Laundromat, Advertising Addiction, Double the Rents!

Welcome back to the Mike Andes Podcast, where we discuss the ins and outs of owning a small business. If you're new here, the Mike Andes Podcast is all about taking your business to the next level. This episode is all about what to do with your money. Specifically, your profit from your small business can be used to generate even more income in a couple other ways. First off, if you're purchasing another business, you need to know what you're getting into. Here's how to make sure you'll actually be making money in the end. Next, advertising is necessary. We all need to do it to grow, but don't get addicted to it. Mike's going to talk about how to avoid the infinite cycle that goes nowhere. And finally, how about a real side hustle? Mike has been taking the profits of his business and investing it into real estate for years. And you can turn a profit if you know how to do it the right way. As always, you can find all this and more over at the Mike Andy's YouTube channel. Here we go. Mike is going to show us how to make sure that new business you're taking over is actually going to be profitable.

If you've ever thought about buying a business, whether it be a Laundromat, a.

Lawn care business, or whatever it is.

The numbers have to make sense. In our Mike Minutes Mastermind, which is our daily mastermind we have with our.

Franchisees at Augusta Lawn Care, I actually.

Broke down the numbers a few minutes on a Laundromat deal that they were looking to buy and just wanted to analyze whether or not it's a good deal. And so I think it's a great thought process that you can use when you're looking to analyze whether or not you should buy another business and get into another industry. Whatever you do, make sure you avoid the shiny object syndrome. Make sure you're getting into business and starting a new business because it's going to make you money, not because you're just distracted or you're entrepreneurial. Let's go ahead and roll the T.

I see a Laundromat near me is for sale. I've been interested in this because the low level of employees need to operate it. The asking price is 210,000. It is a coin operated location that has a drop, wash and fold service. I would drop the wash and fold service because I want to simplify the business. The sales are listed at 140,000 and the net is listed at 97. I looked up the business and was able to see that it was owned by an older Couple that has been operating it by themselves. The Google reviews are sitting at four out of five stars. People are saying that it used to be better kept and that it could be more comfortable. Seems like an opportunity capitalizing the need of a boomer aged owner that is looking for liquidity. How should I go about analyzing this opportunity? How should I value the business? I heard Cody Sanchez from Conventional Acquisition say that these valuations are really mostly made up. Meaning that it really comes down to what people think. I would like to do this with either a SBA loan or 90% finance or owner financing or a combination of two. What do you think? Okay, so several things that have my go through my head. I don't know where you're at financially. So that's the biggest thing. It depends if you have multiple locations, it's very different. Well, I'd be saying but let me try to give advice without knowing that because that is the determining factor. But first and foremost ask yourself, what's the difference? What advantage do you have over the market in this industry? This is where Cody. I think Cody's amazing by the way. But you have to remember the only reason you do a good you can make a great deal in boring businesses that don't require employees. And it's just they run by themselves. The only way to make a good deal work is you get a good buying. You get a good buy. It is not on the because if there's nothing you can do to make the business more profitable by growing it and there's nothing, no employees required, there's no operational efficiencies then vending machines, things like that, there's no real improvements you can make on the business. It becomes commoditized in terms of valuation. So the only way to really crush it in a business like that is the sale price needs to be incredibly good. If you could get this business for 50,000 now it becomes interesting, right, because now you're able to make your money back within a year. So my first thing is do you have any sort of edge on any other buyer when it comes to laundromats? This is why I've stayed very narrow to lawn care and only recently started going to real estate. Right. All of my businesses are around lawn care, like the gym. Okay, that's. I did that beforehand to figure out the franchise model. But even that is within franchising. Right. So it's like lawn care, franchising, real estate. Like that's very narrow. And every single time I've ventured outside of that, I either stop question Myself or I've started it and then just had to abandon it like keto ketosis cups. I was not a food expert. What was I doing? Why do I think I'm going to beat. People have spen years and decades of their life dedicated to that industry. So first and foremost I'd be looking at, do you actually have a, an operational advantage over anyone else buying secondarily? If you don't, the asking price is the only thing that matters, what you can buy it for, because then you're simply looking at numbers. Third thing I would look for is 141,000 in revenue. I would imagine that 30 to 40% of that is from the folding service and the Washington, if not more. I could be wrong. You're not giving me the numbers here, but I would imagine 30 to 40% of that is the wash and fool. So let's go ahead and say 100,000 of it is from the coin operated side of things. So now we're looking at.

