The following is a transcript from our latest podcast episode. New episodes every other Wednesday - available on all popular podcast platforms. Thank you for joining us today. I'll see you in two weeks.

Roni:               Today I'm joined by Mike Ardis and Drew Silver over at LBK Capital. They're going to share with us how they have built wealth and real estate through multifamily and residential investments.

                       You're supposed to go ... Well, thank you for that and thank you for the opportunity. I asked you that back then, how did you find me? And you had found me through social media.

Mike:               Exactly.

Roni:               So yeah, I say that I'm not a listing agent, I'm a marketing agent, that I'm a negotiating agent, and then I get to be a closing agent. Like I said, three hat process. Listing agent, I could put a sign in the yard. But interestingly enough, look, we were supposed to hit the market with your house and COVID came.

Mike:               Right.

Roni:               And so we held it off the market for probably about 30, 45 days, but you guys ... I mean, I pushed it out and started hosting open houses. I think we were some of the first ones to host open houses, so y'all graciously and bravely allowed me to do that.

Mike:               We weren't worried at all.

Roni:               No COVID happening.

Mike:               That's right.

Roni:               Anyways, got to know you guys through being your realtor, and oftentimes that does formulate a friendship. And now I get to help you on the investment side of the business. That's what we're here to talk about today because I really want viewers to understand how to invest. Where do they start? Whether it's whole selling or buying multifamily, buying storage units, buying flippers, fix and flip, holding it for short term rentals. There's so much opportunity in our marketplace for investments, and you guys are doing it really good over at LBK Capital. How'd you get your start?

Mike:               Well, I'm in ... My background is construction, so we we were the contractors for investors for about three years and we kind of kept saying we should just do this ourselves. But you have to figure out how to source the deals, how to get the capital, raise the capital, because you can only do so many deals with your own capital. You've got to figure out that piece, and that's a very important piece, obviously. But once we figured that out, we already had the construction experience, so it was just move forward and do it.

                       But we also partnered with some people that had been flipping and they were able to source the deals and they were able to find the capital, and so we partnered with them. They kind of held our hand through that process for about a year and a half, two years. They ended up moving to Wilmington, their business took them there, and so we decided to keep going hard as we could, just pick up the pace a little bit more and so far it's been great. We kind of ended last year on a roll and I think we're off to a great start from the single family and from a multifamily standpoint starting in 2023.

Roni:               Yeah. Good. Well, I can't wait to see, and I'm proudly a part of some of these investments on the fix and flip. So I look for opportunities that have some character and personality, and then you guys determine if it's a numbers game from there and figure out if the numbers work.

                       Drew, do you want to talk about how do you calculate? How do you know when it's a good investment to dive into?

Drew:              Yeah, sure. I know Mike can hit on the single family fix and flip side a little bit better, but you definitely have to work backwards with the numbers. Make sure your exit strategy is in place, that your numbers work, in case you go over budget, go over timelines, all that. On the multifamily side, you of course, and probably the single family side too, want to buy where people want to be. So that base is there that you always have a need for what you're trying to purchase. And then, I mean, we really through relationships like yours and in the community, we try to leverage those to be able to make a profit and sell them and get out when we can.

Roni:               And you're not from this area originally, right? I think you're from Miami.

Drew:              I wish. I'm from West Ashley.

Roni:               Oh, you are from West Ashley. All right. All right. All right.

Drew:              Yep. I grew up behind Palmetto [inaudible].

Roni:               And you went to the Citadel. You're a Citadel grad.

Drew:              Citadel grad 2001.

Roni:               What is your tie to ...? Don't you have a tie to Florida?

Drew:              I do.

Roni:               Okay. What is that?

Drew:              So I sold real estate down there in '05, '06. Well, '06, '07.

Roni:               All right.

Drew:              Miami Beach with a Citadel buddy that ...

Roni:               That's what it was. Okay.

Drew:              We played baseball together, and he's a broker down there.

Roni:               Okay.

Drew:              That's the tie to the real estate.

Roni:               All right.

Drew:              Before this even came about, we just always found ourselves looking at Zillow or looking at real estate or seeing a vacant house and just saying to ourselves, "There has to be a way to make money with that house sitting there vacant."

