216. REAL DEAL: Optimizing the 1031 Exchange

Summary

Real Estate Investing School Podcast Episode 216: REAL DEAL: Optimizing the 1031 Exchange Release Date: December 5, 2024 Host: Brody Fawcett Guest: Mike Neubauer

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Introduction

In Episode 216 of the Real Estate Investing School Podcast, host Brody Fawcett welcomes Mike Neubauer for an insightful discussion on optimizing the 1031 Exchange. This episode delves into a specific real estate deal that showcases strategic networking, effective deal funding, property renovation, and successful exit strategies using a 1031 Exchange. Whether you're a seasoned investor or new to the real estate game, this episode offers valuable lessons and actionable insights.

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I. Finding the Deal

Networking Leads to Opportunity

Mike Neubauer emphasizes the pivotal role of networking in uncovering lucrative real estate opportunities. The deal in focus—a short-term rental condo in Maui—"found us" rather than the other way around. Mike explains that through active participation on various online platforms and forums, he was approached with an estate sale opportunity.

Mike Neubauer [00:16]: "We found this deal. Well, we didn't find this deal. This deal found us."

Estate Sale Dynamics

The property was part of an estate sale following the passing of the unit owner’s husband in Korea. Mike recounts the complexities involved, including handling the transition after the subsequent passing of the property's owner.

Mike Neubauer [04:59]: "There was a death in the family and the people who owned this particular unit was, I think it was a husband of some lady in Korea and he passed away."

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II. Funding the Deal

Financial Structuring

Brody and Mike discuss the financial aspects of the deal. They purchased the condo for $450,000 and invested an additional $40,000 in renovations. The financing was structured with a 30% down payment secured through a 10-year ARM at 5.5%, coupled with a 30-year amortization schedule.

Mike Neubauer [13:13]: "We took it down with 30%. We put 30% down to get the loan and we had it on a 10 year... fixed loan for 10 years at 5.5%."

Partnership Dynamics

The investment was a collaborative effort between Mike and his partner, sharing both the financial burden and the responsibilities associated with property management.

Mike Neubauer [13:16]: "We did, yeah."

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III. Renovating and Managing the Condo

Strategic Renovations

Mike took an active role in renovating the property, handling much of the physical work himself. The $40,000 investment went towards gutting the condo and making it rentable as a short-term vacation rental.

Mike Neubauer [11:58]: "We completely gutted this place... I laid the floors and put up some walls and whatnot."

Operational Efficiency

By focusing on one-bedroom and studio units, Mike minimized wear and tear, catering primarily to honeymooners and couples rather than larger families. This strategic choice reduced maintenance costs and streamlined property management.

Mike Neubauer [16:48]: "We decided to focus on the smaller stuff. Let's gear this towards, like honeymoon couples."

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IV. Financial Performance

Revenue and Expenses

The renovated condo was rented out at an average of $200 per night with an impressive 86-87% occupancy rate. This translated to gross monthly revenues of approximately $6,500, with net earnings around $3,000 after accounting for mortgage, HOA fees, insurance, and minimal property management costs.

Mike Neubauer [14:23]: "We were bringing in around 6,500 a month, I'd say on average. ... probably, yeah, 3,000 somewhere in that range."

Mortgage Breakdown

The monthly mortgage payment was around $1,800 to $1,900, with total monthly expenses, including HOA and insurance, reaching approximately $2,400.

Mike Neubauer [14:23]: "Mortgage on that was probably ... around 1800, 1900 a month in mortgage."

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V. Exiting the Deal Using 1031 Exchange

Profitable Sale

After a year of successful operation, Mike and his partner decided to sell the property for $650,000, realizing a substantial profit of approximately $200,000.

Brody Fawcett [19:37]: "You bought this thing for all in with your rehab and everything about 490. And then you sold it a year later for 650, which is like $170,000 spread."

Implementing the 1031 Exchange

Opting for a 1031 Exchange, Mike reinvested the proceeds into a luxury glamping resort near Zion National Park. This strategic move allowed them to defer capital gains taxes while upgrading to a potentially more lucrative investment.

Mike Neubauer [20:57]: "...we decided to 1031 exchange that. We knew that we needed to spend at least $650,000 in order to satisfy the 1031 exchange."