About 50 to 60,000 in annual, annual profit if you take those numbers. Because that, they're, they're, they're, their expenses are fixed rent, utilities. Those are the two big ones when it comes to laundromat because you have rent of the facilities, you have all the water, electricity to operate the machines and then your maintenance. Right now if they were doing all the maintenance themselves, they're doing all the labor themselves. Now you got to look at that 50 to 60,000 and ask yourself, okay, how much is it actually coming to me? Let's just say it's 30 to 40 grand. After you take, you hire someone else to do the maintenance, cleaning, because they were doing all of that, you're going to 30, $40,000, let's just say $50,000 to be generous. Okay. That you're actually profiting on this business. If you cut out the full wash and fold service, so you reduce labor, but then you need someone else to do maintenance, fixing equipment, repairing equipment, changing it out. And I promise you one thing, they're not fixing asset capitalization in terms of replacement costs for those machines. So max you're making ON this is 50,000 a year. Now you're asking, okay, 50,000 a year on 210,000 in asking price. That is going to take you four years to recoup your costs. Okay? Secondly, more from a cash flow perspective, we're now cash flowing about on 50,000amonth or 50,000 a year in profit. We're cash flowing $4,000 a year in profits on $210,000. Of a loan, you are going to be looking at about 2 to $3000 a month in your loan. If you're doing a 10% down on 90% finance SBA, so you're literally looking at about $1500 a month in profit. That's the reality of this situation. Now, if you can get the asking price down to 50 to 60,000, because they're just done with it and they do not. They can't sell the machines by themselves, which is very possible. Now we're talking about something more interesting where you're doing three to $4,000 a month in profit. Then the question is, is this going to take so much of your time? Or if you just put this time, money and energy and that same SBA loan into your lawn care business, would you to $4,000 a month in profit? That is the question. Okay, if you spent the amount of time, energy and money that you're spending on this Laundromat, if you spent $210,000 on your business, would you make $80,000 a month in revenue? Would that make 10 to $15,000 a month in profit? That is the question. So again, this really depends on where you're at in business, where you're at in terms of financially. If you had $200,000 sitting in a bank account, that's a different conversation than if you have $10,000 in your bank account. You just got your business started for lawn care. I truly believe $210,000 on your lawn care business is going to net more than three to four thousand dollars a month. And after the cost of financing fifteen hundred dollars a month, I truly believe.

That those daily masterminds, by the way, are just one of my favorite things about Augusta lawn care.

And if it's something that you'd like.

To be a part of, check out.

Augusta Lawn careservices.com franchise. Even if you have an existing lawn.

Care landscaping business or you're just getting started, Augusta Lawn care is a great place to connect with other like mind. And literally one out of three or.

Four people that even apply go through the vetting process.

Do we allow in the process simply because we are trying to create a group of individuals that are dedicated to.

Growing their wealth, growing their business and becoming better.

And that's what those masterminds are all about. Every single morning I'm on there, we're trying to improve each other's businesses. Answer questions and you could see even it's not even about lawn care.

All the time.

We talk about real estate, investing other Businesses, the economy. And it's just the best part about being a franchise is you have like.

Minded individuals using the same business model and the same systems so you can bounce things off of and just a great group of people that I think.

You might want to be part of. So if you'd like to be, check out augustalongerservices.com franchise. Our next training event is in November.

And there are still a few more.

Available spots, so check it out.

Whether or not a small business is profitable or not completely depends on how you set things up. You need to develop systems, know the quirks of the trade, and most importantly, do everything in your power to get educated. That's why Mike created Lawn Care Business Course specifically for you. This is Mike's personal lawn care oriented course directly from his experience growing Augusta into the successful business it is today. It's a step by step resource showing you how to grow your monthly revenue to over $100,000 in just three years. Including over 30 plus lectures and tons of bonuses to dive into. These lessons aren't the same ones Mike puts on YouTube. If you want a full picture on how to run a growing lawn care business, this is perfect place to start. You can find out more@landscapebusinesscourse.com that's Landscape Business Course.com all right. Should you advertise your business? Yes, of course. But should you rely on it as the only way to grow? That's a big no. And here's why.

