From Zero to 100 Units: Mitchell England’s Roadmap to Real Estate Success - REIA 466

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now, here is your host, Dr. Allen Lomax.

Hello, enlightened investors, and welcome back to Real Estate Investing Abundance. I'm your host, Dr. Allen. And I'm delighted to be back with you again today. It's always a pleasure to be with you. And today we're going to take a look at how we can scale to 100 units with our guest, Mitchell England. And Mitchell began investing in real estate at the age of 19. Over the past several years, he has successfully acquired, improved, and sold many properties across various asset classes.

As a licensed broker, he has also represented many clients within commercial real estate, and today he supports Candia in DealFlow underwriting acquisitions and operations.

And he is the author of a new book. And Michael, just start us off by telling us about your book.

Yeah, thank you for asking, and thanks for having me here. First of all, I'm, um, I really appreciate you Have me on the show. Yeah, we just released Zero to 100 Units. It's actually on Amazon now, so we're getting some good early success there. But the whole concept of Zero to 100 Units is just like the title. Like, how do you start out with literally zero, get in this game and get your feet wet and then scale? And it's something that I really struggled with for several years. I started at 19. By the time I think I was 31 or 32, I think I had 5 or 6 units. So not, not a, not, not scale, right? And I had bought a lot of different kinds of properties. I tried a lot of different things, had some success, had some failures. And it wasn't until about 32 years old— I'm 38 today, so 6 years ago— that I really started to ask myself a question like, how do you scale? What is the sauce? Why have I been doing this for 13 years or 14 years? And I don't have a lot more units. I don't have a lot more cash flow. And so anyway, the book goes through our adventure. Today, we're partners. My partner and I own about 400 units along with investors. And so, we've been able to really scale to a level that's changed our lives. And so, we unpack our journey. We unpack sort of the step-by-step sort of formula, if you want to call it that, or framework. In the book, we talk about our failures. We talk about things maybe you shouldn't do. And so, yeah, that's the book and we're pretty excited about it.

Well, it sounds like a very informative book and I'm sure many in our audience will be interested in obtaining that. Well, Mitchell, of course, one of— I think one of the more— I mean, it's difficult to scale for sure, but it is, I think, probably the biggest challenge is actually getting started and you did that at 19 years of age. So, what's your suggestion for taking that first step and getting started in real estate investing?

Yeah, good question. I mean, breaking the seal, that is the hardest step. A lot of us get analysis paralysis, right? We read all the books, we go to the masterminds, we can't quite take the action. Or a lot of us take a lot of action and we don't do any study. That also can end pretty bad. In Zero to 100, in the book, we actually talk about fast knowledge and fast action. And so for me, I think one of the formulas is like, if you want to play in this game, make sure you're getting fast knowledge. First of all, fast knowledge is listening to podcasts like this. It's reading the right books. It's diving in, not in a way that's casual. It's a bit aggressive. It's like, hey, let's go. Let's turn our— turn my car into a center for education. Turn the radio off, log off Instagram, and get serious about your education. Because education builds confidence and it doesn't take a long time to get the education to buy like a duplex, for example. You can work the numbers on a duplex pretty quickly. And, and then once you're— once you sort of have that base and you have some people, maybe a small network around you who can act as advisors, go buy something, go break the seal, buy something. I would, I would encourage something smaller like a duplex is an interesting first buy, but something to get your feet wet because here's the problem. You cannot learn everything by listening to podcasts or books. You got to take action as well. And so for me, it's like, hey, 30 days, top 5 books, listen to the podcast, dive in, and then take action after that 30 days. Buy something small, something relatively low risk, and then you're going to gain confidence to start buying those bigger properties.

Sounds like good advice. And certainly reading books and education is a wonderful thing to do, but It's theory until you actually put it into process. And as you know, there's really no other way to really learn than just getting out there and doing it.

100%.

Well, good advice on getting started there, and there are really a number of ways to get started, but as you suggest, duplexes, smaller units are certainly one way to do that. Well, once you've gotten your feet wet, you've gotten started, the next question— and it took you, like you said, 13 years to figure this out, but most of us don't want to wait 13 years to start scaling. So what's the secret sauce to scale?

Yeah, I— well, I love this question. And this is— we have the book Zero to 100. We also have the Tribe Zero to 100 Tribe We talk a lot about this. We really work to unpack it. And here's one of the things I noticed is people will go out, they'll buy a single-family or duplex, they'll scare themselves a little bit because it's the first property and it's always scary when you buy your first property. And then they get right back into the comfort zone and they go and buy a single-family or duplex and they do that forever.

Mm-hmm.

