“If we make that choice to get up and move forward, we can do a lot of things not only for ourselves, but the people around us.”

-Mike Morawski

Michael Morawski is a 30 plus year real estate investment veteran. He has controlled over $285,000,000 in real estate transactions. An entrepreneur, author, real estate trainer, public speaker, and personal coach. With a strong personal resilience and a deep desire to help others live an extraordinary life. He has coached hundreds of real estate investors to fulfill their dreams.

In this episode, Trevor and Mike discuss:

  • Mike’s background and how he got started in real estate.
  • Mike’s experience during the global recession, his biggest mistake and how he was able to get back on track.
  • The number one thing that holds people back from becoming a successful investor.
  • How to set up a team when investing out of state.
  • And a lot more exciting topics!

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Full Transcription Of Today’s Episode

Trevor Oldham  00:42

Hey, everybody, welcome back to the real estate investing exposure. Today on the show, I have Michael “Mike” Morawski. He’s a 30 year real estate investment veteran, has controlled over $285 million in real estate transactions. He’s also an entrepreneur, author, real estate trainer, public speaker and personal coach with a strong personal resilience and deep desire to help others live an extraordinary life. He’s also coached hundreds of real estate investors to fulfill their dreams. Mike, excited to have you on the show today.


Mike Morawski  01:17

Hey, Trevor, I’m excited to be here. Thanks. Appreciate it.


Trevor Oldham  01:20

All, certainly. And for our audience, Mike that is new to the show or new to yourself, and they want to know a little bit about you. Do you mind just diving into your background in real estate and how you got started?


Mike Morawski  01:30

Yeah, absolutely. So I’ve been in real estate for about 30 years. And I love it. And people always ask me, hey, how come? How can you like real estate so much? And I say this because I think there’s always something I can learn. I can always learn something new from somebody else. And I don’t have all the answers. And that’s what I like about real estate and more specifically the multifamily space. But how I got started was I was in the general contracting business and woke up one morning and I was just burned out, I couldn’t do it anymore. I looked at my wife at the time, and I said, I can’t do this anymore. And I was still banging nails. And I decided to sell the company and took a year off. And her and I did a couple of house hacks. And this was long before it was a sexy thing to do, Trevor right. But I believe success leaves clues. And so along the way, I met a real estate agent who was extremely successful. And I really liked what he did. So I went to him and I said, Hey, Todd, I’m thinking about getting involved in real estate. And he encouraged me, he said, I think you’d be really good at it. So I decided to move forward. I went to him and I said, Would you teach me what I need to know? And can I shadow you and your team? And he said, No, I’m not gonna let you do that. I’m going to do one better for you. He goes, I’ll make you a cassette tape. Now, Trevor, I’m dating myself, right? Because I don’t think you can find anything to make a cassette tape on today. But he made a tape. I listened to that over and over and over again. And like I said, success leaves clues. I followed those fundamentals. I mastered the repetitious boredom. And I went out my first nine months in the real estate business, I sold 78 houses, all for sale by owners, just following some simple processes. And after that, I went on I built a team selling 125 homes a year and did that for about eight years consecutively. 2005, I saw the market starting to shift and I knew things were going to change and that I would have to go do something different if I wanted to keep the lifestyle and the production up. So I decided to go into the apartment business. Like I said, success leaves clues and I didn’t just wake up one morning and decide to go into the apartment business. But I had studied the syndication model. So I did some work when I was in the construction business for one of the large syndicators in Chicago who today happen to be the largest real estate investment trust in the world. They’re in 80 countries, they’re in every asset class. But they started out with one small four unit multifamily building and built this massive company. But I understood Trevor that you raise private equity, you marry it with a great real estate deal. You stay in the middle and as long as everything goes well, everybody’s happy and makes money. So in 2005 I syndicated my first deal. I went to the apartment business, I raised $18 million in 30 months, I bought $16 million worth of real estate. It had 4000 apartments in five different markets and went on to build a property management company managing 7500 units. Fast forward today I’m in the coaching and training space trying to give back and teach people how to do that.


Trevor Oldham  04:48

There’s a lot to unpack there but I want to ask where did the gap I feel as though of coming from you had the 4000 units and then now your coaching and training I love for you just to walk us through what happened to that middle part of the story.


