loves to share a story, and loves to talk about Jesus. Paul, here’s the first question I want to ask you, what have you learned since the last time you and I have been together?
[00:02:44] Paul Moore: I learned more about my propensity to make decisions on emotion. I’m listening to William Green’s wonderful book, Richer, Wiser, Happier. Charlie Munger said it’s one of the greatest investment books of all time. It’s a new book that came out and he’s talking about the importance of really setting your emotions aside to make great investment decisions. I realized, I’m a connector, I love people. On my personality profiles, I’ll show that. So I realized the role in my company is to connect people with the company and then let more objective due diligence matters and measurements, I should say, take over at that point.
[00:03:29] I sometimes have to step aside because sometimes I’ll say, “man, but this guy’s great. He’s great.” But we’ve got to look at these objective criteria that we all agreed to, and maybe it’s not the best investment because, Wellings Capital, we’re not an operator of self storage, mobile home parks, apartments, industrial. We actually invest with operators. So we do a lot of due diligence and that due diligence leads us to saying no, a whole lot.
[00:03:57] Mike Morawski: Interesting. So we’ll dig into that a little bit more, I want to hear more about that. You’ll probably remember this from the last time you were with me on Insider Secrets. In one word what best describes you personally and professionally?
[00:04:08] Paul Moore: The word I want it to be is integrity. Now, here’s what I mean when I say integrity, although I love the classic definition of it. I’m thinking of having my whole life integrated. Meaning however you do one thing is how you do everything. I want to do everything. I want to love Jesus in my devotional time when I’m reading the Bible this morning and journaling, but I want to love him in my decisions I’m making. I want to love him in the conversations I’m having. I want to do well with our investments, but also I want to hang the Christmas lights on my front porch and I haven’t gotten around to that yet because I’ve had too many important things to do. I want to have an integrated life and I really haven’t done that as well as I want to, so that’s something I’m working on. Talking about adding 1% a day to that would be something where I really want to have everything integrated under that common theme of excellence and integrity.
[00:05:06] Mike Morawski: Yeah. Boy integrity, that is a big word. A lot of people throw it around and it doesn’t mean much to them, but I think when you really dig in and you really think about what it means, not to you, but to somebody else. If people can walk away from you, Paul, and say, “Hey man, there’s a guy just filled with integrity.” Whether it’s because you have a relationship with Jesus, whether it’s because you are just who you are as a businessman at the core, people walk away and go, “wow, that’s somebody I want to do business with.” In your results of what you’ve done over the years and in the real estate space and raising private capital, obviously people believe that in you. So that’s pretty cool. I’m honored to know you that’s for sure. We talked about this a little bit at the beginning but what is one defining moment in your life or your career that’s really made a difference? You might not have just have one of them. There are several that come up over the years, especially if you’re paying attention, but let’s talk about that one defining moment in your life that’s made a difference.
[00:06:04] Paul Moore: Yeah. So I became a follower of Christ in college, in the eighties. I always had this problem and this problem was right here between my ears and that’s in my head. I saw a separation of my relationship with Jesus and the rest of my life. Which is again, going back to that integrity thing. But in 2007, 08, and 09, I was faced with not being able to have that separation anymore. Of course, everybody who has been in real estate or investing for over 13 years remembers 2008 real well. It was November of 2007. I had a million and a half, almost $2 million in the bank when I sold my company as a 33 year old in the nineties.
[00:06:46] 10 years later to the month, I had $2.5 million in debt. I actually was facing down 2008. Of course not knowing that, not knowing what was coming, just hoping that the worst of the recession magically was somehow over in 2007. My business partner at the time said, “Hey, I’ve got one or two more months and I’m going to not be able to pay the interest on this debt anymore. You’re going to have it all. I’ll sign all the properties over to you as well.” We had a bunch of waterfront lots at a resort, so they were not cash flowing one penny. They were just sucking cash. To make a very long story short, I was meditating that morning, on a Sunday morning, and I really felt like God said, “what would George Mueller do? Now George Mueller was this amazing man of God, and he’s not real popular today, like he was when I first became a believer 35 years ago. Anyway, he lived throughout the 1800’s and he raised, what we believe is maybe a quarter billion dollars in today’s dollars, but all by prayer and faith.
