“You need to really play to your strengths and you need to really focus on the things you are good at!”
 -Paul Moore

Paul was the Managing Partner of Wellings Capital. He was a finalist for Ernst & Young’s Michigan Entrepreneur of the Year two years straight (1996 & 1997). Paul is the author of The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing (2016) and has a forthcoming book on self-storage investing. Paul also co-hosts a wealth-building podcast called How to Lose Money and he’s been a featured guest on 150+ podcasts, including episode #285 of the BiggerPockets Podcast.

In this episode Trevor and Paul discuss:

  • How Paul started his career in the Real Estate Investment Industry.
  • You need to focus on what you’re good at!
  • Learn the strategies that help Paul raise capital.
  • How Paul made his failure become his strength to rise up and become successful.
  • Why do you need to choose an investor based?

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Full Transcription Of Today’s Episode

Trevor Oldham  00:48

Hey everyone, welcome to the real estate investing Podcast. I am super excited to bring on today’s guest Paul Moore Paul is the Founder and Managing Partner of wellings Capital after graduating with an engineering degree and then an MBA from Ohio State Paul under the Management Development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner they scale and sold the company to a publicly traded firm. Five years later, after a brief retirement, Paul began investing in real estate in 2000. To protect and grow his own wealth. He has since completed over 85 Real Estate Investments and exits appeared on HGTV House Hunters rehabbed and manage dozens of rental properties and develop the subdivision. After completing three successful real estate developments, including assisting with the development of a Hyatt Hotel and a very successful multifamily project. Paul has narrowed his focus into commercial real estate. Paul, excited to have you here today.

Paul Moore 1:38

It’s great to be here, Trevor, thanks for having me on.

Trevor Oldham  01:41

No, certainly. It’s been great getting to know you, especially you and your company over the last couple of years. And typically the way I just want to start off the podcast is just to learn a little bit more about what got you started in real estate investing. And most people aren’t born reading Rich Dad, Poor Dad, I just come somewhere along their life. And I’d love for you just to share with that point in your life. The place.

Paul Moore 1:58

Yeah, so I was only 34 years old before I was 34. When we sold my company and I moved to the Blue Ridge Mountains of Virginia start a nonprofit organization to provide a farming and mountain experience to international students studying in the US. And that was great. But the volunteers were really hard to harness to really be consistent with that. And so honestly, I got really bored, I thought I was going to be the best version of a husband, father friend, I had two kids, two more, were on the way later, and I became the worst version. You know, everybody wants to financial independence retire early. Well, I tell you what, I didn’t have a good plan. And I was a high energy entrepreneur. And I was not in a place where I should have or should have even discussed any word about retirement. So when my friend moved to town, he had a lot of maintenance experience and apartments. He said, Hey, I heard we can buy houses on the courthouse steps for like 50 cents on the dollar. So I said, well, let’s go down and check it out. So we did buy our first house that first day and we went to visit with no money in our pockets. We had such a great deal. And we turned and flipped it quickly. And we thought we could do one of these every week or two like we could do like 25 a year. Well, the next several were much harder than the first but at any rate, that’s how we got started.

Trevor Oldham  03:20

That’s perfect. And since that those first days being on the courthouse steps, what do think has allowed you to grow your company looking out 10 1520 years later down the road.

Paul Moore 03:28

I found out after flipping a whole bunch of houses and then flipping waterfront laws starting an online business that everybody knows this but it took me a while to figure out you need to really play to your strengths. And you need to really focus on what you’re good at. So I was wondering over the years doing all these different things, rental homes, flip homes, duplexes, online residential real estate lead generation company, I was like, what how do I get into commercial real estate? I always wonder but I didn’t know how and syndication was not a widely known as widely known, I should say, before 2012. And so I stumbled in by getting involved in apartments. And after several years of running a multifamily operation Kwazii Hotel in North Dakota for oil workers that went really well. I tried to start an apartment syndication company, and we want to do everything you know, like a lot of them do. And that’s fine. But we didn’t have the team. I think all three of the partners were really on the money raising side, but not only operations, get your hands dirty side and we found out that honestly, the better fit for me was to raise money and not to be involved in getting my hands dirty in the operations. And I think when I really was able to learn that and apply that after some really frustrating years, through the mid 2000s. You know, the mid teens, I think that’s when we really really hit our stride the last three or four years and as someone

Trevor Oldham 4:56

that’s looking to raise capital for potential investors, typically If you’re targeting accredited investors, there’s a good chunk of change that that person is going to have to invest with you. So when you’re talking to say a potential investor, and your company has put together a deal and say they’re looking to raise around up to 100,000 500,000 million, whatever the number may be, what does that sort of process look like from your standpoint, when there comes an investor to that’s maybe their doctor, their lawyer, their dentist, and they have to have the network, they have the income ready to go, but they’re not exactly sure if they should be investing in real estate, what does that sort of conversation look like with them?