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VI. Future Plans and Next Steps

Luxury Glamping Resort

The new investment is a 20-unit luxury glamping resort adjacent to Zion National Park. This larger-scale project represents a significant step up from the single condo, offering enhanced amenities such as a gym, meeting center, and pickleball court.

Brody Fawcett [24:30]: "We're going to have like a big gym, meeting center... pickleball court and all the fun stuff."

Collaborative Efforts

Mike expresses enthusiasm about this partnership, highlighting the seamless collaboration between himself and Brody, founded on mutual trust and strategic alignment.

Mike Neubauer [22:17]: "We're now transitioned into that property, which I'm super excited... to a 20 unit luxury glamping resort in Zion National Park."

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VII. Key Takeaways and Insights

1. Importance of Networking

• Mike Neubauer [26:50]: "Networking is one of the biggest things when it comes to investing in general. So get out there, network, meet people..."

2. Defining a Clear Buy Box

• Establishing specific investment criteria (location, property type, price range) streamlines the decision-making process and ensures alignment with investment goals.

3. Strategic Partnering

• Collaborating with trustworthy partners can enhance deal feasibility and share the investment burden.

4. Adaptability in Property Management

• Tailoring property features to target demographics (e.g., honeymooners vs. families) can optimize occupancy rates and reduce maintenance costs.

5. Leveraging 1031 Exchanges

• Utilizing 1031 Exchanges allows investors to defer taxes and reinvest in higher-value properties, facilitating growth within their portfolios.

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VIII. Notable Quotes

• Mike Neubauer [26:50]:

  "Networking is one of the biggest things when it comes to investing in general. So get out there, network, meet people, talk about what you do, what you want to do, all that fun stuff. That's how deals get done."

• Brody Fawcett [18:19]:

  "Gotta be able to cater to the families. You know, I just thought that was a good point to bring up because I never even thought about that before."

• Mike Neubauer [19:38]:

  "This is the fun part, right? So we decided to 1031 exchange that... This is an asymmetrical bet that I am willing to take."

• Brody Fawcett [27:43]:

  "How do you go be that person, you know, that you add enough value that people are like, oh, I do business with it."

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IX. Conclusion

Episode 216 of the Real Estate Investing School Podcast provides a comprehensive look into the intricacies of optimizing a 1031 Exchange through a real-world example. Mike Neubauer’s journey from acquiring a short-term rental condo in Maui to leveraging a 1031 Exchange for a luxury glamping resort offers listeners actionable strategies and highlights the importance of networking, strategic planning, and adaptable property management. This episode serves as an invaluable resource for investors aiming to scale their portfolios effectively while mitigating tax liabilities.

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Connect with Mike Neubauer:

• Instagram: @EarthTrot or @MauiInvestor

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Thank you for tuning into this detailed summary of Episode 216. For more insights and real estate strategies, subscribe to the Real Estate Investing School Podcast and stay ahead in your investment journey.

Transcript

[Mike Neubauer]

Okay. I'm leaving for bpcon. Like, okay, cool. And we have to close on Friday. Okay. Let's get on a zoom and we'll talk through it. Let's go.

[Brody Fawcett]

What's up, everybody? Welcome back to another Real Deal episode with the Real estate Investments podcast. This is your host, Brody Fawcett, and we have an awesome guest for you today who I'll introduce in just a second. Second. First off, thanks for showing up. Thanks for tuning in again today. We're excited because this show is short. It's sweet, it's to the point. And honestly, we created it because it is what has helped me probably the most out of everything on this real estate path, this real estate journey, and that's learning from other people, specifically from deals. They did. What went well, what didn't go well. So excited to dive into one single deal today. We're going to extract kind of some good goodies from it. Some gold nuggets that you guys can take. Go apply as always. Like, leave us a review. Share this with your friends, anybody who's into real estate investing. Our goal is to cover as many of these different types of deals that others have done so that as many people as possible can learn from them. That way, you can go and apply this stuff without having to take all the time and all the money that usually takes to learn these lessons. So thanks for being here. And we have a killer guest, which is Mike Neubauer. What's up, Mike?

[Mike Neubauer]

Hey, what's up, Brody? How you doing, man?