And this is what I did for 10, 13 years was I got in the comfort zone and I was like, well, Yeah, I'd love to go buy a big mobile home park like we do, or apartment complex, or an RV park, or— but I was stuck in the comfort zone. I didn't realize that this journey is about continually advancing your knowledge and then taking bigger action and getting a little bit uncomfortable. So for us, you know, if you go buy a duplex or a house hack or something and you get your feet wet, we call it zero to something, right? And then it's something to something more. And I'm talking about not just another duplex. I'm talking about something like we recommend going commercial. So For example, 5 units and above gives you things like forced appreciation. That is, every annual dollar, additional dollar to the bottom line is 10 to 20 times force appreciated, right? And so, it depends on the market and it's, you know, NOI divided by cap rate is the fancy formula for it. But in essence, you get to control your wealth with larger properties because it's based on forced appreciation versus comparables. So, for us, we say, hey, You got your feet wet, you got a duplex. The next step is to learn commercial, understand the pro forma, understand the financials, understand the key formulas that's going to protect you, like cash on cash and DSCR and IRR and all those fancy things that sound scary but aren't that bad. And then again, so fast knowledge, then fast action. Go take something down that's 5 to 10 units. If you're able to do those 2 steps, you're on your way to scale. You've just surpassed 90% of investors because you've stepped into that commercial world and you start to understand it.

I think many of our, our more experienced enlightened investors know the difference between single-family to 4 units and then stepping into 5, but some of our newer enlightened investors are probably not familiar with the difference there. So could you take us through What distinguishes a 4-unit from a 5-unit?

Yeah, I mean, you know, it's obviously unit count, but like what really matters in my mind is 1 to 4 units is how it's valued. 1 to 4 units, we're looking down the road at the neighbor's house or in the local area, and we're looking at comparables. It's not really valued on an income approach. It's valued on— Via comparables. Now, that's tough because I can't predict where the neighborhood's gonna go. I don't know how much the property down the road's gonna sell for. Therefore, because I can't control that, I'm not controlling my cash flow. I'm not controlling my wealth. Now, 5 and above is valued on an income approach. And I mentioned it very quickly, but the calculation is NOI, which is net income. That's total income minus expenses equals net income divided by cap rate. Now, For people just starting out, really think about this as like a multiple. Properties are valued at a multiple times the bottom line. So what's awesome about commercial and awesome about 5+ is if I send more to the bottom line, I force my property to appreciate. I also benefit from the cash flow. And because I have that control, I can control my own wealth versus 4 and below. I don't have the same element of control. And we've seen this In numerous investments that we've gone into, we go into an area and we're like, the area doesn't need to improve. Now, would we like it to improve? Sure. But we know if the area stays constant and we force the bottom line, we can force appreciate and actually get a pretty good win. And so some of our properties are rural where the area has been the same population for the last 30 years. It probably will be for the next 30 years, but we're still able to get a win because we're able to force appreciate that property. So I think it comes down to the word control because you're able to control your wealth and your cash flow with larger properties.

Yeah, and going from 4 to 5 doesn't sound like it should be all that significant, but it makes a huge difference in terms of the valuation like you were talking about. And it's something for, I think, investors to really be aware of, particularly those who are interested in scaling. Because 4 to 5 is nothing, but it's everything.

It is, it is everything. Yeah, it's a small, it's a small leap, but it just changes— it's fundamentally the investment's different, you know.

Yeah, a whole different ball game there. Well, going from piecemealing it together like you did for the first portion of your investment career And going from that to 100 or so, what has that done for your overall well-being in terms of not just your financial well-being, but what has that done for your time freedom? What has that done for all of really the other aspects of your life, your relationships, your meaning and purpose in life, and your engagement? in the work of your calling and your passions?

Well, Allen, I love this question. I think it's one of the most important questions because we talk about real estate, we talk about strategy, we talk about formulas, all these things. But what it really boils down to for me is time. And I think that my theory around that, before I sort of get into the answers, like, time's really the first domino in my mind. Once I knock over that domino, I'm able to focus on my health. I can focus on my relationships. I can focus on bucket list adventures. I can focus on giving back. I can focus on all of those things that I really value in my life. And I think today we have a we have an economy that like most people don't have the time for those things. And so we see people people's health you know go south unfortunately before before it should or we see relationships break up. I mean what what do we have fifty percent marriage divorce rate you know so it's like we we have a lot of problems in our country and I think a lot of those can be solved by time, by getting your time back and then focusing on the things that matter. And so for me, you know, I, I did sell real estate before I was a full-time investor. Before that, I was in the corporate world. I learned what it was like not to have time. I learned what it did to my relationship with my wife, for example. We've always had a great relationship, but it was tough to spend the time I wanted to really nurture that. I have 2, I have 2 girls today. I'm able to spend a lot of time with them. I drop them off every morning at school. I can go to all their events. Like, to me, like, you know, yeah, like, I'm not into real estate for the bricks and sticks. I'm in it for the time that it's able to, to give me. And this is what we talk about in the book. We talk about in Zero to 100, our tribe, how do you get your time back? And we actually, we actually call it R1 when all of your passive meets your lifestyle expenses. R1 being retirement one. It's like your first retirement. And what that gives you is it gives you choices. And choices is the most important thing. I still work today. I say I hit R1, but I still work today. I love my work. I'm passionate about it. I'd be bored if I didn't. But I have the choice when to turn it off and turn it on. And that's the most important thing to me.