[00:07:51] He used it mostly to fund orphanages, but also to fund missions around the world. He never asked anybody for a dime. He journaled very thoroughly, every penny that came in, where it came from and where it was used. Anyway, I thought what would he do? Well I had just read a biography about him. First of all, he wouldn’t have debt, so I was already in trouble. The second thing was, I think he would do something really radical and unusual. So I thought, what could I do? Oh, I know. That Sunday morning, I went to church and for the first time, in my recollection, our pastor preached about the life of George Mueller.
[00:08:29] I had no idea that was going to happen. I thought God had his hand on this, so when I got together with a couple of friends in an accountability group, a few weeks later, who said, “what are you going to do? Are you going to declare bankruptcy? It looks like you’re going to.” I said, “no, I’m going to give my way out of debt.” I should have asked my wife, on January 1st, 2008, we’re going to start giving this set amount to the Lord’s work, church, missions, et cetera. Every week, we’re not just going to give 10%, but we’re going to give a set amount every week. Until this thing implodes and I end up bankrupt or until God does something to rescue us. Which is what I think is going to happen.
[00:09:10] Anyway, I told my family and the kids were really young and they’re like, “yeah, okay, whatever.” My wife was of course fearful, but she said she recognized that we didn’t have many options. So we started giving the set amount every week and four weeks into this, four weeks into it, I met a guy who gave me an idea. That idea turned into action on my part, and it took a whole lot of action, like a year of really hard work based on this idea that was completely unique and completely I’m sure dropped by the holy spirit.
[00:09:44] I ended up being able to sell off a bunch of property. Just to punctuate that it was God, I ended up selling off a whole bunch of waterfront property in September and October of 2008, the worst months, the very trough of the crisis. I was able to sell off $1.5 million or so worth of property right then based on this light bulb idea. I ended up completely debt-free by 2009.
[00:10:14] Mike Morawski: So you equate that to tithing, to giving back to the Lord?
[00:10:18] Paul Moore: Yeah, and this was I don’t want to call it reverse tithing, that would surely not be the word, but basically we set an amount and we said, no matter how much we lose or make, we’re going to give this set amount every week. We kept that practice going for about I think 10 more years, after that same amount, and then we increased it.
[00:10:37] Mike Morawski: Isn’t it amazing. I don’t want to tell people on this show that they should go give to church or to some ministry or something, but, isn’t it amazing how the Lord works? I mean, I spent some time in prison for the 2008, 2010 crisis and life is a lot different today, but I have a tithing story from prison that is just, it’s amazing. I made a commitment to a friend of mine who runs a camp that I was going to tithe to camp every week that I was in prison based on a certain percentage. That percentage continued to grow because so many people blessed me while I was gone. It was just the most amazing thing in the world. The story how I got there was even crazier, but this isn’t about me, it’s about you. Isn’t it amazing when we’re open, humble, living a life of integrity, when we’re vulnerable to the Lord what happens right around us, among us to people around us? It’s just interesting to watch. How’s that show up in your life?
[00:11:34] Paul Moore: I discovered guy’s named Tom Rotolo and Todd White back around 2013. Todd had these long dreadlocks, but he was very passionate for the Lord. He began to just pray for people in public and I thought I can do that. I’m an extrovert, and so I began to ask people if they needed prayer in public and it just turned into so many wonderful wild adventures. Many which I forgotten over the years, but it’s been so much fun. Then sometimes I’ll end up talking to an investor or a potential investor on the phone, or even an operator and they’re going through a crisis and I get a chance to pray with them as well, and that’s wonderful.
[00:12:14] Mike Morawski: Amazing when that happens. It’s crazy. Hey, let’s dig in a little bit, talk about real estate. Let’s talk about your history in real estate and where you started and where you’re at today as a result of your path.
[00:12:26] Paul Moore: Yeah. My friend and I were bored, it was the year 2000. I had a nonprofit ministry for international students studying in the U.S and there wasn’t a whole lot going on with it. So my friend and I out of boredom, honestly just flipped a house. Then that turned into dozens of houses. Then I thought, “if I can flip a house and make 20,000 or whatever, maybe I can build a house and make 50,000.” So I started trying to be a builder and I learned something really important, Mike, and this is really important for your audience too. If you don’t know how to tighten the door knob on your own house, you probably shouldn’t build one. I don’t know, maybe it’s just me, but that was my experience at least. That led us into the business of buying waterfront lots at Smith Mountain Lake in Virginia, that’s why I ended up buying and selling dozens of waterfront lots.