So here's why.

Small businesses get addicted to marketing and spending money on ads and never become profitable.

Numbers don't lie. So this equation of new revenue divided by by your attrition is going to be the thing that determines exactly how big your business will become before it stops growing. Now at that stage of business, there's two things you can do to affect the equation and make sure you continue to grow the business. One, you can improve the top line revenue and pump money into marketing. And if you pump money into marketing, you will increase the amount of new revenue that's coming in every month, every week, every year, et cetera. Or you can also increase the customer service side of the business and increase improve the attrition, the retention side of the curve. But I want to talk about the first part because that is the scary thing that small businesses do to keep growing their business. But it's an extremely unprofitably and is why most businesses will not be successful or become profitable.

Here's the thing.

A business will hit that point where their new revenue growth Equals their attrition. And when that happens, the business stops growing. So what do they do? Well, I need to go get more customers. I want to keep my accelerated growth, 50, 60, 70% a year, year over year, just trying to grow my business. Well, if that slows down, I've got to spend more money on market and generating more top line revenue. That growth engine needs to keep burning. So what do we do? We go spend money on Facebook ads and Google Ads and we try to optimize. We've spent a whole bunch of money around advertising and marketing, Whether it be every door, direct mail and print marketing, radios, tv, social media ads, whatever it is, we pump money into acquisition and increasing the amount of new revenue that's coming in the door. Here's the thing, when you do that, you are artificially changing the equation. And if you don't have a brand that's going to sustain that new revenue growth, I want to walk you through that process because this is what a lot of small businesses do when they hit that plateau of revenue because their attrition now equals their new revenue growth. What they do is they start spending that money on marketing and their business does continue to grow and it's artificially growing because there's money being pumped in. However, that new revenue growth, if you were to take away the marketing, the direct response marketing, they don't have enough brand. And what will happen is the revenue will actually continue to decline because there's not more money being pumped on the marketing engine. This is why focusing on brand is so important. But take that aside, what typically happens, the revenue begins to go up because the marketing engine keeps burning. We keep piling money into advertising and Facebook ads and all these different types of advertisement. So the business does continue to grow in new revenue. However, that growth of the business now needs more infrastructure, needs more non revenue producing employees, it needs office buildings, it needs more overhead, it needs more management. So what do we do in order to accommodate that acceleration, that second wave of growth that comes in the business? We get more office space and hire more people and get all this overhead. And now the business is literally relying on the overhead structure, the infrastructure. The business has been built to support this growing business that is only artificially growing because we're pumping money into marketing. So what happens? We get in this infinite loop of spending money on ads and being unprofitable, but then needing more infrastructure and management and overhead to support this growing business. But all the while it's all fugazi because as soon as we turn off those advertising doll. As soon, as soon as we stop inflating our customer acquisition costs and just pouring money on advertising, as soon as that is taken away, the revenue will decline. And now we're stuck in this position where we have to lay people off, we have to abandon our lease for the office. And the reason for that is all because this equation. And so the question is, well then what do I do if I have plateaued because my attrition is equal to my new revenue? Yes, generating more business is absolutely part of the equation. But what so many small business owners fail to do is address the denominator of the equation, which is attrition. And if you can just focus on halving your attrition, you will double the size of your business over the course of time. If we take the example of $10,000 in new revenue each month and we divide it by a 10% attrition rate, that means that we have $100,000 as the plateau where the business will stop growing. However, if I can take that 10% attrition rate and turn it into 5% attrition rate now, the capacity, the plateau that business can become is 200,000. I literally dou the size of the business over time as long as I get that attrition from 10% down to 5%. And here's what's really cool. A lot of the things when it comes to attrition doesn't have anything to do with spending more money. So you can actually be profitable while cutting your attrition. Instead of spending a bunch of money on advertisement and infrastructure and office spaces and Facebook and Google Ads and all of these things, I can actually focus on something that doesn't take any money. And I'm able to increase the capacity of my business while at the same time remaining profitable because I not pouring money and inflating my customer acquisition cost. But see, the thing is this attrition is affected by things like customer service. Improving how you pick up the phone, improving your communication skills, improving your website and your click through and your estimate request form and your conversion rate. All these really basic things, even just a matter of how do you respond to complaints from customers. These are things that affect your attrition rate, the amount of customers are leaving every single month. And it's yet the thing that's so unsexy. And we as business owners neglect because we're always chasing the new shiny customer. When the customers that are currently, if we just take better care of them, it would actually make a bigger impact on our business. So if you're wanting to maximize the profit in your small business. I first want you to recognize that the denominator focusing on attrition and keeping customers, making sure that customers stay with you for years to come is the number one thing that you can do. And it doesn't cost any money in terms of making your business more profitable. The second thing you can do if you're going to focus on the numerator, the top line revenue generating more growth, ask yourself instead of spending more money on customer acquisition, how can I reduce my customer acquisition by making my ads more effective so that when I spend the same amount of money on marketing I actually produce more top line revenue. So instead of spending more, how can I spend it more wisely? By reducing my customer acquisition cost. Instead of spending $10,000 with a customer acquisition cost of $500 per customer or CAC of $500 and getting 20 customers now if I can take that $500 customer acquisition cost and move it to $100 in customer acquisition costs now I can take the same $10,000 but instead.

