The Brutal Cost of $50M in Real Estate by Age 31

Nick Morales is actually a team member at Bigger Pockets. One of the great people I worked with at Bigger Pockets in Mike Calvy, Shoutout Mike, hope you're doing well. Nick has built a $50 million real estate portfolio by age 29, and he's got a property management business, and he still sells products for Bigger Pockets, on behalf of Bigger Pockets. And I think those headline numbers stand out because they're so big and they're so impressive on the surface. But underlying that when we unpack Nick's story, you're going to see that it's not nearly as glamorous as that headline suggests, and that there's a real, real cost, and real battle scars that Nick has that he's gone through to get to this point. I think you're going to find the story fascinating. I think you're going to find this very real. A lot of I think people who have big portfolios or shop big numbers like that on Instagram and social media, leave out the real detail underneath that portfolio, and I think Nick is going to share that here. And I think that despite his large numbers, some of you are going to really find that awesome and a huge achievement, and it is a big achievement. And some of you are going to decide, you know, I don't think that was worth it. That's not the kind of cost I'd want to pay for this. Hello, hello, hello, and welcome to the Bigger Pockets Money Podcast. My name is Mindy Jensen, and with me as always is my real deal co-host, Scott Trent. I'm so glad you raised that topic here when you were so excited to be joined by Nick Morales today and hear about his incredible story as a whirlwind real estate professional, like the guy that you'd expect to come out of a world with bigger pockets. Tens of millions of dollars in real estate, three businesses in real estate, and yet it's not as glamorous as those headlines might suggest, and he's really in the thick of it working towards the promised land over the next few years. So Nick, welcome to the Bigger Pockets Money Podcast, super excited to chat with you. Thanks for having me on. Good to see everybody again, and thanks for being here. Nick, before we get started, tell us about where you're at right now and where you live and why you're not where you live right now. I have a resident in Nevada, Reno, Nevada, where I grew up and moved back to after I left my job, but I have currently right now in a manager's unit on one of my buildings in Sumter South Carolina, which is about the middle of the state, about 45 minutes from a bunch of my properties. So I kind of sit here and I'm actually sleeping in a bunk bed that you see back there. That's my residence Monday through Thursday, and then I will be going back to my apartment in Charleston on Thursday through Sunday. How has how you got to this glamorous position in your life, living in a bunk bed? Long story short, I started buying property with no money with OPM, other people's money, and I brought the equity and sweat. So obviously doing that, you got to be out here getting dirty and get into it, and so I find it a lot easier for me on a day to day basis, though, to be here where the assets are and remote managing is extremely challenging. And so my staff, my employees, and my investors, you know, expect presents, and that's part of why I'm here on Monday through Thursday in the market. And I also get to enjoy it. It's kind of like my peaceful Monday through Thursday, get to work, zone in, and then go back to my fun lifestyle on the weekends, and you know, but Monday through Thursday, it's out here in the markets. Are you flying cross country every week? I used to do that every week, and that was took a lot. It was like Reno to Vegas, and then Vegas to Reno, and then Vegas to Reno to Charlotte. And then our drive Charlotte is obviously in North Carolina, but it sits about an hour and a half above Columbia, South Carolina. And it was the best airport to be in. So I used to fly from Vegas there, staying Columbia, and a couple of my buildings there, I'd sleep in an air mattress, and then I'd fly back to the West Coast, I would stay for a week or two, and then go back, stay for a week, and come back. But now I have a place in Charleston that I stay pretty much four to five months of the year, and then I kind of go back and forth to the West Coast, so not weekly, now, thankfully. But weekly, I am driving at least to some during the middle of the market, and then driving home on the weekend, and we're going back to the West Coast. So you said something that gave me the HBGB. You said you bought real estate with no money of your own. You were using other people's money. This is something that when I was the community manager for bigger pockets, I would encourage people not to do. How old were you when you first started buying real estate? Because I think that's really important to your story. Yeah, I was just turned 24. Okay, so back then you knew everything, and it was okay to buy real estate with other people's money. How do you convince somebody when you're 24 years old to give you money? Well, it's not giving money, right? It's a lot. It's an important distinction. I think a lot of people use other people's money, and they say they gave you money, and you spend it best, not the truth, right? As an older real estate investor now, everything is a tool in the tool belt, and one of the tools in the tool belt is using capital and leveraging capital around you to either buy an asset. So my first flip is I had a friend that knew somebody that was a lending cash at a hard money rate, you know, 10% and two points, and either I did the math and said, okay, this makes sense, and put him first position on the asset and closed on it, and then had money for the construction all built into that, like a normal bridge long that you would do at a normal lender that's in bigger pockets sphere, but it was just, you know, going direct to the source rather than having to deal with draws, and all that stuff that comes with, typically the larger soft institutional hard money lenders, like Kiabi, CB3, you know, and all those guys. Okay, so you get your first property. It's a flip. You have a hard money loan for a percentage of the purchase price. Was it was it 100% of the purchase price or purchase price plus rehab costs? Yeah, it was 100% of the first price entry have cost. I think it was 130,000. I think it was. I'll never forget it. It was like one of those military split homes where, you know, it had like two units, and they kind of split a wall. That was a center block wall. It was two bedroom one bath. I think all, and I was like 130 on it, and it took me seven months to do like the construction and everything was a thousand square feet. I did a terrible job in my first one. My dad went out there was like, what are you doing? And like, this is so bad. This contractor was screwing me over, and I didn't know what I was doing as my first one, but I fixed it all. We got it all fixed, and I was able to sell it. I think I made 80,000 dollars profit on that first one. Wow. That is like a grand slam home run for your first deal. The whole doing it all wrong thing. That's par for the course for a first deal. When you buy a deal right, that's been my biggest thing that I try to do the best of my career is buy low sell high, right? So if you're buying very low and you're buying deep disk kind of deals, you know, it allows room for mistakes. I think a lot of times people get a little bit too overzealous or aggressive when they try to push the needle. And when margins too thin, it's almost not worth it. You typically never hear of anybody going into a deal where they're going to make $10,000 and they actually make $10,000 because there's always going to be a problem. There's always going to be an overage. There's always going to be a delay. I've never done a deal where it goes right. And that's why my hair is thinning in receding. So I'm retreating and receding as they say. So let's go a step back here. You bought this deal which year? There's 2019 right before COVID was my first flip that I was doing. And what were you doing for work if anything in addition to that deal? I wasn't doing anything. I