Mike Morawski  05:00

Big question there. Great question. 2008 came around, it was like a freight train hitting a wall. Remember, I started this thing in 2005. So during that 30 months, I brought on 4000 assets. I grew a company very fast, very unstable, that made some mistakes along the way. And those are mistakes where I grew too fast. I was very unstable. I was over leveraged, I paid too much for property. And I didn’t listen to people around me or pay attention to the details around me,  things that were going on. 2008 came around, we hit the worst economic crisis the world’s ever seen. I’m sitting at lunch one day with my CFO, and the news happened to be on and we’re watching him carry boxes out of Lehman Brothers by the dozens. And I looked across the table and I said, we’re screwed, aren’t we? He said, Yeah, we’re in big trouble. And it wasn’t, but 18 months later that we came off the rails completely, our company imploded. I wound up trying to save the company. And I was never one to fly private. I didn’t, we never had that kind of money. I didn’t fly private. I didn’t have a boat. I didn’t buy big houses or fancy cars. I tried to build a company. I was a guy, I was home most nights for dinner, and I was the neighborhood baseball coach and soccer coach, and I started to move money between companies. So at 38 different companies, some were very profitable, some were not so profitable. Those profitable companies, I took cash flow from and put the nonprofit and will companies, which isn’t illegal, actually went to my accountant and attorney. And they both said, you can do it just leave notes behind. And when the market changes, put it back? Well, I had been involved in recessions in the past, usually a recession, there’s a 10% correction. Last 17 or 18 months, this thing was a 40% correction that lasted seven or eight years. People are still recovering from it today. My problem was I didn’t tell my investors what I was doing. And because of non disclosure, I was charged with wire fraud and mail fraud charges, and sentenced to 10 years in federal prison. So because of us imploding, and the company unwinding all those assets, and that went to a receiver and a receiver managed the rest of those assets for the next several years unwinding them, and taking care of the assets and the investors.


Trevor Oldham  07:33

Within that story, there’s a lot to learn even more, a lot even more to unpack, and I could see how it’s at the time. I feel as though it was an honest mistake that you hadn’t even known that you were committing. I don’t want to say crimes. But in SEC terms fraud, as I know, I’ve heard of a couple other investors making a small mistake and how the SEC breathing down their neck. In this case scenario. What was that experience? Like when you had the company 2008 2009 come and it’s going down? And then now all of a sudden you get hit with these wire fraud and bank fraud charges? What was Moses’s mindset? And how did you overcome that? Or did you end up going to? I know you mentioned that you were sentenced to 10 years. Did you have to serve all those 10 years? And just what was that experience? Like cuz I can’t even imagine?


Mike Morawski  08:18

Yeah, well, I would never wish it on anybody. It becomes your deepest, darkest nightmare. Prison is not the greatest place in the world. It’s dark, it’s evil. There’s a lot of crazy stuff that goes on. There’s a saying in prison, though, that says you can either do the time or what the time, do you and it’s a choice that you make. I’ve been in prison about 17 days thinking that the worst they can get in my life is over. What am I going to do? And at that point, my wife tells me she’s going to divorce and move on. And it wrecked me. It absolutely ruined me. And I walked around not knowing if anything mattered anymore. How did I wind up like this? You go from living this middle class lifestyle of like I said, being homeless nights for dinner being the neighborhood baseball and soccer coach, to having a date night with your wife having a great marriage to all of a sudden you’re living 12 by 12 room with three men you don’t know living out of a two by five locker, get three green outfits and buy pairs of underpants wondering what the hell happened in your life. And so I think I think the Lord that there were some guys around me that really cared, and that mattered and knew I mattered and were able to instill some hope in me. I walked in the gym one day in about six weeks. Then this guy walks up to me and he goes, Hey, he was coming out. He didn’t let these people beat you. All we want to do is take everything from you. And what they can take your apartments, they can take your real estate, they can take your money, they can destroy your family, but what they can’t take is what’s inside. They can’t take who you are What you’re made up of, they can’t take your knowledge. Because I got that 10 years back. He goes, look, come to this gym every day, start working out, take my class, lose some weight, you’ll start feeling better. This point I was probably 35 pounds overweight. best advice I’ve ever gotten in my life. I started going to this guy’s class every day. I hated every minute of it. But I, but I know self discipline. And I know success leaves clues, right? So I did that every day. And I kept doing it, I started losing weight, started feeling better, decided to go to school, I went and found a scholarship, went to Christian Bible school, and I got a bachelor’s degree in theology. I wrote two books while I was gone to home study courses, actually. One is called exit plan, your complete guide to multifamily investing and why you need an exit plan before you buy. And I would absolutely love to give a copy to your listeners at the end of the show. Another one was on property management. I taught real estate investing in property management in prison for five years. I wrote an ethics course I taught ethics, how ironic the federal inmate teaching ethics, right? I taught Bible study, I went on to be on an outreach program because of being a good inmate. And I got to go into the community and tell my story to local businesses and small print in the colleges in the area. I met a professor from the University of Minnesota. And we co authored a paper together that this year we had published in the Business Journal of ethics. And it gets taught at the college level for forensic accounting, and sales and marketing classes. So the list goes on, I did a number of other things as well. So I really made a choice to do the time I came home and better shape spiritually, physically, mentally and emotionally than I’ve ever been. And today I work on that redemption piece. I want to carry a message to your listeners to other people, I tell my story to hope and inspiration. We all make mistakes, we all can stumble, stub your toe and get hurt. But the The difference is what do you do when that happens? You lay there? Or do you get up again. And I think we all have to make those choices, and they’re not easy choices, they can be tough. But if we make that choice to get up and move forward, we can do a lot of things for not only ourselves, but the people around us.


