Podcast

Episode #190 – Transitioning From Corporate To Entrepreneurship with Mike Deaton Part 2

Within your first few years of real estate investing, any good investor makes way more than they ever had in their life.

And a negative aspect of more income is Uncle Sam demands a much larger payday for your hard work. Today’s guest, real estate investor, Mike Deaton, found this out the hard way.

But instead of submitting to Uncle Sam’s foot, Mike found some creative commercial real estate industries to maximize his income and minimize his taxes.

In this episode, Mike reveals how to use commercial real estate investing to lower your tax bill (even if you have no experience in commercial real estate).

Listen now.

Show highlights include: 

  • 3 of the best commercial real estate industries for dramatically cutting Uncle Sam’s bill ([2:23])
  • Why Texas is the best state to grow a multifamily extension to your investing business (even if you don’t live there) ([4:56])
  • The “Hopes and Aspirations” copywriting trick which makes every investment more attractive to buyers ([7:49])
  • 2 profitable reasons why “wasting” thousands of dollars on coaching fast tracks your growth ([10:11])
  • How to crush your stock market returns—while also lowering your taxes ([13:23])

Want help diving into the world of land and multifamily investing? Check out Mike’s website at: https://deatonequitypartners.com/freedom.

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Read Full Transcript

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now your host, Dan Barrett.

(00:41): Hey guys, welcome back. You're listening to the second part of last week's episode. Let's jump back in. I wanna talk about D and equity partners. So bring us up to speed on like what you guys are doing in the context of the company today. Like, what's your business model? Who do you serve? Walk us through, um, d and equity partners. Sure. Yeah. So we started D and Equity Partners a couple years ago, as I mentioned, really just to diversify into the commercial space. And it was again, out of, so we really started making a lot of money with land and the first year that we had a lot of success. Well, that next year we also had a really huge tax bill, and I was like, I am not gonna pay this amount of tax this year after year. So really started diving into what can we do? And another Robert Kiyosaki connection, uh, a guy named Tom Wheelwright is his CPA and does a lot of his work. Well, he's written some books and, and, um, you know, one of his is on, um, tax and wealth planning and, and strategies, and he gets into the benefits of multiple areas. But the one that resonated for me was commercial real estate.

(01:54): Um, you know, his thing is, the government uses incentives and taxes to shape social policy, right? So they incentivize businesses right? Start, they need people to be employed. So they want you to open businesses, so they'll give tax advantages to people that start businesses. Well, same thing for commercial real estate. We all need housing. We need affordable quality housing. And so they've created a basket of incentives for people to go out and chase that and, and help provide for the country things that are needed. And so, you know, commercial real estate being one of those, we started looking at the different areas. So there's obviously retail space where you have, uh, businesses that lease space to, to run brick and mortar businesses. Uh, there's self storage units and multifamily. Were broadly the ones that we at least initially looked at. And, you know, multifamily resonated the most with us.

(02:46): And so we just started getting into, we did about six months of research in terms of different ways to make it work. Our going in position was, we'll buy a rent house, we'll rent it, we'll buy a duplex, we'll, we'll rent that. Um, and the more research we did, you know, the more people that were bypassing those smaller entry points and getting into a hundred plus unit apartment homes in a syndication model, which is basically just pooling together a group of investors, right? If you need a million dollars as a down payment, a lot of people don't have a million dollars, but if you put 10 people with a hundred thousand or 20 people with 50, then you can get that you all share in the profits. And so that's, that's largely what Deep Equity Partners was started for. And so we do a combination of personal investing.

(03:34): So we invest through the company in our own deals as a way of generating passive income. It's very easy, right? We find the deals we like, we invest some money and we get a little bit of cash flow year after year, and then a bigger cash payout, uh, either at a refinance or a sale or things like that. But we also have time on our hands and an interest in the industry. And so we are also more on the active side. So we're out there finding deals, talking with brokers, uh, underwriting properties, and gathering the equity needed to do that. And so we do a little bit of both. We, through deepen equity partners generate a lot of investor interest. And it's typically, you know, not uncommon or not what you would, you know, believe to be uncommon people like us, right? It's people that wanna generate some cash flow, they want some tax advantages.