quit my job in the NFL. I moved home. I had a job working for the in the NFL for a while as a defensive tackle offensive line. But yeah, no, I sold tickets. So I sold for the dolphins, the Raiders and the Niners as I kind of progressed to the the Raiders and the Niners. I was selling more premium and CEOs. Kind of led to my reason why I left and started my company or started wholesaling and buying property. I did my first deal up in Reno. I was doing some wholesales at the time. So I was making some money there. And I figured it was time. I did I think four or five wholesals at the time within a four or five month period of time. And I was okay. Maybe I feel comfortable. Like this is a really good deal. Like let's try to flip this time rather than just wholesaling. Like I feel that I was really wanted to learn. Like I was very blessed to be able to start at the very bottom and then kind of work my way through the different levels of doing stuff. And which allowed me to still make cashflow with some of these other other things that I was doing as I scaled into kind of like the next, I guess thing that you could do within real estate. Not to say one is better than the other. They all pros and cons. So I normally like to hear a progression from one step to the next. But I don't think that's the right way to present what's happened for you in your your situation here. So I'd like to skip to kind of a headline as I understand it. I think at the general arc of how your business interests today developed. So what I understand your business to be is you own 50 million dollars in real estate. Now you don't own 50 million dollars in real estate. Your firm does. And you've raised that capital in various forms using other people's money and debt to purchase that. And so there's that piece of the business. And you get a carried interest stake in that in some degree, right? Is my correct on that first observation at a high level? Yep. The second business that you have is a property management firm which manages these assets and some additional assets as well, including in the short-term rental space. Is that right? Yeah. So the manager company predominantly on the long-term rental said only manages my assets and my company's assets on, you know, that allotment of units. On the short-term rental side, we manage another about 50 to 60 some short-term rentals on asset. And where are those units located? These all in one geography are they in disparate geography? Predominantly, they're going to be up in Reno and Tahoe area. So they're alone, I manage roughly about 40 or so short-term rentals up in the Reno and Tahoe Basin. Got it. Okay. Now, there's one more business I believe here as well, which is the management of your assets under management. That would be all encompassing underneath the management grant. It's all underneath one thing. 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Get more with Northwest registered agent at northwestregisteredagent.com/moneyfree. You have maintained some semblance of professional salesmanship of sold stuff for other companies during this journey, including starting around last year, selling for bigger pockets, right? And some of the advertising inventory we have on bigger pockets, is that correct? Yeah, yeah. I mean, the bigger pockets has been about two and a half years that I've been there in that capacity, continuing to help. But before that, I quit my job full time after I left the NFL and was just wholesaling and doing deals and scaling my portfolio. And then that actually came to come back to work for bigger pockets. And while still scaling my portfolio, and it just was a seamless fit with what I was already doing. This is an enormous position, right? We have three full-time jobs in the real estate asset management space, the property management business, and as a sales professional. How do you think about your net worth? Are you able to even estimate it at this point in time because of the interrelationship it has with the real estate equity, which is probably hard to market at this point? The real estate equity I can market often because I know values of the assets in the areas and, you know, the cap rates in the NOIs that are on those assets, you know, a plus stabilization or at the current refives that I've gone them out. So I have an idea of what my net worth is in that area, or not what there's roughly around five and a half million in equity in assets, based off of my splits across that $50 million portfolio. So, you know, because we have debt, you know, around 65% of the asset base, 60 to 66% to surround that area. I got to look at the actual RIO schedule, but my equity is roughly in that area, but although you cannot spend equities, so this is why I have had multiple different things to continue to help me propel, you know, acquiring more assets. My net worth is predominantly based off of the assets themselves. As far as like cash assets and those things, yeah, I pretty much don't every dollar I have into the management arm, the employees, the staff, the trucks, you know, the facilities to be able to control and scale my assets on a larger base of so. I think this is going to be fascinating for a lot of people because in your position, that that $5.5 million of equity of net worth, if you were to liquidate the portfolios today, you would not clear that, right? Net of fees and transaction costs for the portfolio most likely. Maybe a walk away is like three to four, yeah, but yeah. And there's a preferred return I assume for many of your investors that you must clear as well over the next couple of years. Yeah, the way we stack our assets are different. So I'm a feeless platform. So I don't charge asset management acquisitions, any of that stuff. We just charge the normal property management fees, which is why I have a 50 50 split across all my deals with my LPs. They also traditionally are getting their capital back within 12, 18 months after we stabilize the assets. So their preferred return has already been given to them. So, you know, at that point, it's just a straight 50 50 split one stabilize, which is why I got to keep on, you know, jobs like bigger pockets and, you know, obviously bigger pockets just made a lot of sense for me. But, you know, gets the place where my equity was starting to kick in and my sweat was trying to, you know, build off of that at that point. So I have one portfolio right now of roughly about $20 million with a real estate that is currently fully performing. And the other 30 is in process of some stages of renovation or stabilize, but now looking for another loan. So, you know, we're kind of cycling through that next asset group right now. So, what I love about your situation is it's like this is real. This is real real estate investing. This is like the craziness of the partnerships and how this all works. There's real money to be made here, real risk and real opportunity to make a lot more over the next couple of years with your portfolio if things go well and you're able to exit these. Now, on the property management side of the business, would you mind sharing the high level there? What is the total revenue of the property management business? Right now, I think it won't gross close to over a million this year in total gross receipts. Some of that includes, you know, supplies and stuff that's built back, right? But I would say as far as like the short-term rents aside, along with close to roughly around 30,000 a month, we're getting close to on the short-term rental business. The long-term rental business is starting to pick up because the scaling of the assets that are in construction, right? I don't charge the property management fee until the asset gets in service. So, once the asset gets in service, so right now we have like about a hundred and 80 units that are in some sort stage of construction or leasing. Once those kick in, you know, we should be roughly around similar to what we're pulling in on the short-term rental side. So, the short-term rental business has really carried, you know, my platform to be able to have my long-tail assets like my big renovations catch up for those fees to start kicking in. What is