Roni:               Yeah.

Drew:              And I think that kind of brewing in the subconscious all these years sparked when we finally took the leap of faith. And Mike and I talk about this a lot, and you've mentioned it in the beginning about how we've met, but really the network is your net worth. So if it wasn't for certain people in this area that started a Facebook group for the multifamily side, that we decided to take a jump and kind of basically head first into, I don't think we'd be here today because we wouldn't have met the partners on certain Florida properties. And it just all kind of came together based on really networking.

Roni:               Yeah. Well, you just closed on a multifamily unit down in Florida, is that right?

Drew:              We did.

Roni:               So you're still investing, not just in South Carolina, but you've got investments going on other places.

Drew:              That's right. And we just had a pre-planning WebEx this morning with the county, down in Manatee County. It's a small complex now, but we really bought it for what it's going to be. So it's a seven unit now, but behind it eventually we'll demo the seven units and we're going to build a 96 unit apartment complex.

Roni:               Oh, wow. Big project.

Drew:              Yeah, big project. Affordable housing. So a certain percentage of that will be affordable because it's desperately needed down there for sure. But I'm sure across the nation, affordable housing is a big need.

Roni:               Gosh, it is here in Charleston. I mean, we'll talk about the market here for a second. I mean, we don't have a lot of multifamily here, so let's team up and work on fixing that. I'll be looking for the opportunities, but we do need it. We do need it here, I'm sure Florida does too and across the state. As pricing continues to elevate, which we have all seen in the last couple of years, then there's going to be that housing need is prevalent. The generation ... Those in their twenties and even early thirties, they have a hard time finding affordable housing to purchase or even to rent.

Drew:              Yeah, absolutely.

Roni:               So let's speak for a moment about people that want to jump into the investment side and it takes a leap of faith, right? There's a lot of people that say, "I wish I could." or they see the Zillow opportunities or such, they're playing on these external sites and they see the potential, but they're yet leery of jumping into it. Or they're like, "Well, I don't have as much capital as what it's going to take to do it." That's one of the reasons y'all formed LBK Capital, I think. And there are other ... There's companies like that that are formulated to give investors or those that are wanting to step into that investment realm, a group to go in with other investors. Speak on that for a minute, how that would look like if you had an investment team, a pool of people with the capital to be able to purchase.

Drew:              Yeah, I mean ...

Mike:               Just lay out one of our deals is probably the best way to explain that.

Drew:              Yeah, if you want to hit on the single family, and I can do the multifamily.

Mike:               Yeah, from a single family standpoint, there's hard money. There's private money. You can use a bank, which that's a difficult one.

Roni:               Yeah.

Mike:               So we're able to use certain companies here in Charleston that you pay for their money, but they allow you to get in and it all comes back to can you buy that deal cheap enough to make the numbers work? So how do you get started? Carefully, and you reach out to people. There's real estate events here locally in Charleston that I think is a great place to start. And then the networking one, social media is a great place to start, but you have to be careful because there's not always the best ... There's people out there that will take advantage of you, so just get to know people. I think most people are a good judge a character, so if you get to know people, you know if that's a person you can trust and maybe put money with.

Roni:               Yeah. Yeah. What do you think would be a baseline number? I mean, if I had $10,000 set to the side, could I do anything with that? Is there any option? Or do I need to save up $50,000 to jump into the arena? What is a number that I could play around with?

Mike:               Well, I would say the way we do it is ... I mean, we don't really use much of our own money, so I don't think $10,000 is going to get you to where you need to be.

Roni:               Yeah.

Mike:               In our real estate market today.

Roni:               Yeah.

Mike:               So yeah, I would say, again, that's part of networking. Understanding the deals that you could be a part of without using your money, and ...

Roni:               That's the key.

Mike:               That was a year of education for Drew and I.

Roni:               Yeah.

Mike:               Yeah, I don't know. I mean, there is opportunities, if you have $50,000, $60,000 down, maybe you could be part of a down payment and earn. I think we're paying some investors right now 12.5% on their money, but it needs to probably be around $50,000 to $60,000 in those particular cases.