(04:24): Maybe they're interested in starting their own business. Maybe they're interested just in getting some, some cash flows to enable a little more lifestyle freedom. Um, something like that. But we, you know, you attract the people that you attract your tribe, right? So it's very much, uh, a lot of investors that are, um, similar to us. But that's kind of what we do with that. We've, we've, um, we've invested over the last two years in, uh, uh, 1,200 units, I would say. So that's across around eight properties. They're generally a hundred to 200 units. We like the Texas markets a lot. I mean, I'm from Texas. Uh, it's a high growth state. It's very landlord friendly. A lot of the macro factors are, are lining up to keep it very strong. So we have properties in Dallas Fort Worth area and, um, uh, in some other areas of Texas, but we also are in some deals in, in other states.

(05:17): Um, and so yeah, we, we very much have centered the company around trying to help other people generate lifestyle freedom. Uh, and so we do a little bit of education. We're, we're looking to ramp up more of that just to help teach people about the different ways within multifamily, but also outside of multifamily, to put your money to work and allow you to take back more of your time rather than, you know, feel like you have to be punching the clock, uh, or you're not making money. And so it's just, it's been such a liberating avenue for us that, uh, we love giving it back. And, um, it's, it's kind of one of the cornerstones of that business. Uh, one of the reasons we love multifamily as well is it puts capital back into communities, right? So we'll buy an older, uh, apartment building, and with the equity that we raise in order, in addition to the down payment, there's usually some equity to, to renovate and improve the lifestyle of the community. It also increases the value of the property, which, so it's kind of a win-win. But that's, you know, other outside of self storage, um, or other things we just, multifamily felt a little more, uh, another way to give back. Yeah. Put our money to use. So that's kind of what we do with deep equity partners. And, um, yeah, we're, we've been growing it nicely over the last couple years. And

(06:43): Yeah, I will say, I think, so for people listening to this, right? First of all, if you're an investor, you're an all industries interested in syndication, or you're an investor and you are just curious about, you know, maybe working with Mike or whatever, you just wanna see, I, I really suggest you go check out the website, right? So it's deaton equity partners.com. We mentioned that also you can go to slash freedom there to get a whole bunch of stuff. But one of the things I love about your sort of company and your brand, right? I think you guys do a really incredible job of spelling out the benefit to the investor that you are trying to work with, right? Like, there are a lot of investors who try to attract other investors into, you know, a fund or whatever, right? This is a common thing.

(07:30): Even, even, even people are just looking to build a buyer's list or something like that for wholesale property. This is a common marketing challenge. And I think investors are used to marketing to sellers, right? Because they're used to getting deals and they, for some reason, they almost have a harder time talking to other investors about why me, Right? So I just wanna point this out, right? Right. On the website, when you load up deep and equity partners, it says, passive income for life, right? And then it says, We help busy professionals like you generate passive income to reclaim your time and fuel your life's adventures. And you've got all this like, really cool copy. You've got pictures of you and your wife, like doing all sorts of cool stuff. Yeah. It's just such a great job of speaking to the kind of hopes and aspirations of somebody that make them interested in investing to begin with, right? Like, it just, you guys have done a really good job. So I'm, Yeah. Thank you. I'm curious, like, for you guys, what has the process of you, you know, you just saying like you, you've done a good job of attracting interest from investors, people interested in investing. What is that process been like, right? Like when you got started, how did you start reaching out and finding people to sort of partner with? Um, what was challenging about that or what seems to have worked really well about that process?