the net for this property management business? We're running your work between seven to 12,000 a month, which just depends on, you know, if I buy something extra on the asset, I'd personally take no salary from the management company and either do any of my partners. I purely use it as a way to, you know, hire more talent, bring on more employees, you know, all that stuff to continue to manage the assets. But for a long time, it was running negative. For, you know, three or four years, it was a negative loss. That's remarkable, right? I mean, this is a property management business with dozens of units there. You're saying it was negative for many years and only recently is it broken positive and it split with partners. Well, I own 90% of that, so other management business. So, we don't split any of the proceeds on that management business. We always put the proceeds at the assets themselves. I bet you have a lot of credit card points. Let's just say I fly for free as we're right out. Yeah, going massive debt and you'll fly for free. Yeah, it's great. You'll enjoy it. Well, I thought your story was so interesting is because you've got all of these things going on here. And again, like, they're big numbers. You're running real businesses. They're not huge businesses yet, but this is not a small business. On the rent side, just to give you like the scale, by the time we're done with all the assets that I currently have under management and they'll be fully operational, it'll be 300 into 20 something units and we'll be roughly around probably four, 50 a month in gross receipts on the rents. So, you know, you're talking about a five million dollar business on the rent side and you have costs and we typically run about a 35 to 40% on our operating expenses because we do have the management company that has in house management, in house maintenance, like we do everything in house. So, we're able to artificially keep my stuff low, which is why it's taking me so long to become profitable on the manager side. Like, the goal of the manager business is not to become profitable. It was just a way for me to control the manager of my assets, but I had to continue to invest considerably, which is why I've worked multiple jobs. I afford my salary as well. So, can we get a picture of the journey to get here now? We've kind of got the end state. Thank you for this. This is really, really helpful. So, give us like the overview, not every deal piece by piece. Full transparency. I don't even catch up with full transparency. I'm my first portfolio, right? I've like that first 15 to 18 million of assets. Like, we net as partners about $40,000 a quarter. I have a currently a higher split, you know, than them, partly because I just run the majority of the company, but it's not crazy. Now, we actually equally split the proceeds in an LLC. We have a holding corporation. Everything rolls up. They're all different SPVs with their own partnerships and everything rolls up into our holding corporate into our partners. We control the tax stuff and all that, but we're about $40,000 a quarter that we are netting on that. That's my original portfolio that I started with back in 2019 and started stacking my first couple assets in that one. So, you know, I roughly make about $3,000 to $4,000 a month for years of work, right? It's not very sexy at all. But, you know, the next portfolio should double that, you know, and that should be in a place where now give more global wage and make sense. But I'm happy to go into kind of like the story arc of how that worked, but that gives you kind of an idea of where we're at there. Let's do it. It's hard because you've been so long, right? I've how long ago it was when I left. But I can tell you that when I was in my early 20s, I left ASU and I was $90,000 a month student alone debt and with discover loans. My family could not financially afford for me to go to Arizona State. Probably should not have gone there. Probably should have gone like community college or something, but I decided I was hell bent on going there. And I went there and, you know, I graduated early. It was not a great scholar in high school. I think I had like a 2-4 and, you know, in college, I got, you know, 3-4 and I graduated early. A lot of that came down to because I was working multiple jobs and my mom was like, "Hey, Nicholas, like you're going to have a thousand dollar in my payment." And luckily my mom and my father could help me out enough to help me kind of, you know, pay the interest payments because that's something I didn't even know. You know, you still have interest payments recurring, but people don't even think about it. You know, they just defer it. You know, and so my parents paid. that for me to keep my principal low, but you know, graduated with roughly around 90 some thousand in student loan debt and really political science degree. Like, what am I gonna do here? Like, this is not gonna go well for me. So, like, teacher salary is not gonna work. We gotta go do something quick. So, you know, my cousin at the time was working in the NFL. I got me a job working for the dolphins with him there. He was a top seller and, you know, took a job making $13 an hour and, you know, I saw how much my cousin was making. It was kind of like one of those Wolf Wall Street scenes where it's like, you're making how much? Like, and I was like, yeah, I'll do whatever you need me to do to make, you know, $200, $300,000 a year. I don't care. I'll work all day. And so, move there was making like minimum wage, selling upper-level tickets. Did a ton of poll calls and learning how to sell and how to, you know, edge value. And at the time, I didn't really understand a lot of the stuff that I was doing. I was just kind of brand new out of college and just kind of thrown into a sales role, right? Like, I really understand all that. I really just, that's all I did. I worked all day in the selling upper-level tickets and the Raiders were moving their team to Vegas. And I got a call from Mike Calvey, who is an old VP employee. He was my cousin's boss. My cousin was the number one seller on the NFL at the time. And so he was like, you know, Nick's willing to leave. I know my cousin, Nick's cousin's not going to leave. So he called me, said, would you like to come back to Vegas? And I said, well, as in Nevada, and yeah, I would love that. That would be awesome. I could come back to my home state, open up the new stadium. And so I moved there and, you know, instantly, you know, I got a pay raise and it was a, it was a good time. And I learned how to sell more premium products. I was selling to, you know, the wins and the different groups that were out there that were buying the large boxes. And I sold $36 million in 18 months. I was the number one seller in the NFL at the time. I sold over 3,000 PSLs and kind of took that job where I basically was able to pay up my student loans relatively quickly, went from making no money to decent money, you know, in my early 20s. And around that time, I sort of get in the feeling in my heart that there was just, my dad was a mechanic at how to zone shop my entire life, you know, blue collar worked in, you know, his own shop as a general mechanic. One of the things that I always really liked about work on my dad was that he could see a vehicle, a hero vehicle know exactly what was wrong with it and kind of say, okay, well, that's doing this. That means that's wrong. And so if you said anything to me when it came to business because I was like, you know, I felt like I was just the wheel in the business. You know, I didn't really get to understand everything else is going on. I was just told the cell and that was my job and that was fine. But I just kind of felt a little bit lost, you know, I started getting low like, I was in my early 20s making good money and I just decided like, hey, you know, why don't I take another job for more money? It'll probably make me happy. And I did that move to San Francisco and I knew the first day I walked in there, I made a mistake. We could too later, I was, my cousin flew back out to see me in San Francisco from Miami and I'll never forget it. We were talking about