[00:13:14] Then 2008 hit and then during those years, I wondered, “how do you get involved in commercial real estate?” I knew these big shots were in commercial and I thought you must need millions of dollars, lots of experience, et cetera. Anyway, we stumbled into a commercial project when we built housing in North Dakota and Northwest North Dakota for the Bakken Oil Rush. There were people coming from all over the country to work there to make a hundred thousand dollars or so a year, but they lived in these really not great conditions honestly. So we built these beautiful cabins, basically a multifamily quasi hotel in 2011. That thrust me into the commercial world.
[00:13:58] I ended up writing a book on multifamily in 2016 and then fast forward, we set up our funds and I ended up writing a book on self storage that just came out a few weeks ago. So our funds, Wellings Capital, we invest in operators who have great asset classes like self storage, mobile home parks, et cetera.
[00:14:19] Mike Morawski: So you do a fund to fund kind of investing?
[00:14:22] Paul Moore: Our goal is to find the very best operators with the best deals. We put them together to give diversification to our investors and that’s what we do. We love syndication, but we also love the fund model, the diversification it can bring for investors.
[00:14:38] Mike Morawski: Before I ask the next question that I have on my mind, I have to ask you, can you put a door knob in today?
[00:14:45] Paul Moore: No, but now I don’t care anymore.
[00:14:47] Mike Morawski: Yeah, when you raise $71 million of private equity, does it really matter?
[00:14:51] Paul Moore: Yeah. I’m going to be super forthright with you on that. Ben and I, we just met again yesterday. That’s my business partner. We’re leaving all the cash we possibly can in the company, so we can grow. In fact, now when we need to hire a CFO and we need to hire other people, we have the cash sitting there. Actually, I think I already knew the importance of delegation. What I have learned though, is the importance of delegating to the right people. When I tried to build a house in, I think it was 2004 I delegated to the wrong people. People I liked, but people who did not have great integrity, one guy stole a bulldozer from me. Can you believe that?
[00:15:29] Mike Morawski: How do you steal a bulldozer, Paul?
[00:15:32] Paul Moore: I don’t know, he must’ve hid it in his garage. He’s still got it, but I didn’t have a time to pursue him.
[00:15:37] Mike Morawski: You’ve said a couple of times in the last few minutes that you invest with good operators. How do you vet an operator? So let’s say that there’s a passive investor listening this morning and they want to invest money with you, with Wellins, or they want to invest with somebody else.
[00:15:53] Paul Moore: The bottom line for people, if they’re interested in doing it themselves, they can go check out Brian Burke’s wonderful book called The Hands-off Investor. It’s basically a 300+ page manual about how to vet syndicators. However, we have about a 28 point process. We check them out, we check their references, check their background. We ask lots of questions. We try to find out how long they’ve been in the business, how they handled 2008. How they talk about their employees, how they talk about their staff, their investors, their spouse, the waiter, or waitress.
[00:16:30] We try to see what type of people these are at their core. We also try to figure out do we want to be in a bad deal with this person for the next decade? If things go south and we check their debt structure, we check the type of debt they want to use and that they have used, we check their track record. We just look for really objective measurements like that. We look at their proformas, how much do they project for future cap rate? We’re just trying to see if we really believe their story.
[00:17:02] How much did they put in the deal? If we’re investing with an operator, we have an operator who has a $95 million fund. I believe though, I’m not sure the final number, I believe he was putting in the first 11 million himself. That spoke volumes to us when he’s putting his own cash in because somehow or another magically people seem to behave differently when their own cash is in the deal. That’s really important to us.
[00:17:25] Mike Morawski: Yeah, absolutely. You tend to work a little bit harder when you’ve got skin in the game. I want to talk about underwriting for a minute with you, vetting a sponsor, how are they looking at loan to value and cap rates and things like that? What are your going in cap rates today? How long are you holding a deal and how are you projecting coming out?