(08:48): Uh, yeah, so I'll speak to that from a couple of levels. So when we started and, and we had an interest to get into the space, we really embarked on, uh, educating. And so we looked at, um, what books are out there, Uh, and we were coming at it a little bit more from taking an active role in buying properties, running properties, you know, if you're a passive investor or if you're interested in just using your capital investing similar like you would in a stock or, or something else, it's a little bit different journey. I mean, you, you still should take, uh, time to get educated and learn the ins and outs of the business, learn the red flags, to look for, um, where you could be manipulated potentially in terms of, uh, right. People present a business case. Well, you know, you need to dig below the surface a little bit to understand the, uh, the variables.

(09:38): But, you know, for us going into this and, and starting a business, when we started our land business, we joined a community, right? We found a mentor, we joined a community, we started going to some workshops, and it really accelerated our path to success. Well, we wanted to take a similar approach in multifamily. And so we started looking at what type of educational programs are there out there, and there's a lot. And so, you know, we took the time to find the one that resonated with us, and, um, we joined a community and we paid to join, you know, a coaching program to get educated. Just knowing that, you know, one, it would accelerate our own growth. Two, it would introduce us to a network of professionals that were already in the business. And so, you know, we got quickly plugged into other investors, other syndicators, uh, the legal side of, uh, the business, mortgage brokers, a whole ecosystem of people in the space.

(10:42): And so we kind of had a ready made community that we were able to, to plug into and leverage. And then, um, you know, on top of that, we found a mentor and a coach who has a really, you know, 15, 20 years experience in the business such that we could leverage his learning. And, you know, one of the things that attracted us to land was you can enter the business very inexpensively. You can buy and sell land for hundreds of dollars if you want. Well, in this larger scale, multifamily, we're talking tens of millions of dollars. And so a mistake in that business is just, you know, it could be catastrophic. And so, you know, having that experience behind us was really critical for us and worth a really good investment, uh, to go into that. So, you know, for us it was about finding, finding our tribe that we wanted to join and, and helping us a along our path. And so, you know, that was the initial start. And then in terms of the investing side, yeah, I was totally unfamiliar with, I had done sales before in my life, uh, a time or two, but, uh, our going in thought was friends and family. Well, you know, once you really get into that conversation, we don't actually like having family in our deals, right? I mean, I don't, I don't, uh, it just complicates relationships a lot of times. I Was gonna say, this was a, this was on a much smaller scale, a lesson that took me a long time to learn. Mm-hmm. , like, just like I'm naturally like wanna bring everyone I know into all that stuff, and it's really difficult, is really difficult to do Well. Yeah.

(12:25): Yeah. Yeah. It is. I mean, exactly to your point. Um, that's the conversation we have with most people is like, it has transformed our lives, and this is a very stable, traditionally high yielding investment class mm-hmm. . And so when we find good deals, we wanna shout it from the rooftops and share it with as many people as we can, right? But there is that, um, you know, with friends and family, there is a little bit of, you know, it gets a little too personal sometimes. And so, uh, a lot of our conversations are really just with people who find their way to us. Um, we keep a fairly small investor list. Um, I, I like to personally know everybody I'm working with. Yeah. I like to understand their goals and their, uh, discretionary income and, and be able to, to say, Hey, you know, maybe you should rethink investing in this deal or putting this much money in, or, you know, make sure you have, uh, cushion there.

(13:22): You know, multifamily is it, the returns are, are outstanding and the tax benefits are great, but, you know, contrary to the stock market, it's less liquid. I mean, you get into a deal and you're in it for five years, um, roughly, and, and, and you don't have access to that money should you need it. So, you know, there's a little more caution that needs to come into it, and that's where you really want a good, uh, guide or somebody that's helping you along and making sure it's the right one for you. Um, and, and you, and you understand the ins and out with it, uh, ins and outs of it. But yeah, those conversations become easier over time, as with anything, right? Once you, once you understand a little more, and then once you have practiced a conversation or have answered certain questions, then it's a familiar path.