Roni:               Okay.

Mike:               It's all predicated on the deal as well.

Roni:               Sure. So that's the single family fix and flip, which you and I are involved in numerous deals right now with that. Drew, do you want to kind of talk about the investment, the investor side, the capital that's needed on the multifamily?

Drew:              Yeah, sure. So typically on the multifamily side, you got to be kind of careful because if you syndicate, it has to be 506(c) regulated, meaning accredited investors, and that's where you're going to get high net worth individuals that probably already know a lot of the stuff that you're going to tell them anyway.

Roni:               Yeah.

Drew:              And the typical, what they call share is about $50,000 depending on each deal, but $50,000 for some of your $0 to $10 million deals, and anything higher can be $100,000 to $500,000 chunks. So that's kind of people that are already in the game, so to speak. But if it's somebody that's watching that says, like you said, "Hey, I've got $10,000, $25,000 saved up, how can you get in?" There are 506(b) syndications, 'B; meaning buddy. So if you go meet somebody at an REI event or whatever, and you start that conversation, you now qualify to get into one of those deals at a lower price point. And you've already met them, you feel comfortable and getting on social media, going to these events in person, you can gauge a person pretty well on the trust factor and their credibility.

                       So for an investor that maybe ... We had one on one of our fixing flips that actually works for Edward Jones was tired of seeing her account dwindle by the thousands every month.

Roni:               Yeah.

Drew:              She's like, "I'm not doing it anymore." So she pulled out money to put with us so she can actually get a good solid gain back. So each deal is different, but if you've got $10,000, there's a way to get into a deal, whether it be multifamily or single family flips, whatever it is, you just have to get out there and network at these events for sure.

Roni:               It's relationships, it's understanding. It's who do you know and where do you get plugged in and where do you want to have the trust to put the money and allocate the funds, so it's just another place to build wealth. It's just another place, a great outlet to build wealth. It happens to be in the real estate investment side. So Drew, when you say that your network is your net worth, will you elaborate on that and explain what that means?

Drew:              Yeah, absolutely. So again, we talked about that mental hurdle of thinking we had to have all the money.

Roni:               Yeah.

Drew:              And so you start going to these events, you attend ... You don't have to pay for some of this stuff to meet multimillionaire that will help you, so you just get out there to these REI events or when you finally are capable, you go to these masterminds and you start rubbing shoulders with people and you realize very quickly that they have plenty of resources, whether it be money, knowledge, whatever. And then now they're in your network. You met them, you shook their hand, you had a drink with them or whatever it may be. But you can literally increase your net worth just through networking.

                       And locally here, if it hadn't been for Jennings and [inaudible] starting my first million, a multifamily group, again, I don't think we would have multifamily property in Florida, met Danny or Ryan that became partners, all my JV partners on that particular deal.

Roni:               Yeah.

Drew:              It's just doors open up when you network and your net worth truly increases, whether you see it right away in your bank account or not, but it's coming.

Roni:               Yeah, those guys that you're mentioning, Jennings especially, I mean they do a phenomenal job of online educating people. So we'll tag them and make sure to give a high five to those guys. Anybody that's interested can kind of tap into that group as well because they really do a good job of education.

Drew:              For sure.

Mike:               Absolutely.

Roni:               Yeah. You and I have a fondness for David Coggins. You listen to his podcast, and so I just finished up one of his books. Boy is he a hustler.

Drew:              Oh, yeah.

Roni:               And talk about somebody that has failed and picks himself back up and keeps going. What do you take away from some of his mindset?

Drew:              Yeah, so being a seal that he was, he says it a lot, you just never quit. Just don't quit. And we have failed a million times.

Mike:               Oh, yeah.

Drew:              Over and over and over, over the years. But if you fail forward and you're constantly putting yourself out there, and when I say fail, I don't want anybody that may be watching or listening to feel like that's a bad word. It actually helps you become more successful quicker, so the more you fail and the more often at a faster pace, the quicker you'll succeed. And so his takeaway of never quit, it's okay to fail.

Roni:               Yeah.

