Building A Legacy Through Property with Expert Insights from Mack Benson

Foreign bowling here with Pivot to Prosperity brought to you by Pivotal Real Estate Investments, where we help our investors build wealth and income through commercial real estate that improves communities. And today we have Mac Benson here. Thank you for coming, Mac.

Thank you for having me.

Yeah, I'm glad to have you. I'm going to read your bio first and then you can tell us what it doesn't say. Okay. Mac Benson is a devoted husband and father, deeply committed to his family's well being and future in his professional life. He combines his IT and mathematics background with a keen interest in real estate investing. Mac's journey into real estate, fueled by desire to achieve financial freedom and build a meaningful legacy for his family. His approach is characterized by a practical blend of analytical skills and a hands on understanding of real estate dynamics, all while prioritizing importance of family and health. Mac's story is a testament to balancing professional ambitions with personal values, offering inspiration to those on a similar path. Welcome.

Thank you.

Your company name, Infinite Focus Capital, tell us about that.

So the name, I. There were two things that I was thinking about and actually the name finally came to a head when my wife and I were out walking to the park with, I think we had two kids at that time and all of a sudden it was like a light bulb went off in my head. And first was the infinite part. I wanted to integrate that somehow because that's meaningful to the two of us because the infinity sign is one of the first things that connected us when we started dating. She liked the shape of it, I think is why she liked it. But for me it was more of the. When I was doing mathematics, once you introduce this concept of infinity, it completely changes how mathematics is done. And I've always loved that part. And then the focus part, it was knowing that people equate focus with the acronym Follow one course until success. And because I kept trying to chase all these shiny objects for so long, it's a constant reminder that I need to just follow one course. And until I find success, which is where I am today, still following that course, I wouldn't say I've found success.

Well, you know, it's one of those things. It's a process. And a lot of us are newer into the syndication world, so there's a lot of different asset types and it's a pretty competitive environment out there. So, you know, you can see somebody doing something else and it's a shiny object there too. Right. But yeah, I think that's great. And so in your bio, anything you want to add to that, you know.

I would say for me to stress the. Trying to find the balance. I see a lot of people, they may focus on, may have sole focus on their business and they're super successful. One that really sticks out in my mind is Alex Hormozi. And he specifically said he does not want to have kids. He may one day, but he does not want them right now because they would get in the way of his business. And for me, it's trying to figure out a good way to integrate my family with my business and our overall pursuit for health. And the health is a mainstay because, I mean, what's the best thing that you can do for your kids? You can be present and you can be present later in life and longer. And how do you become, how are you able to be present? Well, be healthy. So that's a constant focus for all of us in our house.

That's great. That's so true. And you know, Katherine Bell also says it well, where she says that money is like oxygen. The more you have, the more you can do and the more you can do for others. And if you can breathe and be healthy, it's like putting the oxygen mask on yourself first so that you can help others. And so. Yeah, no, I totally like that. And so as far as your focus right now, what are you focusing on? Is it multifamily that you're doing?

Yep, still working on multifamily in the process of switching markets and part of switching markets as a physical relocation to the market that I want to be working. Working in, which I think, like you, is a little bit further south than where I currently am. In Minnesota.

Yeah.

Mainly Florida.

Come to paradise.

Yeah. And that's something that, I mean, we, it's a, it's been about a four and a half year process for my wife and I. So it's been a lot of planning, a lot of pivots, and we're finally pulling the trigger this year.

How many kids do you have?

We've got three, nine, four and three.

Okay. Yeah, yeah, yeah. Well, I think you're starting it at the right time because as we talked about, I started getting into syndications as an empty nester. So my kids haven't seen the power of this commercial real estate investing. They, they have seen me doing other types as I was a consultant most of my life, buying these big properties from people. But I didn't realize we could be the owners. So it all changed in my mind when I realized we can be the owners and bring others with us. On the ride. So, yep.

I. I bet you, like me, just drove by and never even really thought, well, who owns that?

Well, I did think about that because I had to buy a lot of it for, you know, government with road widenings or utilities. I always have been interested in who owns it, but I just didn't think that it could be me.