(14:05): And so, uh, it's a lot easier, um, easier road for us these days. But, um, yeah, it's been, it's been good and I, I highly encourage it, you know, any form of real estate, whether it's single family home or, or multi-family, I mean, there's, there's risk on both sides. The majority of people I know yeah, have had bad experiences in the single family home, and they're just more prone to the shocks than, than the larger, um, larger plays. But, you know, it's all, if you have a long enough, uh, you know, as long as you're not locked into needing something in the next year, you can weather, you know, any, uh, any setback or, uh, recession or something. I mean, generally it's appreciating, uh, over the long term similar to stock market. But, um,

(14:51): I, yeah, I mean, I think you, you know, one of the things that really comes across about you that I think makes you good at what you're doing is you come across as very transparent and also like very concerned about meeting the needs of the other person and making sure it's, it's a win-win situation, right? Which is always like, if you're gonna invest with someone you wanna know, they're not just roping you into something that's good for them, right? You don't wanna be grist for the mill. You wanna be a partner in that. And I think, you know, you guys have kind of done such a great job of that. And again, I highly recommend people go check out the deep and equity partners website cuz they do such a good job of speaking to this. And I think that's something that any investor can look at and sort of model in their own business.

(15:32): Whether you're doing syndication or you're doing wholesale link flipping or whatever, you need to talk to the needs of the people that are gonna be your clients, your customers, your sellers, whatever. Um, and I think you guys have just done a great job on that. I wanna end cuz we're coming up on time. I wanna pull a deep cut from your LinkedIn . Okay. And I wanna ask you about your life coaching certification. You have a Robins Masons life coaching, so I'm gonna ask about this because we talked about this. We did a, we do a pre-interview before we do the show, so we spent a lot of time talking about like personal development and stuff. Yeah. And I love personal development. It's probably no surprise at some point I thought about getting that certification, I was like, maybe and I just didn't do it. I am really curious what your experience was like, what you got out of that. Uh, if anything, if you're gonna tell me that Tony Robbins beat you up in a parking lot, we can edit it out after, but, uh, I'm just super's Great story.

(16:28): He's huge. I mean, you look, I can't tell you a tall on scream, but it's like he's a giant dude. But yeah, I'm super curious like what you was then and what you Got. No, it's great. It's so, so when I, um, when I found myself outta work in 2016, yeah, a lot of soul searching. I hired a coach to help me think through and, and pull out a path. And you know, part of that was, uh, some of the values work, some of that was, was other exercises. But through that process and really exploring my past, what I really loved from my corporate career was the coaching aspect. I loved having a team, I loved developing them and to my detriment, quite frankly, like I was the type of manager that was promoting all of my team and I do a terrible job of patting myself on the back. And so, but, but, but for me, that's what was resonating strongly. And so in that moment, kind of a parallel path for me was also, and I also am personal development junkie since I was probably 18 or 19, I think actually. Uh, I think I was 17 or 18, and I found, you know, going through my, my parents', uh, storage unit or something, a set of Tony Robbins personal power cassette takes.

(17:51): Yeah, I don't, I don't think these are worth money anywhere, but it feels like they should be worth money somewhere though, potentially get the cassettes are cool. Yeah. Yes. Yeah. So I think I might have been 16 or so when I did that, but, you know, I started listening to him. It was pretty, it was pretty impactful, uh, to think about the power of your mindset and, and different things. And so, you know, since then I, uh, as when I was in the work world, I was reading managerial development books and, uh, parenting books and I just, I, I, uh, I love to explore different concepts and, uh, I'm not so good at applying them in my life. I like to, I'm a consumer of information and it's so hard to apply, but, um, yeah, part of my path was really just wanting to be a coach. I do that today on a very, very small scale. It's, it's unfortunately, you know, unless you are Tony Robbins, um, it's a hard industry.