whole-sounding and Maxwell Maxwell was the big thing at the time, you know, that Facebook guy, the wholesaler. And my aunt was wholesaling in Houston. My 60-year-old aunt was doing Houston wholesaling and making good money for 100 grand. I was like, okay, well, if you could do this, I mean, I should be able to do this. And so I got a prop stream account at the time and I was playing on in San Francisco when I was living there and you know, I went down for San Diego for the July of 2019 and my cousin, I was sitting there in Coronado Island. I said, you know, I'm just going to quit my job. Like, I just think I can do this. Like, why can't I do this? These people that have no sales frame can do this. Like, there's no reason why, first like me, that has a bunch of sales frame can't find a way to get somebody to sell me their house or whatever, right? Knowing nothing about real estate. So when back to the office, that next Monday, quit my job, packed up my little Z3 BMW and drove back up to the mountains and grabbed my computer and got a CRM in a list and started call calling and shooting text messages. - What year was that? - It was 2019. - 2019, okay. - Yeah, I kind of made that transition and then you know, started doing wholesaling and understanding about list stacking and like, you know, buy the stuff from Propstream or go down the city, get the code violations. You know, we'll do all that stuff. The water shutoffs, like I found how to do all that stuff and then I'd go to IDI, which I think is a red velvet company or was, you know, I'd go to them and buy the data direct from them rather than getting it from these other places because I felt that sometimes that data wasn't the best. So I wish went to direct to those guys that developed a relationship with them and I was stocking a bunch of lists and, you know, I got my first house within like a week or so. I think it was a mobile home. I did a wholesale for about $27,000. And at that point, I knew I was hooked, I was okay. Well, if I can do this, then, you know, I got a assignment contract to wedge wood at the time, which if you're familiar with them, they're a large institutional buyer. At that point, I just started, you know, really working with a lot of other flippers in the area doing deals and I was selling to these guys and whole science to them and they were getting their loans from Civic at the time before Civic Solve to now became a new CD3 and all that stuff. But, and their banker called me and said, "Hey, Nick, you know, are you interested in finding deals in Las Vegas?" I said, "Well, sure, why not?" And so I got the phone and started talking. His name is Dave. He's like, "Well, my other partner, Dave is, you know, is I'm the banker and your other partner doesn't know his construction. Would you be interested in doing deals with us?" And I said, "Sure, I flew down there in November. I think it was like a Thursday. I took a flight and just flew down to Vegas from Reno." I met these guys at a coffee shop and those guys are still today my principal partner seven years later. So that's how that started my relationship with them and then around March of 2020, we part-former and they did our partnership during heightened COVID started. And we started together because they had the background of how to flip the properties and the construction and the other one. And I did my first flip. That was when I really screwed up. I did my first flip and I didn't really know what I was doing. They were kind of helping me through it while I was transitioning to becoming their partner. And the other one knew lending and kind of like the financial markets and how to stack capital stacks and like how to create these structures for us to raise capital. And started in March of 2020 COVID shut down everything and we started just aggregating data and I was just working on my computer a bunch and trying to get all the data into one place to start shooting off marketing and we just hit it right. I started doing marketing during that time period when everyone was freaking out. Bought a bunch of property at a very low point and we started just flipping a bunch of those at that point we were doing probably about 30 wholesalers and flips a year probably about half and half for the next probably couple of years. And then that kind of turned into us having an office where I had a bunch of employees doing co-calls and a lot of stuff in an office as an acquisition team. And then the market started to turn and you know financially I was a little bit overstrapped on payroll and these other things and people weren't buying wholesales anymore and the market got really challenging. So that was the first time that I had to let go my whole entire staff down size and you know removed myself from the office and around that time you know financially we were still buying the good ones. You know we were so on the ones we didn't really want we bought the ones and we were doing burrs, right? You know we were buying them, renovating them and then flipping them into our portfolio. Top money got tight and I just decided well we need to kind of finish these assets so the first bulk assets. So I shifted my virtual staff that was at the time doing all acquisition to doing asset management and having them do the rent collection and all that stuff. And I went back up to Reno, flew back up to Reno and started swinging hammers for a year and a half. I started working on job sites with my guys to finish the jobs with my partners and I and while trying to still look for other deals at the time we own some property in South Carolina but South Carolina was still kind of like, "Hey let's just finish this stuff over here and get this stabilized." And then we'll start our focus back at our other assets that we owned at that time in that market. Got those done. It was a painful year and a half. I was on a lot of job sites doing stuff and then right around one of my Calvy called me to come work for bigger pockets at that time in November. At that point, we were looking for the markets. We already kind of invested in the South and the way we started doing that as we were looking at other areas that had similar sense of data of Reno, Nevada, where I'm from. There was a big gentrification and change that happened in Reno somewhere in Denver. And so how can we find markets that are like that but 15 years too soon? Where 10 years too soon, how can we get in now where the rents are relatively low and can be increased and the opportunities still high? I mean, we really landed on South Carolina and it's been just a really good gold mine for us since then. And so fast forward, two and a half, maybe three years from then we have bought another probably 300 and something apart into the 10 buildings. We're nine buildings or so and scaled out that whole operation out here with onsite team members which still the back end office that I built from the original. We have our ten full time then as well on staff that handles the rent collection, the evictions, the reporting to government municipalities as we do have some PVV contracts, in section eight contracts, all the way to the short-term mental team that does all the back end stuff there and coordinate took my two on in the US maintenance men that do go around in our vans and our trucks to handle any of the work orders or calls, have had a finance now, have a director of community and a head of construction that are all US-based plus my two principal partners. So that's kind of the short abbreviated version of how we went from wholesaling to this, it's been a guide rule step up. It took me many, many years to get to that place where we started to acquire a lot of assets quickly. In the last 18 months, we've required seven or eight buildings. So it's really trying to speed up but it took me five years of really trying to figure out how to do asset management and how to do it virtually with the staff overseas so we can really have a lot of scalability. - You know, just to summarize what I'm hearing is we've had a wild ride over the course of your career in terms of sales gigs, putting it all on black and a new profession and wholesaling. We've had huge wins, we've had