[00:17:44] Paul Moore: One of our funds goal is to invest in a diversification play. We want to have a diversified group of operators, geographies, asset types, assets, and strategies. The reason I say that is we have some operators who are very opportunistic. They’ll buy like a self storage facility and if they get a fabulous offer on it a year and a half or two later, they might sell it. Then we have other operators who plan to buy and hold forever. I’m thinking of a couple of guys who are around 40 years old, they literally plan to be holding these into their late, 60’s, 70’s, 80’s, et cetera. They have no plan to sell at all. So that’s the answer on hold time.
[00:18:29] Now I’m going to say something that might sound like heresy. I’m writing an article right now for BiggerPockets and it’s called Why Cap Rates Don’t Matter…sometimes. I don’t know what bigger pockets will actually publish it as, they’ll probably publish this in January, 2022. I have no idea what they’ll title it. They change the title to fit their SEO requirements and all that. But that’s the plan. An alternate title might be Why Self Storage And Mobile Home Cap Rates Don’t Matter or something to get people’s attention, but that’s really what I mean. Here’s why, I don’t have all the data right in front of me, but a study that was done by a guy named Chris Bennett at 10 Federal. At the time he said 93% of multi-family above 50 units, is owned by companies who have multiple assets. Meaning, that these companies typically have a staff and typically they have asset management and property management dialed in.
[00:19:28] Typically they’ve done the value add and upgraded the countertops and cabinets and appliances and flooring and bark park and all that. But, 90% of mobile home parks, 85 to 90, and about 75% of self storage is owned by independent operators. In fact, half of all the 53,000 self storage facilities in the U.S, that’s about the same as Subway, McDonald’s, and Starbucks combined, about half of those are owned by single asset owners. Which are also known as mom and pop owners, and these mom and pops don’t have the desire, the resources, or the knowledge, to make upgrades and to increase income and to maximize value and ultimately equity for their shareholders. They don’t have to because the cap rates have compressed so much in the last decade, their values have typically doubled and they’ve doubled while the operator continued to do what they always did.
[00:20:36] Honestly in many cases, is being mediocre and they can continue to be mediocre and they can continue to get this great cashflow, they don’t have to raise rates. I talked to an operator the other day said he’s owned a facility. They’re the lowest price in town already and they have not raised rates once in six years. I talked to another operator who said they’ve only raised four times in 28 years. Think of inflation over 28 years or even 6 years, it makes no sense, but they’re making it work and now their cap rates have given them a double value. Let’s add one more example, we have seen so many acquisitions of mismanaged, self storage facilities, where the owner operators are taking hundreds of thousands of dollars in salaries out. We know one in Grand Junction, Colorado, the delinquency rate was 80% at this facility. The owner was not able to collect or willing to collect from 80% of the people, on a timely basis at least. And so when you go into a facility like that at a 1, 2, 3, 4% cap rate, and you can turn it around in 3-6 months and if you can get it operating at an 8% cap rate or a 10% cap rate in just a short time. And you’ve got an operator who has a track record of that, then I believe cap rates don’t necessarily matter on the front end. That was a very long diatribe there or monologue I should say. I will honestly tell you quickly that on the backend, even if cap rates right now are 4-4.5% on the sales side, we like to see the proformas projecting a 6-6.5% sale price. Which means much more conservative than reality is what I’m saying, because interest rates could go up and cap rates would go up if they did.
[00:22:29] Mike Morawski: What you’re saying is you’re being conservative in your underwriting, you’re making sure that you’re vetting your sponsor to be conservative in their underwriting. After being through 2008 and that whole crisis. You’re looking at today seeing, a lot of the same things going on fundamentally wise, where there’s really no fundamentals. You have to look at things differently and that’s what you’re saying you’re doing. You’re saying cap rates are compressed right now, but there’s probably going to be some decompression moving forward and you’re trying to come out of deals at a little higher rate.
[00:23:02] Paul Moore: Yeah, that’s right. What that means is if we’re able to buy something that is stabilized at a 5% cap rate, we might say, “okay, on the backend, we’re expecting to sell it at a 6% cap rate.” Somebody listening might say that’s not much different. If you do the math, it is very much different because dividing by a 5 versus a 6 cap is, I’m doing this in my head so please forgive me if I’m wrong, but I believe it’s a 20% decrease in price to go from a 5 to a 6 cap.