I'll get 100. That would essentially make the equation allow for the plateau of my business to literally 5x. The business could 5x in size before it ever hits another plateau simply by reducing my customer acquisition cost. So the moral of the story here is two numbers you must focus on in your business. Number one, attrition. What percentage your customers are leaving every single month, every single year in your business and how can you reduce that secondarily? Your customer acquisition cost. How can you be more effective with your marketing dollars and ensure that every single dollar is spe most effectively by ensuring that for every dollar you spend, you get the most amount of customers from it. Reducing your CAC is another way that you can improve your business, make it more profitable and allow it to grow without hitting a plateau. Now if you want to breakdown of further KPIs key performance indicators in your business, watch this video here. I break these down even further and talk in depth about the most important numbers in your small business tool absolutely lead to game changing results.

If you own a home service brand, you already know all about brandimage and you know how important your website is for your reputation. Your website is the first thing anyone sees when deciding to hire your services or not. So if you need to expand your online presence, you'll want web experts that can combine great designs and search engine optimization into the perfect website for you. That's why we founded Home Service Web Design. We handle every aspect of your website for a fraction of the cost of other web designs services and outperform the SEO of our competitors consistently. You can find out more@homeservicewebdesign.com that's homeservicewebdesign.com Last one for today. Mike's been buying real estate and flipping it for a profit for years. Should you spend your hard earned money doing the same? As long as you know how to do it right.

Today, I'm going to be sharing with you how I took this dilapidated duplex in Bellingham, Washington, and within a couple years made more than $100,000 in straight profit. And I'm taking that money tax free and using it to grow my business. As most of you know, my first love is business. However, stocks and real estate is something that I have used to invest the profits from my businesses and allow it to grow and then take that money and even allowed to expand the businesses even more. And that's exactly what I've been doing. Over the past couple years, I've acquired more than 20 rental properties across Whatcom county in Washington state. And I'm now actually selling a good chunk of those in order to be able to afford our headquarters. Now, there's been someone in the comments saying that I am a sham and all my businesses are failing because the bank won't give us the loan for the headquarters. But for those of you that are actually wanting to learn about business and things like loans and the sba, the Small Business Administration, here's why. And that is because they have recently changed their building requirements when it comes to new construction for projects that they fund. And 80% of the building has to be occupied by the entity that is signing on the loan. However, the problem is I'm gonna have four entities that are occupying that building, and the largest piece of the building's gonna be owned by the franchise that only has a couple years of tax returns. And they're all like break even or losses because we've been growing so fast. So the alternative is that we go out and get a commercial loan and we already have one lined up, and I potentially might use it, but I'm trying to avoid it for this one reason. And that is in six to 12 months, I feel like interest rates are gonna be significantly higher. And when you finish a building project is when your interest rates get locked in. And so I don't want to be waiting another six or 12 months knowing that my payment every month is going to go up several thousand dollars simply because interest rates are on the rise. Whereas if I can sell my real estate, take the equity and simply build the project. I can do it in a tax efficient way using the 1031 exchange and avoid having a massive balloon payment or interest rates being hiked and me being screwed. So that takes me to my very first property that I sold last week. I'm going to walk you to the through the numbers of that deal, what I bought it for, how much I put into the property and what I sold it for, and what my total profit is. And hopefully you can learn a thing or two from it. Alright, so this specific duplex I purchased for $617,000, that was the purchase price. Now it was originally listed actually for 620, then they reduced it down to 600, then they reduced down to 570. And when they hit 570, all of a sudden that was the right price for it to actually get people's attention. And so now I was in a bidding war and actually had to bid all the way up to 617 on this property simply because they finally hit where investors got attracted to it. And that is a key part of negotiation when it comes to real estate is setting your purchase price not way above and then trying to like find the market someplace. Because if it sits on the market for three or four months in a down market, you could potentially lose a lot of value. Fortunately, the market caught up to them when I purchased this back in 2020, because this was kind of just coming out of Coke, people were just starting to be able to start buying and realizing the real estate market was going to be okay. So as they lowered the price, they eventually hit equilibrium with the market and we had to bid it back up to 617. So that was the purchase price, $617,000. Now at the time when I purchased this duplex, there were two tenants inside of it paying $1,250 per month. And then the second one was paying $1,500 per month.