Drew:              Just don't give up because once you give up, then it's over. And I feel like as many times as we've tried stuff and tried to do things and it didn't work out, we never had the mindset of, "Man, that really stunk. I'm not going to try that again." We just kept going.

Roni:               It's a lesson learned.

Drew:              Yeah.

Roni:               With each opportunity. You can't gain knowledge and a strong takeaway unless you put yourself out there. And a big part of investments is just overcoming the fear. Just you got to jump in and do it, right?

Drew:              Yeah.

Roni:               And you're going to learn something from each deal that you do.

Drew:              Yeah, and when you're looking at deals, I can't tell you how many we pass on because they don't ... They fail, they don't meet ...

Mike:               They don't meet the criteria.

Drew:              Yeah, and then so that's all part of it. And failure is actually a good word.

Roni:               Yeah.

Drew:              So if you fail at a faster pace, it's just going to help you succeed quicker.

Mike:               Absolutely.

Roni:               So one of the things I like about you guys is that you are family and by marriage. Your father-in-law is a part of this company as well. The family dynamics, and I get to look at that from and be a part of it because I see ... I know your wife, I know Seth's wife, I know Rob and his wife, and so I just really commend you guys for making what started off as family has now transgressed over into business. Any complications with that?

Mike:               Well, the good news is no, because we're just starting.

Roni:               Keep good point.

Mike:               We've actually got our first meeting next Friday.

Roni:               Yeah.

Mike:               So everybody will be involved in that. We'll lay out current projects and things like that, timelines and stuff. But I think the timing is right because we're all kind of in our early forties, mid forties, and we have strengths and weaknesses. And I think we've decided ... Or we've kind of realized hey, we can do this and we can do it a lot faster if we pull our resources together and our strengths together versus us trying to do it one at a ...

Drew:              All alone.

Mike:               Yeah.

Roni:               Yeah. Yeah. Well, I really commend you and I look forward to watching this journey as it transpires. But you guys have a lot of respect. I know you do life together outside of work as well, and boating may be a big part of that.

Mike:               A little bit.

Roni:               Everybody's got to have a little fun, and so that seems to be your fun outside of work. And so anyways, it's just really fun to be a part of that. So thank you for letting me be in y'all's circle and kind of being a trusted advisor, especially in the residential side of the fix and flip piece of it. So anyways, I just look forward to seeing where this goes next.

                       Speaking on family, Valentine's Day is right around the corner. Any special plans with your spouses? Any secrets you can tell?

Mike:               [inaudible] and my anniversary is the 10th of February, so we don't celebrate Valentine's Day. We just do the anniversary.

Roni:               Yeah. Yeah. And how many years?

Mike:               Gosh, I know that, but you don't ...

Roni:               I'm hitting you up, right? And two kids later. Two beautiful kids later.

Mike:               The good news is Brent can edit this.

Drew:              '06?

Mike:               '06. So yeah, do some quick ...

Drew:              I think we're at 16.

Roni:               Sixteen, yeah. Yeah, got some longevity. Strong as ever. I see it.

Mike:               Yeah.

Roni:               I see it.

Drew:              It'll be pretty low-key for us.

Roni:               Yeah.

Drew:              I guess your typical Valentine's, maybe a dinner or something out. And then of course, I'll give Sage, my daughter a little something special for Valentine's as well.

Roni:               Yeah, winning those brownie points.

Drew:              Yeah.

Roni:               With the women in the house.

Drew:              So that when she turns ... Becomes a tween that she's daddy's favorite.

Roni:               That's right. Maybe a daddy date thrown in there would be good. Awesome. Awesome. Well, they will all enjoy it, I'm sure.

                       So we're in several fix and flips together, Mike. What has been the biggest horror story that you've encountered in these fix and flips?

Mike:               Luckily, the ones we've done so far, zero. We were about to close on a property [inaudible], and I went to do the inspection, opened up the crawlspace, and literally there was two and a half feet of water underneath this crawlspace.

Roni:               Oh, yeah.

Mike:               So luckily I was able to get out of that one, but I kind of knew it when I drove up because it was at the bottom of the hill.

Roni:               Yeah.