[00:23:33] Mike Morawski: Yeah, it’s crazy.
[00:23:34] Paul Moore: 20% is a lot.
[00:23:35] Mike Morawski: It’s huge. I teach some underwriting and I have a couple of coaching clients that I work one-on-one with and teach them underwriting specifically. We have a great tool that we use, but he asked me the other day, he just asked a simple question. He goes, “so you make the point that when you add value that it increases the property value?” I said, yeah, ” do you know how that works?” So we took the new, other income that we added, in this case it was a 20 some thousand dollars or something like that. I said, “look, if the cap rate is 10% and you take this extra NOI, extra income and you use the NOI formula and divide the 10% into that. You’ve just added a couple hundred thousand dollars in value to that property.” I didn’t understand it when I got in the business either, but today, when you see that it makes you as an operator want to figure out how to increase value.
[00:24:31] Paul Moore: It’s really amazing. I mean, if you think of taking a self storage facility and adding boat and RV parking, let’s just say you gravel an area and you can add $10,000 a month to your income. That’s 120,000 a year cap. You divide 120,000 by 0.06. You just added $2 million to the value of your facility, and if you bought that facility for 5 million, with 2 million equity and 3 million debt, you just doubled the value of the investor’s equity by graveling a parking area and bringing in tenants.
[00:25:08] Mike Morawski: One quick question, I have a couple of questions here, and then I want to get into your book. In the self storage space, we know in multifamily that when we look at a deal your expense ratio is generally going to be around 50%. In the self storage business are the expenses like that or are your expenses less in the self storage business?
[00:25:27] Paul Moore: Yeah, it’s all relative because when you buy and sell in self storage, in theory, you should see a similar expense ratio, but 34% is the average going rate that we often see in self storage. What is that? 66% profit. 34% expense to make it clear.
[00:25:47] Mike Morawski: You made an interesting comment and I have to circle back on this, about these guys that don’t want to sell, they have no plans to sell into their 60’s. Where does it make sense? When I model a deal, there’s a profit place somewhere. If I model it over 10 years, I’m usually hitting my highest profit point somewhere before that, 7 years, 8 years. Hence exit plan, because now I need to figure something out. How do I scrape profit off to maximize my profit. When somebody’s not selling a deal for that long, how does that help?
[00:26:20] Paul Moore: I’m really glad you asked. I think you’re the first person that’s ever asked that question that clearly. The answer is not being focused on IRR. So the internal rate of return, as you said, there’s a curve. If you sell, if you create a lot of value in the first year and can somehow magically sell a year later, we had a $7.1 million value add mobile home park that sold for 15 million in 10 months. The IRR on that to the equity was 347% and that looked great. Everybody applauded, but we looked at it again and we said, what if they’d have held it for 10 years and got all that income and the increasing value adds they could have done. It would have taken them four years to fill up a bunch of vacant spots. Instead of selling it for 15 million, they could have probably extracted a lot of net operating income for 10 years and then sold it for maybe 21 million. Actually, there’s an argument to be made. Warren Buffet famously said, they asked him what’s his average holding time.
[00:27:22] He said, “my preferred hold time is forever.” So holding over a long period of time, a lot of people who’ve been in commercial or other real estate for 10, 20, 30 years say their biggest regrets are all the properties they sold. The mindset is basically that you extract value through net operating income along the way and refinance on a regular basis. You keep taking money out through refinance and then keep cash flowing, giving the cash back to the investors, taking all their risks and their equity off the table, allowing them to reinvest it and then continuing to cash flow for decades.
[00:28:01] Mike Morawski: So I just want to say right now to my listeners, stop, whatever you’re doing, rewind what he just said and listen to that again. It’s going to be really important that you take that in because I think there’s a lot that was just said there and a lot of merit to that. Let’s just talk about a model real quick. So if I was going to put a deal together and we’re going to raise private equity, let’s raise $10 million private equity on this $25 million deal. We bring that private equity in and we plan to hold this thing for the next 30 years.
[00:28:31] We’re going to go through a couple of loan cycles and, outside those loan cycles, let’s raise money. Let’s bring new investors in and take the old ones out, the ones that want to get out. That’s an exit strategy, that’s another plan to create that helps you maximize that profit pull cash, pull tax-free profit off the table. So it’s an interesting thought. I don’t know that I’ve ever thought of it really.