Enlightened investors, if you haven't done so already, be sure and click that like button and also click that share so others can take advantage of the content.

And finally, be sure to subscribe so you don't miss a single one of our upcoming episodes. Yeah, and 40 years ago, we lived in a country that had rules and regulations that supported labor, and people had, uh, could work a 40-hour week, and they could have time to spend with their family. But today, people are working 40 hours at one job and then they have to go get a second job.

Sure.

And these are just to make ends meet. And it's a challenging, challenging environment and I don't see, I don't see things turning around. I don't think that there is anything on the horizon that indicates that it's going to get better for labor. And so if you want a lifestyle that you want to design, We need to be listening to people like Mitchell England who have found their way to develop a lifestyle that they want to be living. So the question is, is that, I mean, not only do we need to move from beyond 4 units and into the 5 units and more than that, there's no way we're going to do this on our own dime. we're going to have to raise capital outside of our own immediate needs. Tell us about that and how do we begin that journey?

Yeah, like, this is a great question. And it was one of my big breakthrough moments was I was always scared of raising capital. I pictured capital raising as like I'm meeting a family member or an old friend at Starbucks and I'm awkwardly pitching a slide deck and it's uncomfortable because I'm asking For money. And so that's what I pictured. And that's one of the reasons I didn't raise capital earlier was I felt very uncomfortable by the concept of raising capital. Now, you're exactly right. Unless you're born into money, or you're— or maybe you're, you know, you sell a business or whatever that is, like most of us don't have the capital to scale beyond 100. And so raising capital is sort of a natural piece of that or requirement. And by raising capital, you take away that challenge of money and you're able to go a lot further. Now, what I learned, I learned a really, a really valuable lesson was if you wanna raise capital, you need to attract people to you. And to attract people to you, you need to be a thought leader. And like this all sort of happened slowly for me, but I realized that if I'm a thought leader and being a thought leader, really like the easiest way to say it is like you are giving your knowledge without the expectation of anything back. And that's an important piece because we live in a world where the law of reciprocity is true. And so early on I realized, hey, if I want to attract people to me, to my world, get people involved in my journey and raise capital, I don't need to go start calling people. I need to attract people to me and be a thought leader and give before I take. And so we early on, we started a meetup in our local town and we started, I think the very first meetup was my wife and I. My partner, and then like some guy who got lost on the way to the bathroom. You know, it wasn't impressive. So now grew it grew over time because we were consistent. Consistency matters. But over over the next two three months, we had like twenty five investors in there. People were people were having fun, and we set a little framework for the for the meetup. We would meet and greet. We talk about our goals, and we always bring value. I talk about forced appreciation, or I talk about house hacking and getting started, or I've talked about a project where we're working on. I remember thinking, I don't know where this is going to go, but we're just going to keep doing it. About 2 months in or so, one of the investors who was listening and we had built a relationship with, he said, look, I'm selling a condo in California. I have a quarter million dollars I want to invest in. I want to invest with you guys. Let me know when you have a deal. Of course, I was like, hey, play it cool. Don't act like this is a big deal. Don't let them know that I'm actually like, my heart rate's going to 180 or whatever. And, and so it was really exciting because somebody— he was our first person who said, hey, I want to be a part of your journey. And he also saw us as valuable investors because he realized we understood the terminology. We learned the language. We, we were speaking the language. We were teaching it. And so, so the first deal that we raised capital for was from him. He brought in about $235,000. My partner and I brought in $15,000 for a $1.6 million mobile home park. We brought in very little money, but it was such a good deal. We were able to take a decent percentage of that deal, force appreciate, and really give him a great return. And that first deal was when I realized that I'm not asking for money. I'm actually providing a service for folks that if I can beat the stock market, if I can beat the money market account, I can beat the bank account. That's pretty easy. If I can beat those things, I'm providing a service for folks to invest, to, to get cash flow, to have, you know, tax-efficient distributions and, and be a part of something that's growing over time. And so that's where the— that's where it switched for me. I realized I needed to attract people to me.