Month.

Now this is massively under the market value of the rent. And I knew that going in that this should easily be 16, 17, potentially even $1,800 per month for these rents. So over the past almost two years, I haven't owned this for two years yet. It's a year and a half, two years that I'm in between on. Now that these rents have been raised. This one was raised all the way up to $3,000. That included, by the way, $100 in pet rent. So we could say it's $2,900 and the tenants here, this property, paid all of their utilities. And then there was one part that was we couldn't split the gas. So they just paid a portion, like $100 per month each. But that's in addition to this monthly rent. So basically, utilities were covered. This $1,500 per month one was only raised up to $2,000. And I'll explain why in just a second. So we got the property. This specific unit here, this fifteen hundred dollars per month one was a tenant. Inside was a section eight tenant. So Section eight is basically subsidized housing from the government. And you can't raise rents a massive amount. And you also have to kind of get some of the rent from the tenant and some of the rent from the program, section 8. And so this specific unit, they did not want to move, and we wanted to keep them. They were pretty good tenants, and I didn't want to improve that unit and remodel the entire thing. So we let them stay and we just marginally raised it up to 200. Again, for some people, it's like, that's a 33% increase. Yes, it is. But this was under market rent when I purchased it, and I knew that going in. So we were able to raise that one to 2,000. Now, we spent a good chunk of money on the remodel for this property. Now, this is like in the middle of all the craziness with material cost being really high and lumber and all the rest of it. So what I actually ended up doing, the repair cost on this place or the improvements equaled about $50,000. I think it was like 47. Let's just call it 50k though, for just keep it round numbers. So that $50,000 went into landscaping, painting the entire house, fixing the deck that was kind of rotting, and then also completely gutting this first unit. I shouldn't say gutting. It was like carpet paint, a lot of cosmetics, light switches, just really making it look nice. And just we didn't tear out things. We didn't blow out walls, but putting in nice shade and putting in brand new flooring and just really tidying the place up, cleaning up, modernizing it. And that's why we were able to raise the rents all the way up to 3,000. So essentially, I took the rents from $2,700 combined per month, 2750, all the way up to 5,000. So almost a doubling of the rents over the course of the past couple of years. So just as of last week, I put this property on the market. Now I really thought that I'd kind of missed the top of the market by 5 or 10%. My real estate agent was like, no, I'm looking back before even March, April of 2022. And I think this is like the best time to sell. We're obviously going to be heading down in a down market. Right now is a good time to sell. It's a good time to get out and take advantage of where the market's at right now. So we actually put the property in terms of the listing price. The listing price was $799,000. Now, for everyone that is freaking out in the comments about the prices, this is Bellingham, Washington. We're about an hour and a half north of Seattle. Seattle is way more expensive than us, but we are expensive. I understand if you're living in Ohio or in the down south, some other state, this is going to seem very expensive to you. But just keep in mind, look at the rents. The rents are way more as well. Cost of living is much higher here. Our hourly minimum wage is a lot higher, et cetera. So we put the price, the listing price at 799. And I was really hoping to get 820. Honestly, that was just my personal. Like, I really wanted 820. And you'll see why in just a moment. But that was the listing price, 799. Now, the first offer came in within 24 hours because we really priced this one to sell. So this is offer number one. And the first one came in at asking price. So it's $7.99. And it was like very, very short contingencies. Five days for an inspection, and they were good to go. Then again, this is within 24 hours, because when you price it competitively, what happens is you get a lot of people's attention, and then you can create somewhat of a buying frenzy to get the price up to where you actually want it to be. Because I want at 820, that was my honest thing. And I was like, you know what? If you think it's 799, I know I kind of missed the top of the market. So let's just put 799. Well, this is what happened. Offer two comes in at 825. However, there is contingencies on this prop, this specific offer. And the contingency is that they have to list and sell another property, and we don't know what that property is. So