Yep, exactly. You didn't realize that it could be you.

Right.

And here we are.

Yep. Yeah. Well, that's great. So do you want to tell us about your first purchase?

My first purchase. So I started on this journey and spent about a good year and a half chasing shiny objects of single family. Even though the very first conversation I had with my wife was, hey, should we try and buy an apartment? And about a year and a half of me following biggerpocket's playbook and looking at single families and brrrs and duplexes. And then we had our second kid. And she basically said, what the hell are you doing? You haven't actually bought anything, and you're just spending time chasing your tail like, oh, crap. You know what? You're right. I've been trying to do flips to get money to be able to buy apartments, but what turned me onto apartments in the first place was the idea of syndication. I was like, okay, well, what don't I know? Because obviously there's something that I don't know because other people are doing it. So that's when I finally said, you know what? Enough of this online stuff. I need to find my first mentor.

Gosh, that's good. That's really good. That's. That's a good golden nugget. It took. I. I was thinking, I've been in real estate 40 years. Why am I going to pay for a mentor? Right. But that's what made the difference for me too.

Yeah.

So how long ago was that?

That was in 2019.

Good for you.

Yeah, yeah, that was summer of 2019. So it was like drinking out of a fire hose. And I remember. So it was pick your market and then start. The next step is going to be starting to reach out to brokers, get on their lists. And I completely froze. I was absolutely mortified with the idea of calling a broker because I didn't have confidence in myself. And then a quick kick in the. Or a swift kick in the butt, and basically them telling me to suck it up. Buttercup made the call. And I realized, even though I cr. I absolutely crashed and burned. I mean, I. I was talking to a broker in Tampa, thought I did great and then at the end of the call, he said, well, based on what you're looking for, I think you should be looking in Alabama. Call didn't go quite as well as you would hope, but that was the first one. And each one after that has gotten just that much easier.

So the property that you have now that, well, you sold one, you said, I believe. Right.

Working on selling it.

Oh, okay.

Yeah.

You want to talk about either one of those?

Yeah. So we. This one, we got it direct to seller. My business partner was doing texting campaigns for his own portfolio, so he was looking for like duplexes and quads. Texted this owner and he came back and said, well, I'm not really interested in selling that quad, but I'm building a 40 unit right next door if you want to swing by this afternoon and take a look. All right, we'll be there. So it was a quick scramble to figure out what to do with my kids and quick dip out because normally I try and be present after work until they go to bed and then it's my time. But going to that property in the afternoon was just something that had to be done. And when we got there, there were. The third floor had some Sheetrock on it and the bottom floor was just two by sixes. So we crunched some numbers quick and dirty in the back parking lot and said, okay, we can probably offer this and make out pretty good on it. So within that was probably Friday, Thursday or Friday, and by Monday we had an offer on the table that was accepted.

Wow. So how did you know what kind of offer for finishing the construction? Did he give you some numbers?

So he gave us what he would like to see and we took it back to our underwriting, did an initial underwriting and said, okay, so we think that this unit mix and this area is going to get these rents are. And we had to completely go based on a pro forma for expenses, which I don't like to do. And with what I've learned here, I probably won't ever do again until I'm much more experienced because, I mean, we missed a few things. But I mean, once we had everything plugged into our underwriting, it was a no brainer that the price that we were offering was going to be good.

Excellent. Congratulations on that for sure. And do you want to talk about any things that happened after that or.

Yeah, so actually just getting it to close. So before we were going to close, he came to us and offered us seller financing on contract for deed. And after, I want to say about Three weeks of us saying no. We finally dug deeper into that and we're like, well, I mean, he only wants this much down, which is far less than what the agency wanted. And the interest rate was on par, the term was on par. And we're like, well, this means we can just take all of our syndication paperwork, light it on fire and pivot to a joint venture. All right, let's do it. So take that 10 to 15 grand of SEC filing paperwork and just throw it in the dumpster and start over.