That's, uh, yeah, that is a wonderful lesson, I think, for all of us to learn, is that we have to give before we can expect anything in return. And we have to give with that attitude that you were giving with, that, that we're giving to give and not necessarily to receive, and eventually it is going to make a difference. I was talking with an investor friend today who also happens to be in the insurance industry and also does financial advising, and he had recently presented at an event, and he was telling me that most of the clientele in that event that he was presenting at are used to putting their money in CDs and just holding it there. And one woman approached him afterwards and she said, well, I've got, you know, $350,000 in my CDs and I'm comfortable with that. And he goes, what is it earning for you? And she goes, 1.5%.

Lower than inflation, by the way.

Yeah. Yeah, and yes. So she was quite happy with that. She had no clue that she was losing money because inflation is running at 4 to 6% these days, and so if you're only making 1.5%, you're instantaneously losing money.

Yep.

But she was satisfied with 1.5%. I mean, he proceeded to tell her that She's not even totally completely insured with the FDIC, even though she thought she would, because they don't insure over $250,000.

Right.

And even at that, it could take them 10 years to, to pay back on, on their insurance there. So it's not as secure as what people think, and it may feel good, but it's just a way to lose a lot of money.

Good point.

And of course, you as a real estate investor, you offer tremendously better returns on people's money than 1.5%, as, as well as we do as well. But, you know, there's, there's just a lot of people out there who, who are taught and trained that you've got to be really careful with your money and Put it in CDs and it's safe and wonderful there. Little do they know they're losing money every single day.

A really good point.

Well, Michael, tell us about one of your greatest setbacks and what did you learn from that experience and how did you come through that?

You know, there's been a number of setbacks because I think that's the The honest answer of an entrepreneur being an entrepreneur, there's, well, just, just trying to make it in anything. There's a lot of setbacks. But, you know, early on, I, I've been in aviation for a number of years. I was a ROTC guy, went into the Navy as an officer, and I actually had a— actually got a pilot slot. I kind of had my life plan planned out for flying for the Navy, which was, which was pretty exciting at the time. But I was actually medically disqualified for the Navy for, for my eyelid. Uh, and that happened after 4 years of The Navy saying, "Hey, you're you're good to go." And so, so this it was kind of a strange setback. I I had planned for for several years on this career, and and it was something that was out of truly out of my control. I was disqualified. And so for me, I was 22 or 23, I think at the time. That was a very like confusing time. I didn't have I my path was ripped from me, and I and I didn't know I didn't know which way to go. But you know what I learned from that was like. You gotta pivot and you gotta do it quickly. You know, yeah, you know, if you, if you experience a failure or a setback that's out of your control, or maybe it's in your control, take some time. And this is what I did. I took a week or two and I said, look, I'm gonna give myself— I think it was like maybe 10 days or something.

Mm-hmm.

I said, I'm gonna give myself 10 days to really just sit in it and just feel how, how, you know, crappy this, this is. But once, once I hit day 11, then I'm pivoting. And I didn't know what that was, but I was going to take action. So I quickly went and I got my master's degree. I started flying again in the civilian world. I've flown for several years in the civilian world. And of course, real estate's always been a part of that too. I was looking for properties and trying to figure out the next move there. But I just realized that I had to really— I had to grieve it for a time. And then I just had to pivot and take action. Because if you grieve it for too long, then you're going to be stuck. Right there. And there's this quote, I don't know who said it, but like they said, it's something like, um, the only thing that matters is your next move. And what that does is it takes your, your mind and your brain and all your focus, the bat— your battery, your energy, and it focuses you on your next move. Because it doesn't matter if you're living in your car or if you've filed for bankruptcy or if you've been fired from a job, all of those things only matter if you're focusing on them. If you stop focusing on those things and you realize the only thing that matters is my next move, then life can become a game, and a really successful game at that.

I like that. I'm going to have to remember that quote. The only thing that matters is your next move. And I'm, I'm impressed that after a major setback like that, you were ready to go on the 11th day. I've not, not been I'm not that good at overcoming those kinds of setbacks. I can sit and be depressed for a lengthy period of time.

Well, don't let me lie to you. It snuck in during that year and it was hard, but I did do my best to flip a switch, you know, and to really try to push.

Well, I'm impressed, so congratulations on that. And thank you, Michael, for being with us and sharing your experiences with us. It's been an impressive conversation. Thank you, Enlightened Investors, for being back with us again today. And until we meet again in our next episode, live abundantly in all areas of your life. And we'll see you in the next episode.

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