it has contingencies based upon another property being sold. So this thing is this first offer expired within 24 hours. They wanted to move on it quickly. And that's what happens usually when you do an aggressive listing. Price is people want to move on this quickly because they know other people are going to get involved. So second offer comes in 825. Of course I want that. However, I'm not going to sell my property in a down market based upon another property being listed and sold. I'm not waiting two or three months and crossing my fingers because I know in two or three months of the property value will be lower. Just guarantee you in this market, that's what's going to happen. So then we had another offer come in, Offer number three. Offer three. Now, I don't really remember, honestly what offer three was because we didn't really address them. We wanted to address this offer that was on the table, hot on the press, ready to go, ready for us to pick up. So what we did is we went back to the person who offered this first one and said, hey, look, there's other offers coming in, and we expect another one or two more offers coming in tonight. So within the next 30 minutes, we need your best and final offer. And we're going to compare all the offers tonight and make a decision. So give us your best you got. And the reason we did that and the reason we didn't say, hey, there's a better offer out there than yours. The reason we didn't say that is because if you say that, then they can ask, are there contingencies? And you have to tell them if there is or there is not. And if we would have said, yeah, there's 8:20, there's a larger offer than yours, and there's a contingency of someone else listing and selling a home, that would be really, really bad because that's a very weak offer when there's a contingency of selling another house. So we did not want to show that card to the first buyer. So all we did is tell that first offer that, hey, there's more offers coming in and you got to give us your best and final because we're comparing notes and there's some really strong offers coming in. That's all we told them. So what did they do? They went ahead and they offered 8:30 plus 11k escalation clause. So an escalation clause is basically where it's like, hey, look, I am willing to pay. And this is what they said they were willing to pay up to $866,000 for this property. And so they said, hey, we're going to offer $830,000 with an escalation clause up to 866,000 if there's any competing offers that you can prove to to us are valid. So what that means is if anyone comes in and offers in offer three, offer four, whatever, and it's below 866, they are willing to go up to 866 and if there's an offer that's lower, then they'll beat it by $11,000. That is what an escalation clause is. Now some people are like, well, why wouldn't you do like a $500 or $1,000 escalation clause? A lot of times it shows that you're a bit of a rookie and you're not respecting the seller. And so I've always done 10 or $15,000. Escalation clauses. Well, it's very common, at least $5,000. Just a bit of a pro tip. So they did $11,000 escalation clause. So then what happened is offer three came around offer four, there was another offer that came in for 830. So what did that do? It pushed offer one automatically to what ended up becoming our selling price of 841k because someone else offered 830, therefore they get pushed up to 841. So that was the final selling price of the property. So now let's break down some of the numbers and actually look at at what we made on the deal. Alright, so I purchased the property for 617 and I got a loan on the property for approximately 450,000. Again, the thing that kills me about selling the real estate right now is the fact that this debt was great. I think it was like 4% or 4.25% and you can't even touch that right now. It's like seven, seven and a half percent mortgage rates. It's insane. So I hate selling right now. Honestly, I would love to keep my real estate because I really believe in the long run it'd make me more money. However, I really don't want to do duplexes anymore. I'm thinking 30, 40, 50 units down the road. There's not enough juice for the squeeze when it comes to these smaller properties for me, as of where I'm at right now in my business. So I got a loan for 450k, put down 25% on conventional loan and on the actual purchase price. So I got 617, then I got 50k. So in terms of what I actually have into the property with equity and everything, $667,000 in kind of like the aftermarket repair value after I put in my improvement cost and the purchase price. And then I've sold that now for 841k. Now there's going to be about $40,000 in cost to sell this real estate commission and there's other costs involved. So really let's just go ahead and take away 41k as extra fees and just call it 800k just for the sake of round number numbers. And