Wow. Had you actually gotten very far with it?

The entire syndication paperwork was drawn up and we were ready to start accepting funds.

Oh, wow. So that was a big decision.

It was a very big decision. Knowing that we were going to have to eat that cost.

Yes.

Yeah.

But wow. I mean, if he didn't require the big downstroke and you could cash flow, was it interest only or no. Was it interest only?

There was some interest only.

Okay. Yeah. So that helped you. Well, you can't cash flow right away when it's still under construction. Was any of it habitable?

No. So part of, part of the contract was that we would not take ownership until the certificate of occupancy was complete.

Oh.

So that was expected to be in July. It didn't happen until October.

And when were you thinking that you would have payments start? I. He was going to finish the construction regardless if you used agency.

Yep. Yeah. And what the payments. Interest only started the first month after acquisition.

And he was going to build it out with you owning it or you were still only going to take title at the end of. At the co. Yep.

After the co. So that we could get people in there. So we worked on pre leasing it through.

He was a nice guy, huh?

He was.

Yeah. Is whatever still is? Yeah.

I'm connected with him on Facebook now. And he's globetrotting China to Mexico.

And he did tax hit you. You accepted the seller financing.

So we did. And that saved him a huge, huge tax hit. I mean, so we're, if we're saying a purchase price of five and a half million, if his all in costs would have been what, 3, 8 maybe that's a delta of almost 2 million that he would have had to pay taxes on.

Yeah.

And right now his tax liability on this property is what, on the interest income minus the interest that he's paying his bank.

Awesome. Yeah. Win, win, win. I like that.

Yes, it is.

Yeah. Good, good, good. So and so what's your buy box then? Why don't you go back to Explaining a little bit more about what that is.

Oh, my buy box has definitely been more specified because this was so far outside my buy box, I couldn't even see this property from inside my buy box. Which is another lesson that I've learned because I mean, before that it was all, get your buy box, get exactly what you're going to be buying, and don't deviate from that path. So it was. I was looking for 15 to 50 units and outside of Minneapolis and St. Paul, so the suburbs. And on site parking, on site laundry. And I wanted mostly two beds, but I would accept maybe about 30, maybe a third of them, one bed. And I didn't want any studios, but if a couple came along for the ride, that'd be fine. This property, it's in Minneapolis, which I hadn't even looked at properties in Minneapolis because I didn't want them just because of the problems that come along with owning in Minneapolis. It's 40 units, all studios, no parking. There's five parking spots for five, 40 studios, plus four units next door.

How do you make do?

By the skin of our teeth.

Is there on street parking?

There's ample on. On street parking. I mean, whenever I've been there, it hasn't been more than half a block. Which, depending on where you're from, that might sound like a foreign concept, but in Minneapolis it's completely normal. I mean, most winters you're going to be on street parking on one side only for the whole city because they lost. They ran out of places to put the snow.

Yeah.

So the fact that we have plenty of on street parking, it's never really been a huge concern. We've lost a couple tenant leads, but.

I would think that be a big deal, but I don't know.

And it's also strange that people are really into biking all year long.

Really? Yeah. Yeah. That's not me.

Not me.

I can see myself sliding down a hill. Right.

We do that for fun.

Well, so do. So it probably was a hip roof, Right? Not a flat roof. Flat roof, yep. So when it snows a lot, do you have to get some of the weight off of the roof? Nope.

It's actually built to. I forget the weight that it's built to withstand, but I think after the snow caused the Metrodome to fall down, what, 15 years ago, they're pretty mindful of it. And honestly, flat roofs in this market are incredibly common.

Really? Wow. They're not even a little slope, so that as the snow melts, it drains.

It's pitched. So it drains the Snow melt will drain away, but yeah, it's never been a concern. And then the new. The newer EPDMs, I mean, we don't get the sun that Florida gets, so the rubber roofs don't really get as beat up. And I mean, you get a good layer of snow on there and the sun doesn't hit it for six months. Anyway.