huge losses that have wiped out certain ports of your position or resulted in you having to shut down companies or lay off people and where we're at right now is 50 million in South Carolina, primarily real estate holdings in your company. You have a sprawling team with some onsite in some international to manage the assets and you are physically onsite for five days a week, most weeks of the year to manage these assets and get them performing at this point. Is that right? - Yeah, you had the nail on the head, yeah. - So what's next? What's the end goal for all this? - I feel like I want a gold medal just in the mail, right? Now I want to see it through. You know, we finally got over that hump from the real estate investing standpoint where the hardest thing is scale, right? I think because scale can be. be dangerous in a lot of ways if you don't do it correctly. We've seen that happen with a lot of different operators that are out there, but it can also be very helpful when you have the economies of other assets that can help kind of reduce your time in that day and day out work. So I want to continue to grow the organization. It's more about how do we build a company that can withstand the time and continue to grow a learning organization that will grow and buy more assets. And I think the greatest thing that I can do from my business now is be as little as involved as possible from a data de-operation wave. I can continue to step back, train good people, hire good people, and have good processes right. I can build a very awesome platform that can scale continuously, right? And so for me now, that's the goal is how do we continue to add on more assets, you know, train and hire rate people that want to be here while also, you know, protecting the bottom line assets that we have and not overleveraging because, you know, we want to get aggressive, you know, so that's kind of like the next thing for me is the continuation of what I've been doing for seven years. The goal when I started with my partners seven years ago or six years ago in March of 2020 was to buy large multi-family. Maybe I'm not at 300 unit type buildings that we're buying in, but I still feel like we're buying medium to large size multi-family for the most investors. And you know, now we're here. And so the goal now is how do we not, you know, screw that up and continue to provide good results for our investors and our partners and, you know, build a platform that can withstand the time because ultimately, like, I have long range debt on all these assets, 30-year notes that are, you know, hard financing. So I have good, good debt. And like we got to make sure we, you know, manage those assets correctly for the next, you know, five, 10 years. So the phone is just beginning, you know, it's just for me. I finally have gotten to a place where I can sleep at night knowing that we're going to be okay. You know, it was a lot of weeks, a lot of years of like working two jobs, you know, to make it work. It was painful. It was very hard. I am fascinated to have you on the show here today because I think that what you're doing is not what people who listen to bigger pockets money want. On the bigger pockets real estate podcast, I think there's a lot of folks that are pursuing various versions of what you're doing, but at bigger pockets money, I think it's like, whoa, that sounds terrible. I think, I think a lot of people are listening and seeing. And it sounds to me very stressful. It sounds like there's huge operations right now that are not yet hanging off in a way that is commensurate to the scale of the property management business. And everything is very illiquid. At this point in time, there's a huge potential payoff, but there's no doubt in my mind you went through a real hell to get to this point here in 2026. And hopefully the next few years bring the returns and the rent growth and those types of things that, you know, the market should bear with with lower supply coming online the next few years. And that should kick in and stabilize things. But I can only imagine this has been a brutal period in your life here from a work-life balance perspective. Is that is that fair? I mean, brutal and I just, you know, a lot of times I would think it's something wrong with me. Why would I want to do this? These things that worked multiple jobs. But I think a lot of people that you look at that want to create something. For me, it was never about the money. If I wanted to make a lot of money, I could have just stayed in my job and probably could have made good money doing that state in the NFL and did those things. For me, it was about berating something that I was my that I created, right? And so this has just been an evolution of my creation and my partner's creation and guidance. And my partners had put a huge impact on allowing me to stay tough and stay kind of, you know, solidified and crystallized with the vision, right? And to make it through. You know, real estate is a get rich slow game. You know, it takes time. It's an investment that you cannot cheat because they will come get you with debt or however you want to, right? It just takes time. It's a slow asset. So it's been extremely challenging. But I look back on even the small amount of money I might be making on a monthly basis, you know, often my current assets that I have. When you look at that, you know, it took me three years to build something that I now have, you know, a recurring income source that is very, very, you know, this has been happening for a couple of years now of the income that's coming my way. The biggest reason why I probably taking more pain on than I could have, you know, probably than I needed to was because I was trying I'm trying to scale, right? Like I did not really try to go to grow even more, you know, then maybe need to buy that extra truck or that extra van to get the maintenance guy going, you know, you may not have needed to buy that new computer or get the new guys hired or a new person. That was going to help us get to that bandwidth. But so yeah, I would agree. I think for the average user that is looking to diversify and do those things, this is the extreme case of that, you know, I would say so. Nick, it seems like this has been a real struggle. And again, it seems like you're handling it admirably in the sense that you're on site in the maintenance room right now as part of your weekly routine here to make this work. And there is real promise that that that things could work out and the business could could drive significant equity growth over the next few years and their skill can come in the future. We've heard a lot about syndicators in general being in really pick a big pickle in today's environment. And many of them have raised 10, 20, you know, 20 times as much as you have in terms of assets and our management, right? And equity raises your situation, what I think is interesting is it seems like your physical presence on site and the ability to make baited data decisions is likely going to be enough. It seems like you think to see this through and get to a good reasonably good outcome in your portfolio. But if the scale was 20 times as large, would it have been impossible? Would it have wrecked the business to some degree? Yeah, I mean, this is why we've grown very methodically. I could have gone a lot faster a lot sooner. You know, the capital's not been a problem for me to raise. We have plenty of money that's there for us to go buy a lot more assets. I think the hardest thing to do as an operator, at least for me, is to balance the scale with the velocity of, you know, the velocity of scale, but wanting to buy more deals and being aggressive because I want that because I want to speed up the process, but also understanding that, you know, I need a good foundation to build off. I think a lot of syndicators that do it and they go zero to, you know, 5,000 units relatively quickly or 1,000 units relatively quickly have not learned the lessons on how to truly operate the assets that are out there, right? They're not as present on the properties. They're not really truly operators. They don't know what to do. What happens when something