so really what's happened is I have made after all of the extra fees etc just from the equity side. Now what I'm not taking into account here is the fact that we were able to cash flow on this Property by about $1,500 every single month in terms of cash flow just from the rents. I also paid down the principal of the loan by about $20,000. Aside from all of that, I'm walking away with approximately $133,000 as my final profit on this deal. I'm going to be taking a 1031 exchange, it's called on this and rolling it into another real estate deal which is going to be the headquarters for Augusta Lawn Care. Now this is just the first property because as I speak right now, I have three more duplexes on the market and I have more to sell. I'm going to sell up to five to six million dollars worth of real estate in order to be able to pay for that headquarters with cash. And if you go back to my videos, a couple years ago when I started investing more heavily in real estate, I specifically said this was the reason I was doing it. And that was as a backup plan for the businesses to be able to pay for the headquarters. Because I know that headquarters will allow us to get to much larger skies and scale than this real estate ever will. Ultimately, I will get back in real estate. I love the real estate game. I understand the numbers. I actually became a licensed real estate broker just a couple weeks ago. So I love real estate. I'm not trying to get out of real estate. I just believe that over the next couple years these property values are going to become compared. My rents are not going to go up a whole lot and I'm really bringing $133,000 worth of profit forward. That would take me at least five or six years of renting this property, managing this property just to get to this $133,000 in profit. So I'm just accelerating all that cash flow, bring it forward to today and then do it tax efficiently by rolling it into a 1031. So the question is, well, should you sell your real estate right now? Probably not. Most real estate, if you hold it for 10, 15, 20 years, does really, really well and this property would continue to cash flow. The rents would probably marginalize for the next couple years, then come back once the recession kind of is passed. But ultimately I'm not going to wait around. I'm going to accelerate that cash flow. I'll get over the next five or six years, bring it forward to today, and then take that money and go build something that I think has much larger potential in a gusta nation down the road road. When I see these market values of real estate go down over the next 12 to 24 months, I will be a net buyer of real estate, but I won't be buying duplexes. I will be buying things that have 30, 40, 50 units where I can have an on site property manager and even more hands off for me. And I don't have to get involved at all. Now I've had a property manager, Liz did this all for me. I literally don't know the tenants, never signed a lease, never did an inspection, never did any sort of handyman stuff at all. However, with when you're only making about 15, 1600 dollars per month in cash flow, the juice is just not worth the squeeze for where I'm at currently in my career, duplexes were a great place for me. It started I have five or six of them, six, six, seven, seven of them, I don't know. But I have quite a few of them and I'm now trying to get offload them while I still have plenty of equity in them, tax efficiently move them into a better real estate product and then when the time comes, when there's great opportunities, when I feel like the most market's going to really have a hard rude awakening in 2023 and in 2024 I'll be buying real estate for a discount and I'll be able to do it for real estate that actually makes sense for me. That's large enough, has much more scale and is actually going to move the needle for me in my personal finances. So stick along for the ride because over the next few weeks I'm going to be selling a lot more real estate. Millions of dollars worth of real estate. I'll try to give you guys the numbers as much as possible and I look forward to sharing that knowledge with you and hopefully you can use it in your business, your personal finances. Check out the links in the description. MBA for entrepreneurs Next month, I'm going to be creating a module about investing beyond business in things like real estate in the stock market, something I'm going to be working on throughout November and December on the MBA for Entrepreneurs course. So check out the links in the description and I'll see you tomorrow.

This has been the Mike Andes podcast. Now you have some ideas on how to take your business to the next level. And if you liked what you heard, we have tons of lectures, interviews, and more over at the Mike Andy's YouTube channel that'll be right up your alley. That's all we have for you today. We'll see you next time.