Is the EPDM a rubber roof? Is that what you're referring to?

Yep, just the membrane.

Membrane. Okay. Well, anyway, so. Yeah, I'll share with you. I always like to look for a rooftop where you can have people gather, but if it's pitched, I guess you really probably couldn't do that. Or could you?

Yeah. So actually my mom had a condo probably mile and a half from this property. And they had a flat roof, but theirs was built, I think, in 1908. Flat roof. And they put a rooftop deck and made just a. Basically a party area.

Yeah, yeah, I understand that. Not every roof can do that.

Yeah. And access is another thing. You have to actually be able to get there without climbing up a ladder.

Yeah, true. Well, that's good. Well, so. And I believe you have a couple other nuggets to share maybe on lessons learned, right?

Yeah. So a couple of lessons we learned. And it came through having to fire two property managers within one year. The first one, because the screening that they were doing, we found out they really weren't screening tenants. And I think there was kind of a. The interests weren't aligned on getting people into this empty building. We wanted people in as soon as possible and they knew that. And their commission on renting units was the first month's rent. So they would take the first month's rent and then we would never get paid again. And then we'd look at these tenants rap sheet and wonder how they even got allowed in in the first place in Covid or the eviction moratoriums are still in place, so we couldn't get them out even if we wanted to. And it was a lot of stress in a brand new building. Led to a fire on a third floor unit, which was a substantial insurance claim then that hadn't even been fully repaired. And one of the tenants knocked off a sprinkler head in their unit and caused another flood. So. Yeah. And then the second property manager apparently was embarrassed to have a property that was under construction and just didn't show a half empty building all summer. So they placed one tenant in the spring and then nobody after that. So we were going about 50% occupied when our break even would have been 70%.

Yeah. You learned a lot of lessons on that one.

Sure did.

Yeah.

You know the funny thing, the property manager that we have had in place for, what, the last year and a half, they were on our short list before we bought it. We had interviewed them and we passed on them for the simple reason. They had zero experience in multifamily. They were coming from the residential world, and we didn't know if they'd be able to handle an additional 44 units on top of their single family and duplex portfolio. And lesson learned, they were really motivated to do what we needed them to do. And because they didn't have. They weren't set in their ways, we were able to help guide them in their processes to what we wanted them to be.

Good. Yeah, that's really important. And then. Yeah, that checking on it and having metrics and all that stuff is so key, isn't it?

Yes, it is. Yeah. I mean, they're the first out of the three property managers. They're the only ones that have been on board with a weekly touchpoint call, which, I mean, it seems like a simple thing, especially now that we're so far into the weekly touch points. I think last Thursday's call was 10 minutes, where we go over delinquencies, occupancy, showings, maintenance, and any other concerns. Just if you're prepared, boom, boom, boom. Done.

It can be quick, right?

Yep. Don't even need to talk about the weather if we don't want to.

So are you stabilized there now, too?

It is close to stable. It basically stabilized at this point.

Oh, good.

Yeah, we're on a pretty good cadence of just filling units as they come available.

That's good. Yeah. Takes some time for sure. And I don't know Minneapolis, except for that it's cold, but is there a season for better rentals versus other times?

Yep. Basically, you're going to get zero interest. November to February, and it starts picking up in March and then really picks up April through June and a little bit less so up through the state fair, which is the end of August. Well, like the two weeks of the state fair, you don't hear from anybody because they're just too busy eating food on a stick.

That's the biggest thing. Well, very good. Well, so I. I do want to go ahead and wrap it up here. Why don't you go ahead and tell people how they can get in touch with you?

You know, my favorite is a quick text on my cell phone, and it's 612-46-60251. Just let me know where you heard me.

All right. All right, Very good. And again, the name of the company, Infinite Focus Capital. Right. Okay. And they can look you up there and reach out.

Absolutely.

Very good. And you have a podcast?

I do.

What do you call your podcast?

The Journey with Mac Benson.

There we go. All right, Mac, thank you so much. I appreciate you coming on.

Thank you.

We'll be in touch.