goes wrong because they hire property manager. They hire construction manager. They're not there. They're not present. And I think this is part of the reasons why I've tried to take my time and be involved in a lot of these things and scale out correctly is just because I want to be here for the next 30 years. And my assets, you know, that I have stabilized have shown that, you know, when you're buying assets for 30 to 40,000 dollars a door and putting 20 to 30 into them and then they'll revalue that 120 to 150 in a door. You have massive equity gain that does not happen if you're not here, right? Like you have to be here and present to make it happen. And I think that's what's happening with a lot of these syndicators. They raise money when it's very easy to do and very cheap and they relied on the model where, you know, they hire a property manager and they're just not there. And that I think that's what's happened with a lot of these groups. And so it might advice to people that are investing. You really got to take a time to look at does the story make sense for the operator you're working with? Have you seen a gradual build up from where they are up before? And what's happened when things have gone wrong? Because that's the operator you need is because it's always going to go wrong. The deal is always in and not go right at some point. There's going to be a problem. If you don't have an operator who really understands how to fix it or how to make it right, that's where one of these deals are going bad. And then a lot of them also bought on pontificated rents. You know, I buy work class housing that is based off of the section 8 and FMOR from the federal government. A lot of my units and kind of that that base rent I'm not competing against an A class or B class asset that there's a hundred thousand of them out there right now because everybody's trying to get them. You're trying to run their out there units that are a class asset. So it's a different model. So I think that that's the biggest thing I would look at, you know, as a user and as a listener and it's like, if you are going to look at an operator, you make sure you really take the time to get to know that person. And sometimes it may be better working with someone who's smaller who has, you know, more of a slower growth than it is a large operation. There's great large operations that are out there, but they also have different incentives, especially fee-based incentives. So I have a question for you. You are buying these larger buildings and there was a rate increase recently, well, not recently anymore, it was like in 2022 that has caused a lot of operators to falter. How have you fared with the rate increase and do you have any properties that you're in danger of losing or having to give back to the bank or sell it a really low rate just to get out from under those? Yeah, luckily, I'm happy to share my audio, but I'm not in that situation. So I got fixed rate debt and a lot of my stuff back when I was doing it during COVID, you know, that time period, I didn't have floating rate debt or debt that I only had a five-year, you know, balloon on it. So I was able to kind of avoid a lot of those issues and a lot of the assets that I bought in the last 18 months, you know, are predicated on rates that are current rates that are now. So it hasn't really affected me, but majority of the operators that are in that position, it's tough to see. A lot of that stuff is typically in at a class market and it's in stuff that, you know, they were pontificating on rent growth rather than rent concessions and it's challenging at least a lot of units. And so in the world class housing in the space, like we have more people reaching out than we have units available, you know, we can do a whole turn of an asset of 30 to 90 units in 12 months, plus Lisa, you know, out of new rent that has a completely new value as we've completely renovated the units because we're taking a old housing stock that is dead, bringing in new LVP, new flooring, new cabinets, new windows, new HVACs, and then we're going out of renting that same unit that would have maybe been $600 in a one-bedroom to 900. So your theoretical jump is a lot less. And that's currently where the market is at right now on a lot of these things through Section 8 and other platforms. So they're truly affordable, which we also can, you know, use different tax strategies to be able to remove our taxes in South Carolina and other states as we're offering truly affordable assets. So how did you get fixed rate debt? So fixed rate debt, you can go through agencies, Freddie Fanny, HUD, it just depends on, you know, what kind of vehicle you're looking for. What's the term on these? So the term with agencies, so like Freddie Fanny, you're typically looking at like a five year balloon on those ones. But if you go to HUD, you could have a 35 year AM or a 30 year AM with, you know, the whole time fixed at that 5.75 or 6% rate. You do have a 10 year prepaid penalty. But if you're holding long, it doesn't matter, you know, because I've already gotten my value out as I'm buying low, refying at a normal, you know, now a new value rate at 65 to 70% and I have a fixed rate debt for the next 30 years essentially. If I'm going to HUD. Yeah, Simindy, that's what you're asking here is, is you think that a fixed rate below means a mortgage, right? 30 year fixed rate, low interest rate mortgage that you'd buy used to buy a house. That's not the product Nick is using here. He's using an agency loan, no government agency loan, but it's got a five year balloon on it. So with the agencies, it's a five year, but if you go HUD, which I do have multiple HUD loans, it's a 30 year fixed rate wall with no balloon no balloon. Okay, that was my question is how did you get that you went HUD? How do you get a HUD loan? These are five or more units, right? It depends on the originator, but I believe the majority of the HUD loans and agency loans, they have minimums on dollar amount. Typically, you know, they're going to want stuff that's over two three million dollars on a loan amount. Typically, that's kind of like the smallest for their small balance programs. But yeah, HUD has plenty of options. They're non-recourse loans as well. They're fully assumable if you wanted to sell them to somebody else. And those rates are anywhere between 5.75 to 6.5%, just depends on when you lock right. And that's current rates that are right now. Those are on units that are five or more units, right? These aren't four and under that qualify four. And a normal fixed rate loan on like a normal one to four, you could get probably similar rates at a local bank. It just depends on your credit and the asset itself and all that stuff. Yeah, so what I understand and I am not in the space at all, I was very fortunate to lose money in syndications before everybody else did. And I got out of almost every syndication that I was in before all of these rate changes hit. But there's a lot of syndicators, former syndicators, or syndicators who are trying desperately not to, that are losing their properties. Their properties are either being going back to the bank, deed in lieu of foreclosure, and now the bank owns them. Or they are having to sell at a deep discount. And I'm just wondering how you were able to get fixed rate loans when they weren't? Yeah, a lot of times when they go into an acquisition, I'll make it very simple is that sometimes the acquisition loans that they go into, they're either using some kind of what's called bridge to perm. So they're using a short-term loan that could be two to four years. Their pro-former, their numbers were based on them getting a higher rent amount to then get this new value to then get a new loan. Or they had fixed rate debt, or maybe a perm debt that was not fixed rate, excuse me. And it was either a floating floor. So they have a floating rate loan, or interest only loan, that's floating based off of the sofa, and it can go up and down. So that's the problem is that a lot of these syndicators, my opinion, and Scott, a lot of them as well, is like, I believe a lot of them had a constant rent increase on these assets, and