Trevor Oldham  12:31

It’s absolutely fascinating. And I want to hop into the piece that, I feel we’ve talked about before when you were successful with your business and that, the really hard part. And in the middle of the now let’s say that you’ve been released, and now you’re doing the coaching and training program that was just from the things that you were able to build while you’re serving your time. And then once you’re released, you’re able to go out there and find students and do your coaching, how did that all come about?


Mike Morawski  12:59

Well, I taught for five years in prison. And actually some of the guys I’ve taught I’ve heard from since I’ve been home and they’ve gone home and they’re doing real estate, and they’re being successful at it. But I knew when I was in prison that I would have to re-engineer myself to come home and I have 30 years of knowledge, right? And not only knowledge, but wisdom. And I wanted to give that away, I wanted to give that to people and help people be successful and you do a lot more, right. So that’s what my purpose is today is to give back, give back to people helping them. Hey, listen, I’ll just tell a quick story. I have a real estate client and coaching right now. He is a developer out of Omaha never been in the multifamily space wanting to do some multifamily few coaching calls. And he went out and wrote his first offer on a 638 unit apartment complex. A lot of courage, but just took some knowledge and moved forward and did what we did in a very short period of time. And I say that because anybody can do it. You can learn the techniques, you can learn the fundamentals and move forward and build your business. Coaching and training is very important. And I think that you have to have somebody in your life who’s going to give you guidance, help you execute and then hold you accountable.


Trevor Oldham  14:31

And let’s say someone is interested in investing in real estate and they haven’t done it before. What do you think is the number one thing that holds people back from becoming a successful investor?


Mike Morawski  14:42

Fear. I think fear holds us all back at times in our lives. Think about yourself. I mean, you’re probably at a place because you walk through some fear at some point, right? Hey, I’ll never forget the first podcast iPad. I was like, Oh my gosh, and I always thought it was just Hey, grab a microphone and start doing it. Right and But that’s not how it was. And so you got to walk through that fear. And you first have to take the education. I think a lot of people say that, hey, education is power, but it’s only the potential for power. The power comes in the execution, you have to execute. And then you can either execute well, or not so well, right. But I think fear is what holds us back mostly.


Trevor Oldham  15:25

That’s excellent. And now I want to happen to Tony talk about the different asset classes in real estate. And obviously, there’s quite a bit why did you decide to focus on multifamily? What brought you to that more than say, fixin flippers, mobile, home park or even Self Storage? the number of ways you can make money in real estate?