[00:28:57] Paul Moore: I’m glad we talked about it. Thanks for asking.
[00:28:59] Mike Morawski: Yeah, for sure. I can’t believe nobody’s asked that before, so interesting. God, I know I told you we were going to go for about 30, 35 minutes, but we’re going to blow that right out of the water. So appreciate you being here. Hey, let’s talk about your new book, I know you have a new book out, tell us about that. Tell people how they can get it.
[00:29:17] Paul Moore: Yeah, when I dove into self storage a number of years ago, I decided first thing I wanted to do was line my bookshelves with more books and get all the books about self storage. The problem is I went online and I found one, a really good book about self storage, marketing, and sales. Really very few books about self storage, so I began to write special reports for our company, which eventually became chapters of a book. So I wrote this book and BiggerPockets was kind enough to publish it. I have to read it because I mess up the title if I don’t, it’s called Storing Up Profits: Capitalize on America’s Obsession with Stuff By Investing in Self Storage. It’s by BiggerPockets Publishing. As of just this week, it’s finally available on Amazon as well. BiggerPockets puts it out through their own publishing channels first for a month and then it went on Amazon as well.
[00:30:12] Mike Morawski: Nice, awesome. I’m looking forward to grabbing a copy of that and reading it. Do we just live in a world where people are pack rats today, people just keep stuff because they want to keep stuff.
[00:30:24] Paul Moore: It’s crazy, self storage has had a huge uptick since COVID. In fact, there are people downsizing as they close, these are all unfortunate situations. First, during COVID we had college students packing their stuff in self storage, not knowing if they’re going back to their dorms. Then we had restaurants and bars shutting down over the last several years or the last year and a half, I guess you’d say, and they’re packing their stuff in self storage often. Then we had offices downsizing as people move to online and some of them put some of their stuff in self storage. We have death, downsizing, dislocation, divorce, the four D’s that are causing people to use more self storage.
[00:31:06] So in America, at least in oddly enough, self storage has not caught on around the world at all. It’s mainly an American and also a North American phenomenon. Which is really interesting, America’s obsession with stuff.
[00:31:21] Mike Morawski: So everywhere else in the world, people are just minimalists?
[00:31:25] Paul Moore: I have never really checked into that, I probably should. I don’t remember for sure, but I think I saw a statistic that 90 or 98 or 99% of self storage in the world is in America and Canada.
[00:31:39] Mike Morawski: Wow. That’s interesting.
[00:31:40] Paul Moore: It was very high, whatever it was.
[00:31:42] Mike Morawski: Interesting. This isn’t something we talk about, so if you don’t want to talk about it, we can, we don’t have to, but how about your health? How are you doing?
[00:31:49] Paul Moore: Man, I’m doing great. I’ve been a hard charging, hard driving entrepreneur for 30 years and I was probably hard driving as I think about much childhood I was as well. Playing football and other sports like boxing and stuff. This is part of the integrity question. Is it really integrous for me not to have a Sabbath? Should I be doing emails till midnight every night and getting five hours sleep? No, but that’s what I’ve been doing for decades. I’ve had to slow down in this last year, last two years, I’ve had to face this issue of high blood pressure, which it’s not really high, but it’s probably high enough to be on medication, but I’m actually doing other stuff. Just to my right is my treadmill desk and I’ll be jumping up on my treadmill desk later today, hopefully to walk for miles while I’m typing and working and doing calls. I’m doing other things to take hold of my health, including juicing, trying to eat better…etc.
[00:32:48] Mike Morawski: You were on a pretty strict juice regimen about a year ago when we talked.
[00:32:53] Paul Moore: Yeah. I’m still doing that, but I’ve really lightened up on it a lot. It was just so hard to stay on, especially traveling, even with a travel juicer. It’s just so much trouble and you’re going to a conference and going out at seven in the morning to meet somebody for breakfast and then going to 11 at night, it was impossible to keep up this 13 juice a day regimen.
[00:33:15] Mike Morawski: Yeah, boy. Interesting. I’m glad that you’re healthy and I’m glad you’re here, and I’m glad that we got to talk about Jesus this morning. This is Insider Secrets, any final thoughts that you want to share with the listeners this morning?