Paul Moore 05:27

Yeah, I wonder, could I back up and tell you how we got to the place where they would even call us because that is the most pivotal moments in my life. And I think that if I can build it from there, it’ll really help answer this question. So yeah, sure, feel free to go ahead. Thanks, Trevor. I had this delusion that we had actually had a handful. I mean, like three investors in this big project we did in North Dakota, you know, millions of dollars, and I had this delusion, I was under the, you know, thought that I can have one or two or three large investors, and they happen to be in China through a friend of mine. And I really thought I don’t need to go out and build a base of capital potential investors. I didn’t want to have my mentor had 550 investors, and they average 90,000 each. And I was like, You know what, not me, I don’t ever want to do that. I don’t want to go through that hassle. I don’t want to be talking to a whole lot of 100 or even $50,000 investors and all that. And it wasn’t because I didn’t want to talk to him. I just didn’t think that’s the way I wanted to go. Well, my mentor kept saying, You’re wrong, you’re diluted, you don’t you can’t count when you get a deal. What if that guy in China is not available? What if he doesn’t have the money? What’s the cheque size is too large or too small? I might Yeah, you’ll see it’ll work. Well, a year and a half later, I was lamenting on the phone to him that the second deal I wanted to fund with these guys in China had gone South again, this time because it was Chinese New Year. And they said we won’t be able to talk about this deal for three to four weeks. It’s the beginning of Chinese New Year next Monday. I’m like, what, okay, so anyway, that my mentor, and this is a really important moment in my whole life. He’s really quite blunt. Let me put it that way. And he was the CEO of the company that mentored me, and he’s on the phone with two other people from my team. He said, Paul, I’ve been telling you for a year and a half, you’ve got to build an investor base. Don’t call me again. Don’t even get on my schedule. Again, until you’ve done what I told you. That was a painful moment. Trevor’s embarrassing, it was humiliating. And you know what it was the beginning of the happiest turn of events of my life, at least professionally speaking, because it just so happened. A day later, I got to hear Michael Blanc speak about raising capital for deals. And about a week later, I listened to a podcast Actually, it was the first time I’d ever clicked on that little purple icon on my iPhone, but listen to podcasts. And I discovered this family office podcast, I put in the words investments and capital raising and came across Richard C. Wilson. And he told this story. And this is the story that actually launched, you know, put the meat on the bones for what my mentor told me to do. He said, Imagine you’re up north and you love salmon. You want to live on salmon, you’re out in the wild, and you have no resources. He said you can become a spear fisherman, you could actually learn to cut the limb, off the tree, whittle it down, throw it, hopefully, you’d see a fish swim by right at the right moment. Hopefully, you’d hit it with your spear. Hopefully, you’d be able to get it to shore. And hopefully you’d have a nice dinner that night. He goes, that’ll work maybe sometimes. But he said, wouldn’t it be better if you were a grizzly bear standing in the waterfall with your mouth open, letting hundreds of salmon jump around you just jump into your mouth. He said that’s the strategy to raise capital. And he’s basically said that waterfall is like a choke point where you stand there. And if you are the one who is with the grizzly bear in the right position at the right time, you’ll get a lot of people coming to you. And the way to do that is by creating content, educational content, podcasts, books, ebooks, speaking engagements, blogging, videos, YouTube, all the other things. And he basically said that was that and that I listened to that over and over my wife was actually in a store and she came out I said, you gotta hear this. Anyway, we started down that path I published my first book actually was my second book overall, but my first book on multifamily not that long after that, I did ebooks, I started my own podcast, I started becoming a guest on podcast, and I started blogging for bigger pockets. Then I started doing video for bigger pockets, live events. And now to finally answer your question, we have investors regularly calling us asking if they can invest with us. So that’s conversation goes something like this, we say, Hey, we have these opportunities. It’s not for everybody. And you may or may not be a person who’s a fit for that. Tell us more about you. So I want to hear all about them first. And I’m trying to make it clear to them that I’m not selling. In fact, I regularly tell people, you know, you might be happier with this deal over there. And I’ll just If you want, I’ll give you the email address of that other syndicator, or this other syndicator. It’s really great when you’re the grizzly bear, and you already have all that you need. And you’re in fact oversubscribed. That’s how those conversations go.