Mike Morawski  15:42

Yeah, so there are a lot of asset classes, right. And I’ve done a ton of fix and flip on the residential side, at one point, I owned 140 single family houses. So I’ve done a lot with real estate over the years. But when you look at multifamily, just inside the multifamily bucket, there’s a number of asset classes, senior housing, student living, student housing, medical housing, short term nurse housing, Airbnb edu. I mean, the list goes on. And what, I like self storage. So storage is a business that you never get a call about a plugged up toilet or furnace that went out, right? You never get that. And if somebody doesn’t pay rent, you call them once. If they don’t pay, you put a lock on their thing, if you call them again, if they don’t pay you sell it. It’s easy. It’s simple. It’s a clean business, but I like multifamily, and I like market rate multifamily. I like providing something for people. And my mission in the multifamily space has always been to provide safe and secure housing for single parents. Here’s why. Because I don’t care if you’re a woman or a man. And you’re single, but you have a kid living with you and a child living with you. That child might be coming home from school on their own. And I know I have some kids myself, right. But that child may be coming home from school on their own. And I want them to come home to a safe and secure place. I don’t want their parents to have to worry that while they’re at work, that something could be happening to their child, or that they’re not getting home in time or safely. So I always provided that safe and secure housing. But I like market rate rent, because I like the style. I like the format. I like what it offers people. But what I really like about it is it’s a business. And I can walk away from closing and earning an income immediately. As soon as I walk away from closing in, there’s so much I can do to re engineer it to make it better than what it is when I bought it


Trevor Oldham  17:52

for the multifamily properties that you’re buying. Are you staying within your local area? Are you buying all over the country? Do you mind walking our audience through the sort of investment strategy that you have?


Mike Morawski  18:03

Yeah, so that’s an interesting question, right. So the first deal I bought was an 11 unit in my market in Chicago. And I learned very quickly, I wasn’t going to make any money in Chicago. And I remember this was 10 years ago. And so I called my broker and said, Hey, we’re not going to make any money here. We have to figure this out. We wrote a buying strategy, buying strategy, consistent of what markets and what markets look appealing. I went into the Ohio Valley, bought 1800 units between India and Cincinnati, went on to Northern Alabama blood, several 100 units there, but had a very large footprint in the Dallas Fort Worth market. So as in five markets, I always say in my book, actually that, hey, I bought my first 11 units in Chicago, but went on to build a 4000 unit portfolio from the coach seat of an airplane. Because, I traveled a lot and just went and looked at properties and bought assets and built relationships with people. So it’s a relationship business, Trevor, it comes down to who. So the similar thing today is and I’m underwriting deals like crazy today we’re looking to buy deals and get involved to get back in the game. So to say, we’re underwriting deals today and I’m looking at writing stuff in Chicago and it doesn’t make sense and looking at this market right now saying there are a lot of shades right now it up 2006 2007 pulled back the Chicago market I there’s some uncertainty here for me. So I’m looking in high rent growth markets like Tampa, like Dallas, Texas markets again.


Trevor Oldham  19:44

And for these markets that you’re investing out of state, how do you set up your team, at the property management team, the people that are gonna be boots on the ground to ensure that everything runs smoothly while you’re, let’s say a couple 1000 miles away from it.


Mike Morawski  19:58

Yeah, geez, Trevor. Team building is really important, right? You have to have people in your life that you trust, and you have to dedicate time to those relationships. it’s easy today with zoom, right, you can make a few phone calls, you can get on the phone with a contractor, you can get on the phone with a broker, you can get on the phone with a lender and zoom, then you can kind of tell, you get that body language piece from people over, I met on zoom, or on a meeting type situation. But you have to build relationships, it’s about letting people know who you are, and having a vision for your future for your company. Help, you’ve got to get your team to buy into your vision, you have to get your team to buy into your role, hey, look, if my goal is to have 500 units under management, by the end of the year, I have to, I have to get the people around me to buy into that goal. Because that’s going to help me to source those deals, that’s going to help me to underwrite those deals, it’s going to help me to negotiate those deals at a better rate. And it’s going to help me too, it helps me and my team, but it helps the people around this too. So I’m all about Win win.