[00:33:26] Paul Moore: Yeah. So like I said, I spent years wondering how to get involved in commercial real estate. I didn’t know where the entrance plan was, if you will.
[00:33:35] Mike Morawski: Good play Paul. Good call.
[00:33:36] Paul Moore: Thank you. Thank you very much, I’ll be here all week. But seriously, I took the last one third of this book, and it’s about 200 pages, and I took the last one third of it to describe seven different entrance plans to get into commercial real estate. Even if you don’t like, or don’t care that much about self storage, you might want to pick up the book to find out seven different paths to get involved in commercial real estate. Whether that’s multifamily, self storage, light, industrial, whatever you want to do.
[00:34:09] Mike Morawski: Awesome, interesting. Let’s shift gears a little bit and three questions I always ask is a favorite book you’ve ever read?
[00:34:17] Paul Moore: I keep shifting on this. So one of my favorite business book for sure is The One Thing by Jay Papasan and Gary Keller. I think I’ve decided that my favorite personal book is A Different Kind of Happiness by the wonderful late Dr. Larry Crabb, who is my favorite author by far. He’s talking about how we can be happy by loving people rather than seeking to be loved.
[00:34:45] Mike Morawski: Oh my gosh, so cool. Best tourist attraction you’ve ever seen?
[00:34:50] Paul Moore: One of my bucket list items was Yellowstone and I can’t think of anything better than the time I had with my son looking at the geysers and all the other features in Yellowstone several years ago.
[00:35:04] Mike Morawski: Did you run into a Kevin Costner out there?
[00:35:07] Paul Moore: I missed him that day, yeah, sorry.
[00:35:09] Mike Morawski: You watch the show Yellowstone?
[00:35:11] Paul Moore: No, I haven’t.
[00:35:12] Mike Morawski: Oh yeah, that’s why I said, cause Kevin Costner’s in that.
[00:35:15] Paul Moore: Oh, I was thinking you were referring, see, I’m still stuck in the nineties. I thought you were referring to Dances with Wolves.
[00:35:21] Mike Morawski: Oh yeah, that too. Then favorite place you’ve ever eaten?
[00:35:27] Paul Moore: Oh, my goodness. That is so tough. I saw that on the question list and I didn’t come up with an answer then. It’s probably the last good restaurant I’ve been to would be my answer. This week I got to eat at Le Yaca in Williamsburg, Virginia, we were on a little vacation there. So that’s my favorite restaurant I’m going to name for now. It’s a French, white tablecloth French restaurant that my wife and my sister and her husband went to for dinner about three days ago.
[00:35:57] Mike Morawski: Nice. Nice. Awesome. Paul, thanks for being here. Appreciate your heart, appreciate your knowledge, your experience, and your willingness to share. It’s been a great show.
[00:36:06] Paul Moore: I really appreciate it.
[00:36:07] Mike Morawski: Great conversation. Tell the listeners how they can get ahold of you. If they’re looking for self storage information or a place to place some capital, or want to get ahold of your book, tell people how they do that.
[00:36:19] Paul Moore: Yeah. Yeah. They can get the book at biggerpockets.com/storage, but I’m going to unsell my book right now. They can get that information about how to get involved in commercial real estate, at least a very condensed version of it through my website. At wellingscapital.com/resources. Now I’m not doing an excerpt from the book, if BiggerPockets Publishing is listening, but I do have a course on there called Introduction to Commercial Real Estate. I’ve also got other stuff like Introduction to Self Storage, Introduction to Mobile Home Parks, et cetera. So you can get that free at wellingscapital.com/resources.
[00:37:04] Mike Morawski: Awesome, great. Thanks for being here. Hey everybody make sure that you listen to this a couple of times, because there were more than just a couple of golden nuggets in this hour. Appreciate everybody for being here. We’ll be here next week, Insider Secrets is here always to bring you some relative content and help you in your multifamily and commercial real estate investing space. Have a great day. Talk to you soon. Thanks Paul.
[00:37:27] Paul Moore: You bet.
[00:37:28] Kristin: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions, please like, and follow us to get the most up-to-date real estate investing trends.
[00:37:49] Visit mycoreintentions.com, where you can get expert coaching on all things, real estate investing and property managers. If you’re looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.
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