Trevor Oldham 10:37

And where you described work blogging on bigger pockets you had been doing, you know, videos for bigger pockets, you know, you had podcasts guessing it and you were just doing all this sort of inbound content marketing, where did you find that all the time for because you know, there’s a lot of different avenues that someone can take when they’re putting themselves out there and creating all these pieces of content. Did you have a team behind you? Is that yourself doing it? What is sort of that look like for you?

Paul Moore 10:57

Yeah, so as far as getting guest spots on podcasts, I read a book called I think it’s called your first 1000 copies. It’s a book about, you know, all the things you can do once you have a book as a leverage, as leverage. And so I use the book to get on every real estate podcast, I could I started contacting them myself. Then I had an assistant who did it. And then I hired a wonderful podcasting firm to help me get on podcasts. And so getting guest spots has been great. also brought on a very, very smart, wonderful business partner who was only 21. When I hired him, he I hired him as an assistant at you know, like $11 an hour, maybe 12. And then he grew into being a partner over the next four years, I actually made him partner and he is brilliant operational side that allows me to be sort of freewheeling doing all this other stuff, Trevor.

Trevor Oldham 11:53

If I recall correctly, is that partner is named Ben or Benjamin.

Paul Moore 11:56

Yeah, that’s correct. Ben,

Trevor Oldham 11:57

and just out of curiosity, when you had found in 2001 is obviously a young age, how was that process like hiring him and bring him in? And then obviously, you know, it seems like he adapted rather quickly if he became a partner in a short period of time.

Paul Moore 12:09

Yeah. You know, when I brought him in, I wasn’t thinking at all that he would be. But I mean, he seemed like a really sharp guy. He was really interested in real estate. He was a senior at Liberty University in Lynchburg, Virginia, we had very similar values and personal interests, but I could tell that he was very, very different for me is far more left brained, and he was able to do more work and accomplish more in a day, even at a young age than other people could do in two or three days. And he was very effective and only seen him make like one or two typos and 1000s of emails. He never misses deadlines. I mean, he’s just very, very effective. Everything he does, yeah, he doesn’t have the same emotional makeup at all that I do. So I might call him and say, I am so upset, you know, and he’s like, Okay, well, why, you know, and just, yeah, we’re just very different and it feels tense, sometimes. Honestly, we feel tension between us quite often. But it’s a good kind of tension that makes us both better. And we’ve come to appreciate that tension.

Trevor Oldham 13:12

That’s perfect. And going back to the real estate inside and the opportunities that are out there. Are there any opportunities that your company is actively looking to raise money for what sort of sectors are you looking to raise capital to investing is obviously you know, there’s a lot of different areas that you can go personally in the real estate niche.

Paul Moore 13:27

Yeah, I wrote a book called The perfect investment which was about commercial grade, large multifamily. But after that, and I told my wife I plan to be involved in multifamily only for the next several decades, not jumping around. But after about three or four years of beating our head up against the wall in multifamily. We realized that we wanted to expand into self storage and mobile home parks we felt like they were as or more recession resistant, we felt that they were much much more mom and pop owned. And they had much more intrinsic value available and reserves much more value add upside that was you were able to do in these and the more we studied them, the more amazed we were at these opportunities. I mean, real quick, I mean, multifamily 50 units and up if we believe 93% are owned by companies that have already run the typically already run the value out of those multifamily assets. They’ve already improved the counters and cabinets and paint and flooring and lighting up 85 to 90% of mobile home parks, there’s about 44,000 in the US, we believe 85 to 90% are owned by mom and pop operators, they don’t have the desire or the knowledge or the resources to improve the park. They’ve already gained tremendously but a cap rate compression I mean, the parks have already effectively doubled in value per dollar of income. And that means the cap rates have gone from let’s say 12% down to let’s say 6% for those You know, that cap rate thing. And so they don’t have the desire to do all these improvements. But sometimes you can buy them at a very fair and even a premium price for what it is improve it dramatically and make your investors and you owe a lot of money. And it’s the same in self storage. There are about 53,000 self storage facilities, same as all the subways, McDonald’s and Starbucks in the US combined. Yet about half of those are owned by mom and pop operators with a lot of upside potential.