(18:46): You're back to trading your time for money, especially if you're in a one on one type client situation. Um, I do like to mentor and coach today, uh, on a very small scale. But yeah, the Robins Madonnas, uh, program was, uh, a great, uh, it's a, it's one called strategic intervention. It's a certain style of coaching. It's a little more, you know, he's a believer that you don't need to sit on a therapist's couch and mine into your psyche and understand why you just need a different solution and to be able to apply it. Yeah. And so, you know, obviously that's situational. There are some people that really need, uh, professional help and, and, and do things like that. But, you know, in the world of just personal development improvement, a lot of times once we recognize that we're in a certain pattern and that there are, you know, most of what coaching is about is about exposure to different options. To, to get a client to realize that there are other solutions out there and there are other, uh, a world of other options and that you can pursue those. And so, yeah, it's something near and dear to my heart. I'm, I'm still on a search of, uh, you know, how to make that more of my, um, more of my day to day life, um, at some scale, whether it's just through education, um, or other things. But it's such a rewarding, um, thing for me to, uh, be of service and to see someone really transform and, you know, when they come back and go, Oh my God, thank you so much for helping me through this crisis moment or whatever. It's just, uh, you know, there's, for me, there's nothing, um, better than that.

(20:17): Yeah. I mean, it strikes me, right? Like we talked about, you know, going from Nok to Microsoft to land and then, you know, apartments and or commercial, and it's like no matter what your industry, no matter what your business, you always have to have, there's some interpersonal, it's either you and an employee or you and a client or you and your, you know, Yeah. You know, vice presidency or whatever. Like, there's always that interpersonal relationship piece. And it strikes me as like such a cool kind of just tool to add to the toolbox, right? And I think it's, it's really neat. Well, I, Mike, I have to say, like, this was awesome. I've been looking forward to this conversation for a while. I was super excited to have you on, And likewise, Dan Equity partners.com/freedom is the landing patient people can go to that can check out all your stuff. I highly recommend that you do that, but is there a place that you want people to, to kind of look you up on social media or anything like that?

(21:14): You know, LinkedIn's probably where I'm most active. I don't know exactly what my, my handle is, but that's, that's honestly why we put the landing page together, was just such that like if people are interested in land, we have a little land teaser that says, Hey, here are, here's the person that I mentored under, here's a few other options. Here's a little bit how it works, a process flow, which I'm kind of in. Here's multi-family, same thing, but it also has our social handles and, and some contact info. So as far as business goes, I would say, uh, LinkedIn is probably the one that I'm most active on, which is not very much. So it's just, it's an area. I, You have a good LinkedIn page. I checked that out earlier. There's like posts on here and stuff. Like, Usually it's, I, I want, I want to do more social media. It's a bittersweet, uh, aspect as it is for most people, right? I mean, I don't, I hate to be sucked into it. Uh, it's a necessary evil in today's damn world. Um, you know, I mean, you, it gives a lot of reach and, um, and there's a lot of benefit. But, uh, yeah, I, I, I can be a lot better .

(22:16): Yeah. It's like, I want to reach everyone, but I don't want anyone to reach me, so how do I do that? Yeah. Yeah. Well, I, again, for folks listening to this, it's deaton equity partners.com, so d e a t o n equity partners.com/freedom to go and check out everything that Mike Deaton is doing over there. Mike, thank you so much for coming on the show, man. I had an absolute blast and I really Appreciate it. Likewise, Dan. It was a tremendous pleasure. And you know, if anybody is interested, I love just connecting. So no pressure. Even if you want, uh, some ideas, feel free to reach out.

(22:51): That is it, that's the end of this week's episode. As always, you can find all our past episodes plus show links and all that fun stuff@adwordsnerds.com. And hey, if you could leave a review of this podcast wherever you get your podcast, it would really help me out. We, I read every single one, whether it's a comment on YouTube or view on Spotify or iTunes or anything, it means the world to me and it helps other people find the show. So I hope you go ahead and do that. As always, this is Daniel Barr from Maria and Mark signing off, and I will be seeing you next week. Cheers.

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