Mike:               And when we walked down the driveway, there were sandbags. And so all the telltale signs of runoff.

Roni:               Yeah. Yeah. Well, and I will say there's one that we've ... I mean, you're rebuilding the foundation in some of these houses. I mean, when we're talking about fix and flip, they can pretty ... Some of these are pretty large scale projects, a 100-year-old houses, and you're rebuilding it, like keeping the four walls and the roof and just starting with the foundation and restructuring all the mechanicals inside. It's kind of a fun project for me to watch.

Mike:               Yeah, I mean, it's been enjoyable. We have a great team. I think that's why it's enjoyable. Be able to take 100-year-old home, bring it down to really nothing, like you said, and then it's rebuilt and the mechanicals are ready to go in two weeks later, it's pretty impressive. But yeah, that's a pretty big undertaking for sure.

Roni:               Yeah, you guys are quick. I've been impressed by how quick your team has been from the time we close until you're putting up the walls and the mechanicals into a property.

Mike:               Well, knowing that a short-term debt ... Excuse me, short-term debt, then makes you be quick.

Roni:               And you got good ... You got really great help too, I will say.

Mike:               Yeah, we have good help.

Roni:               I've been around construction for the last 20 years and yeah, your team that you have in place is a big part of the success.

Mike:               Yeah, they're awesome.

Roni:               Yeah.

Mike:               They're great.

Drew:              The most work we can get done for free in that first 30 days before that mortgage hits.

Mike:               Yeah.

Roni:               Yeah.

Drew:              Exactly.

Roni:               Yeah. Good. Any words of wisdom for somebody that you wish you had known? Like something ... Gosh, somebody could have told you way back when that you would be faced with, an obstacle?

Drew:              I think our biggest mental obstacle was we felt like we had to have a million dollars in the bank to make our first deal.

Roni:               Yeah.

Mike:               Right.

Drew:              There are tons of people out there with plenty of money that if you have the right deal and the numbers make sense because it's tied to a hard asset like real estate, they'll give you the money. And so I think that's probably one of the biggest paralysis of analysis type things or objections in your mind that's stopping you from making that first move.

                       But also, you mentioned trusted advisor. You have to have the right people on your team that are professionals in the market. You, with us here locally, Jason down in Florida is a wealth of knowledge. He grew up down there, knows stuff that's going on behind the scenes at different city council, town council meetings that you would never know about unless you had that contact.

Roni:               Yeah.

Drew:              So I think between just taking that leap of faith step, overcoming your mental hurdle, and then getting in touch with the right professionals, kind of boots on the ground and people that know what's really going on behind the scenes to give you that competitive edge.

Mike:               Yeah, and I would just add that a lot of times you're worried about making that contact and the quicker you make that contact, the quicker things will happen. And I think for us, it took us, gosh, seven, eight years to start really making contact. So we're excited where the next five, 10 years will go. But yeah, don't be afraid to step out on faith and make the call.

Roni:               Yeah. Yeah.

Drew:              I mean, within the last eight months, or even a year, we're sitting out on the boat, in the long boat key looking out at the water and we're like, "Man, this is our year to make a move." And since then, what? Four fix and flips, the multi-family property down in Bradenton, we're looking at two other properties down in Florida right now on the southwest coast, a little boutique resort, and then a storage facility. And we're making offers on them, and it's just jump in, educate yourself, get around the right people.

Mike:               Yeah.

Drew:              That network that can help you, and then just take action and fail forward really.

Roni:               That's right. Take the risk.

Mike:               Take the risk.

Roni:               Nobody has ever gotten wealthy by not taking risk.

Drew:              At this point, what do you have to lose? You are at the same spot if you didn't try.

Roni:               That's right. That's right.

Drew:              Yeah.

Roni:               Well, I commend you for taking the risk and to putting yourself out there and educating yourself, and you guys are really doing the grunt work. You've been laying that foundation to get educated to where you are now.

Mike:               Well, we thank you. We appreciate you because you're a big part of what we do.

Roni:               Yeah. Well, it's an honor and privilege.

                       If you need anything, reach out. Let's talk. I'll see you in two weeks.