that there was going to be constant demands. And when that demand shrinks, they're going to have to get more concessions and get more aggressive, which means their NOI is going to be worse, which means their end value is worse, because it doesn't cash flow anymore, which is why a lot of these users are getting their stuff back. The difference is when I'm buying an asset, I'm buying an asset, it is severely discount rate anyway. I'm coming in and I'm buying it, you know, it's underperforming. It's not good. And we're buying it on a fixed bridge loan for 18 to 24 months. And once I stabilize, and I've done the renovation, and now then Lisa, I'm going back out and I'm getting a fixed rate loan at that time. I think a fixed rate, 30-year mortgage, plus due to taking the call on site from the slightly below ground hot as hell room, that whatever that looks like here, on site, mood to only operations, is really the tell here, right? I think if we were having the same call with somebody who bought properties around the same time as you, and they're in their air conditioned office on the eighth floor of not the building that they bought, and especially if it's not in the same city as the buildings they bought in, I think you just write it down to zero as an LP in a lot of cases. Like I'm out, like that's a terrible sign for me, and I think that that's got a really wrinkle. You're you pretty badly at these guys, some of these guys make a way more money than you personally, and that is going to be a disaster. Sure, but the reality of this is the reason why that is meaning the reason why this guy is because they make fees, they don't care what they buy, they don't care, they have no vested interests, a lot of them. They take their 1% fee on the acquisition, they buy a 5 million dollar building, they just make 50 grand, they asset manage it, so now they get another 2 to 3% a year on the asset management of the overall value of the rent. So like the structure that they have is vastly different than the structure I have. I have a higher equity split, I have no fees, so I have a huge upside to see that the asset makes money. I'm also personally guaranteeing on the loans. So like the structure is vastly different, you know, then a lot of these syndicators who are raising capital more great capital razors, but they're not truly operators. They work truly into the game long term. They were truly in my opinion wanting to make fees. You know, it's like a lot of these groups, they can say they were making no money on the rents, but they are also making money on the fees every single month. You know, so that's why they're making a bunch of money and they're driving a nice car while I'm sitting here in a 100 degree weather in the swamp trying to make the asset make money because I make money and then which is why for me from a capital standpoint, it's been very easy to race capital because my OPs know that if they don't make money, I don't make money. Like I'm very aligned with them. I have every reason to want to make sure the asset makes money, which is why I spend my time out here. I think the biggest thing is that my platform is built for the next 30 years, a lot of these syndicators are built on raising as much capital as possible, you know, and executing it on assets because that's where they make their money. 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Instead of going out and building a real estate empire, I worked my job at bigger pockets and grew through the ranks there. Today, I own 19 units, six of which are paid down. The remaining 13 of which have low interest leverage on there. Do you ever think, should I have taken that path instead of the scaling with tons of partnerships path here? Or how do you think about those dynamics? There's the Chad Carson school, which I'm fully in, in Chad Carson, small and mighty. Then there's the big boys game that you're playing here with lots of real estate partnerships and all that. What do you think? To answer your question and to the listeners, there's no wrong answer. It's all depending on what you want to do. You can build what I did on that smart. I'm not that I'm just hard working. I think that's about it. I show up every day and I do what I got to do to make it work. I think that you can have a big platform. In some day, my game will come and it will be there. Like I said, my one, my gold medal, it's just in the mail, and I just got to see it through. But I don't think there's a wrong or right answer. I think for me, I could sit here and look at a rear view mirror, but that game isn't here in real estate. You got to continue and like anything and investing, you could have put more money in Bitcoin and made $100 million. Sure, of course. I know you don't have a fan of Bitcoin, but I mean, for everybody, it's a different route. You can do it however you want to do it as long as you stay consistent. And I think that's the biggest thing out of all these things is if you stay consistent and methodical with it, and the doors will open for you to do it. There's times I definitely didn't think I was going to get here, but I did, and we've gotten here. There's been definitely days where I'm like, I wish I were not a tenant, or why did I create this monster? But at the same time, you know, looking at all the assets and kind of they're all making money, it's a good feeling to do that, not just for myself and my partners, as well as my stamp that I could create something. I think my reasons were very different than just wanting to go make a lot of money. You know, for me, it was more about how do I create something? And that has a savings essentially for me, a reverse savings account in a way where I can really go put a lot of sweat equity into something and get that higher value at the end, you know, or, you know, while the assets you're performing. So when you're done with the phase of rehab here, and I think as you go to the swamp, or whatever, you know, what do you want your Tuesday to look like in five, 10 years? I think it's like I said, a continuation of what I'm doing now. It would be a different swamp, a different deal, a different, you know, more people on the team, hopefully, like I said, I think for me, it's about it took a village to get here, and I want to continue to cultivate the village with the team and that I have and give my other younger team members opportunities to not feel the pain that I had to go to acquire the assets that I did. You know, I think that's the goal for me is that, you know, as my partners will continue to, you know, step out over the next probably five to 10 years, like how do I ring up the next group of guys or next group of entrepreneurs that want to be a part of it with me? Because I don't want to do it alone. I have no interest to go walk that path alone. I didn't have to do it the first time, and I wouldn't want to do it again, you know, that's not for me. It's more about the team and building the staff and the employees, less about doing an individual deal. I think, you know, I love sales because you get to make things that have quick decisions, right? You get to have some byproduct from that. You get to make a commission or whatever it is. You get your outcome quick. This has been my longest and greatest sale of my life is creating my company and my team because it's a constant thing that I've had to, you know, go back to. So the word you used over and over again, when I asked you what you want is built. You never used freedom. You never used just retiring on the beach, you know, or whatever with that, you said built. You said it over and over and over and over again. And that's what people don't get is that there's a lot of people out there that are awesome, like Nick, that are trying to build big businesses. And the pursuit of that is the interesting thing here. I think that that's hard for a lot of bigger pockets money listeners because they don't register that a lot, not not everyone, but but a good portion of the audience. They just want this concept of enough and then kind of to do whatever, you know, that we want with the rest of the day here. And that's not how it works for a lot of people like yourself that