Trevor Oldham 15:31

I’ve seen quite a few investors sort of have the same sort of philosophy or the hopping out of say multifamily, and they’re going in and they’re doing self storage. They’re doing mobile, home parks, and even somewhat, they’re buying four or 5000 different ATMs across the country. And with your specific fund. Are you putting these all together? So we’ve seen some funds where it’s compilable, home park self storage, and these ATMs under one fun, everything other companies where you could invest only in self storage with the company, only mobile home park? And then obviously, the ATMs as well, what is sort of the makeup of your fund look like in that sense?

Paul Moore 16:01

Yeah, so our fund is a combination of self storage and mobile home parks, at least the last several funds have been we just closed one as we’re recording this were about two months away from launching a new one, it’ll probably have self storage and mobile home parks with the possibility that we could add apartments if we find the right deal, or senior living ATMs are quite interesting to us. We’re researching that we spent an hour and a half probably this week, at least in discussions in our team meetings about adding ATMs when we add them in the same fund. Well, I can give you a mathematical reasons why it makes sense to put it in the same fund with self storage and mobile home parks. I could also tell you that it might confuse investors. It’s not real estate, and we might not want to put it in the same time.

Trevor Oldham 16:48

Exactly. And that totally makes sense. And, Paul, I want to be respective of your time today. I think we’ve had a great conversation. But there’s just a couple of final questions that I wanted to ask you before letting you go today. And I think it’s something that’s on everyone’s mind, especially what’s been taking place over the last year between the forbearance the housing market, now the prices are increasing, but from your side, where do you think the real estate market is going? 2021 and beyond?

Paul Moore 17:10

You know, I know people love to give smart alec answers like my crystal ball is broken. But I’m not going to say that I will say that I used to make all these predictions. A year ago when COVID hit, I started doing this show, I had a live show already on bigger pockets on Saturdays on Facebook, live and Instagram. And I changed the show for a while to be crisis investing 101. And we talked for months about all the bad things that were going to happen. And I was listening to Ken McElroy, and we were even thinking about setting up a distressed asset fun, I thought we’d have it up and running by now. Well, it didn’t happen that way, as we can all see. And the number of real estate for sale signs in my town that have a sold thing plastered over them within hours or days is almost you know, it’s almost 100%. And we all know what’s going on as we’re recording this. So I’ve really come to the place where there’s a lot I really see a lot of wisdom with Warren Buffett Charlie Munger, Ray Dalio, all these guys, Howard Marks who say we just can’t predict it’s foolish to try to predict and we can only really see where the market went in a rear view mirror. So all that is to say, that’s where I’m at with this too.

Trevor Oldham 18:22

It definitely makes sense. And another question I wanted to ask you is, besides the books that you’ve written yourself, do you have a favorite real estate book that you’ve read? Or that you’d recommend to our audience?

Paul Moore 18:30

Yeah, I’ve got a bunch that I really like. But I think the one that might be most relevant for our audience today is I’m gonna hold it up here. For those of you watching, it’s the hands off investor by my friend Brian Burke, Brian tells us as investors how to evaluate the right syndicator and the right deal. And if you’re thinking about investing in a syndication or a real estate deal, commercial real estate deal, this is a great book for you. If you’re thinking about raising money, it’s a great book for you, because you’ll know what people will be looking for when they seek to find an investment.

Trevor Oldham 19:04

That’s perfect. I’ll definitely make sure to include that in the show notes of today’s episode. And the last question, Paul, for you today is where can our audience find you? Well,

Paul Moore 19:12

My website is wellings capital.com. And I’ve got some resources on there. I want to offer your audience one is a free commercial real estate course they can get that as well as ebooks on self storage, mobile home, Park investing, etc. At wellingscapital.com. That’s w e l l imgs. wellingscapital com/resources. Awesome.

Trevor Oldham 19:26

I appreciate that. And I’ll make sure to include that in the show notes as well. And Paul, thank you for your time today.

Paul Moore 19:40

Thanks, Trevor. great to talk to you.