Trevor Oldham  21:13

That’s perfect. And I can definitely say, looking at the markets like I know I am in Massachusetts and wanting to go out there and buy my first property, there’s properties out there for sale. And my goal would be a house hack. But even looking at these properties, if I were to rent them out at the market rents wouldn’t even be enough to cover the mortgage every month. And it’s just crazy to me that people are buying these properties. And then I’m just using simple numbers. I haven’t even dug into the property. And I’m just looking at market rates and what sellers are asking for. So it’s crazy that people are paying some of these prices. And I was very young back in 2007 and 2008. So I don’t remember the crisis as much. But for someone like yourself who’s lived through it, do you see any shades of what’s going on in some of these markets around the country, with prices increasing just so much where I feel like one day, they can’t even keep up with people’s income, and then to just being so expensive that an investor like myself, it just wouldn’t even make sense to purchase because buying an investment property where I have to pay $300 a month just to hold it or threaten to get $300 that loss every month?


Mike Morawski  22:14

Yeah, I do see a lot of shades of what happened in the past happening again. Now. I think the markets moving really fast cap rates are really compressed. You’ve got people that aren’t paying attention to underwriting metrics. They’re over analyzing deals. And I think that there’s an impending crash coming. I pay a lot of attention to some of the economists and I’m not an economist, but I like to listen because I think it gives us a shape of what’s going on or what’s to come. But when I listened to some of these economists talk about the number of foreclosures that are sitting in the banks right now, I heard somebody say the other day, there’s 10 million pending foreclosures, that as soon as the government releases the foreclosure, forbearance, foreclosure moratorium, they’re going to start to hit the banks. I heard somebody say that by the third quarter of 2023. There’ll be an onslaught of properties again to buy, we have to be careful, we have to watch right, and just tread cautiously, underwrite conservatively. Don’t be over aggressive. Watch your rent growth. I think that’s one of the biggest metrics. And that rent growth piece is like, here’s an example. Right? nationally, they say rent growth right now is about 3.9%. Okay, nationally, in Florida, the rent growth is about 7%. So does that mean that I should show my rent growth on my Property Valuation at 7%? No, not necessarily. What I think it means is that I should underwrite conservatively. So if I look at 5%, that’s a pretty good rent growth rate. Right? In comparison to Chicago, Chicago’s rent growth rate is 1.75. So why do I want to be here if I’m not going to get the rent growth that I can get in a Florida or a Ohio or an Indianapolis or, or another market? That might make a little bit more sense? So just be conservative, pay attention, look around you, think things through, I think it is a big thing that people don’t do. And because we get so busy, right? That’s one of the things I like to work with people on is is coaching them through


Trevor Oldham  24:28

life. That’s an excellent point. But I want to be respectful of your time. And I just had a couple of additional questions I wanted to ask you, before we end our time together today, and one first question I wanted to ask you is do you happen to have a favorite business or real estate investing book that you’d recommend for our audience to check out.


Mike Morawski  24:44

Other than mine? Yes, I think one of the greatest books I’ve ever read is The Millionaire Real Estate Investor. It’s written by Gary Keller. Honestly, I continue to go back and refer to that book, because I think it teaches some sound fundamental principles of how to scale your real estate investing business. And even though it mostly talks about residential, it can be used in every asset class. I think it’s the Bible of the industry. So,


Trevor Oldham  25:21

And Mike, last question, where can our audience find you and feel free to share where they can find the book that you’d mentioned earlier in our conversation?


Mike Morawski  25:28

Sure. Thanks, Trevor. I appreciate the opportunity. They can find me at my website at mycoreintentions.com, you can download a free copy of my book exit plan, your complete guide to multifamily investing and why you need an exit plan before you buy. At mycoreintentions.com/exitplan. You can reach me directly. I am open in networking and conversations call me to reach out. And Mike at my core intentions COMM And I’m all over social media. So connect with me like me, love me, follow me, subscribe to me, please Instagram, Twitter, Facebook, LinkedIn, LinkedIn, and Instagram specifically. So I have a YouTube channel out there, you can subscribe to that. On my website, you can find a couple of different podcasts that I do. And so I’m pretty accessible. And, Trevor, the other thing is that in the next couple of weeks, I will be having a large national announcement that’s going to take place. So I’m excited about rolling that out.


Trevor Oldham  26:36

That’s awesome. And I’ll make sure to include all that information in our show notes. So when our audience listens to this episode, they know where to find you. And Mike, I just want to say thank you for hopping on and coming on to the show today.


Mike Morawski  26:46

Thanks, Trevor. I appreciate it. Best of luck to you and all your listeners.