want to build and make something huge, a big theirs. And those are all ways you've described it. And I think that's that's really fascinating. And I'm excited to see what you do end up building over the next five, 10, 15, 20 years, Nick. So thank you for sharing this with us. Yeah. Appreciate the time. And yeah, I would say for the listeners, like there's no wrong path. Everybody takes their own way. And just because you're not building a big platform doesn't mean you're doing not building something that's big in your own life. So big doors swing on little hinges and little actions make big things happen. So that's all my story is all about. It's taking the little thing every day. You are getting a crazy education in real estate. And I hope that your gold medal arrives in the mail soon here and in the late to much longer here. I'll be waiting for it with the fire on. I'm sure once I get it, I'll change the goal as I have done many times. Awesome. Well, where can people find out more about you, Nick? LinkedIn is the best place. You know, I'm an anti social media guy. I have no social media as I stay here in the swamp in the weeds. So if you wanted to connect with me, LinkedIn, bigger pockets as well, you can find me. But that's the best place to find me. And I'm happy to connect. And if there's anything I can do for anyone else in their story or questions, I'm an open book. I'm reachable. Awesome. One last question before we go. What is on the docket? What happened today or what's happening tomorrow? Like what's the current to-do list for Nick? Today, you know, it's a combination of all days. It was a bunch of different meetings. Most of my days now consist of doing meetings and organizing the staff, right? And just understanding and having problem solve. So today that's what I dealt with a lot of today, as well as looking at a couple new acquisitions we're looking at. And then tomorrow is just a continuation of the same. You know, go back and get one percent better and continue to execute and deliver for myself and my partners in the team. So well, congratulations on what you've built so far, Nick. Thank you for sharing the story here. Thanks for sharing where people can find out more about you and best of luck in the next couple of years as the things start to take off. Thank you for your time. And we'll talk to you soon. Appreciate it. Yeah. Thanks for the time. All right. Scott, that was Nick Morales. And that was an interesting recount of his real estate journey. You don't normally hear people be so honest about the downside of real estate. What did you think of his show? I think that that three to five million dollar net worth net of liquidation value on that portfolio came with a pretty high cost. Yeah. I don't know that I would have quit the NFL if I had known this was the other alternative. I think it's a real struggle. And I think that he's gone through the hardest parts of real estate investing that I can imagine, right? With the whole sailing business, I got no trouble believing that when transaction volume, like everyone talks about interest rates, making things started to buy, what happened was transaction volume just cratered. So if you were in the lending business from 2021 to 2023, you saw the market evaporate 70% on you. If you were in the real estate agent brokerage, you saw transaction volume get cut in half, right? Because the lending was hit with worse because there was no new loans for new purchases, and nobody's refinancing the 3% interest rate mortgage they had in prior years. So you lose refinancing and new origination volume in the lending environment. On the agent side, you lose the transactions, wholesalers, basically agents, you know, they perform a similar service to agents in transacting properties, although they do without license, in many cases. And that's a very challenging environment. So I don't know what we'll believe in that. That business was hard there. I don't know if trouble believing that flips and wholesales were very, very profit in the months and years leading up to that turning point as well. So what a brutal gauntlet Nick has gone through in this story to get to the point where he's at now. That three to five million bucks, he's probably got several more years in the swamp in South Carolina before he can actually realize that and reap the benefits if it comes. So there's good odds, but that's not guaranteed. So that's a real price to pay. And I think the story of this is if this is real, this is I think more real an example of what it takes to get to five million dollars by 30 in real estate than maybe other instances that counted equity in the build up to 2021. Yeah, I agree, Scott. I appreciate him sharing exactly what he's going through because there are so many people who just share the highs of what their story is and they don't share the lows. He showed us the bunk bed that he's sleeping in. He showed us, I mean, you could see the fan going. I believe there was no air conditioning in that unit. Well, if there's no air conditioning, then he had already previously sweat out all the preparation. I 100 degrees. I don't know how he would have had this five, you know, there's a five o'clockish local time. So maybe it's a little cooler at that point. But yeah, that's a tough day. That's a tough day every day, four or five days a week, two thousand miles away from home. That is a tough day. He's slogging through it. I do hope that he sees the light at the end of the tunnel. The gold medal. The gold medal is in the mail. It's just come in real slow. Well, best of luck to you, Nick. And we really appreciate him coming on and sharing this. We'd love your thoughts on the YouTube channel about about this path. And I think this is what entrepreneurship in the world of real estate investing looks like, right? There's the passive-ish end, the more passive end, less active end of real estate investing. And then there's the more active building a business realm. And we clearly went on the far side of that spectrum here today. The very active end of real estate investing. All right, Scott, should we get out of here? Let's do it. Well, before we go, we have to remind our listeners that we have a new website, biggerpocketsmoney.com, where we have all sorts of resources for our audience. How much do we charge for this website, Scott? It's free only. Free only information at biggerpocketsmoney.com/resources. You can find templates and calculators, all sorts of things to help you on your journey to financial independence. So we're done talking, but you don't have to stop learning. You can hop on over to bigger pockets money and find all sorts of awesome things, including a link to sign up for our newsletter. You can sign up at biggerpocketsmoney.com/newsletter. I send that out once a week, a couple of blog posts and information about what's going on in the five world. The best way to support bigger pockets money, because we do make money here at biggerpocketsmoney, is to use one of our fee-only partners and the advice-only or comprehensive financial planning space on the website. You can find those at biggerpocketsmoney.com/fipro. We certainly do make money if you use our partners and find them through our website. So if that ever comes up, and it's time for the professional help with your portfolio and financial planning or taxes or unit community to join, that's a great way to support bigger pockets money if you found the show helpful. Alright, that wraps up this episode of the bigger pockets money podcast. He has got trench. I am Mindy Jensen, and we're going to hit the road, Firebelly Toad. When the change in season hits, some people suddenly just want to declutter the garage, clean out the closets, and get everything all organized, and that's great. If that's you, or if it's not you, either way, let Monarch do the financial spring cleaning this year for you. Another feature I love about Monarch is the weekly AI recap. It catches spending spikes before they become problems and flags big net worth shifts are upcoming expenses. It's like having a quick personal check-in every week, so nothing sneaks up on me. 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