[Brody Fawcett]

Good, dude. Excited to have you. This could have been in person because we both live in the same place, except for you're in Vegas and you're in your hotel room in the bathroom of your hotel room.

[Mike Neubauer]

Thanks for sharing.

[Brody Fawcett]

You're ready to roll.

[Mike Neubauer]

I'm not on the toilet, everyone. This is a swivel chair I brought in here, but, yes, this was the best background I could find. And we are ready to roll.

[Brody Fawcett]

Oh, I love it. You didn't know I was going to bring that up on air, did you? No.

[Mike Neubauer]

Thanks. Thanks, though.

[Brody Fawcett]

Yeah, yeah. The backdrop is good, though. It's solid. Well, dude, excited to jam on a deal. I just barely asked you, like, hey, do you have. Do you have one picked out that you want to go through? Because I know you're really familiar with this show and the layout of it, specifically how we focus on how you found it, how you funded it, and then how you forced the deal and got creative and you're like, yeah, I actually want to talk about this deal, which is One that I know a little bit about because I came, I think this is before I actually moved to Maui. I popped in and you and I knew each other already. I came to say what's up? And you're working on this project, so kind of like zoom out, 30,000 foot view and we'll talk about how it all relates to what you and I are both doing moving forward. But tell us about this deal and the basics of it really quick.

[Mike Neubauer]

Yeah, absolutely. So we found this deal. Well, we didn't find this deal. This deal found us. And it was through networking. We had, you know, I'm pretty active on some platforms online and somebody reached out to me and said, hey, I got this deal under contract. It's an estate sale. It's a short term rental condo on Maui, which is our buy box in a small niche area of Maui, which is fits in our buy box. And he wanted someone to go look at it. I said, yeah man, I'll go take a look at it for you. So I went down there, took a look at it, gave him my thoughts, told him about how much I thought it would cost to rehab habit and get it up and running and what he could expect to earn from it. So long story short, he brought this out. I can't remember when, probably in like January or something, two years ago maybe. And it just kind of took a long, long time for him to get anything going with it. Turns out he couldn't close it. He wholesaled me the deal and we closed on it. And it's, it's a good location, right on the water, everything else. But I didn't know much about the complex itself. So we got in there, we started gutting it and that's when you walked in. And I think we did another video. I think it's probably up on Instagram somewhere of just a walkthrough of what we were hoping to do with it. So we bought it at 450,000 and we put about $40,000 into it and we rented that thing at about 200 a night. When it was all done, cash flowed on it for about a year and then we decided to sell it. So we 1031 out of that one at this point and we sold it at 650,000.

[Brody Fawcett]

Okay, sweet, dude. This is, this is good stuff that we can dive into right off the bat. So I want to, I want to touch on all these numbers as well. Just kind of get people so they have an overall, you know, picture of everything and know what they're looking at. But First, I want to touch on just a couple of definitions that you said. One, you said an estate sale. What's an estate sale?

[Mike Neubauer]

Yeah. So there was a death in the family and the people who owned this particular unit was, I think it was a husband of some lady in Korea and he passed away. There had been a renter in there for 30 something years or something like that since they bought it and they were just, you know, selling everything off essentially. So we had to, we had to deal with that. And then while we were under contract on this thing, the lady that owned it, she ended up dying. So it's kind of like this weird thing and we had to go through like then like the next of kin thing. And anyway it all turns out that we ended up closing on it in like August or something.

[Brody Fawcett]

Wow, that's crazy. Yeah, cool. No, I just wanted to, want to touch on that because that's sometimes it's a good way to get a good deal on a property. Right. Or something happens. Unfortunate. That was the very first house that I bought. Kind of same, same story was asking around if anybody, you know, knew of anything close to college campus. And someone's like, this lady just passed away, maybe her kids want to sell it and cold called them and they're like, yeah, we of it. So there's, I wanted to point out because there's opportunity. Right. And stuff like that. The other thing you mentioned, which, which is really cool and people probably have no idea what these words even mean, but buy box. You said this was in our buy box.

[Mike Neubauer]

Yeah.

[Brody Fawcett]

Can you give like a 30 second definition of that?

[Mike Neubauer]

Yeah. So for us, we were looking for short term rentable condos in South Maui. So we have about a 3, 3 mile radius that we look into. Yeah. And so if things come in there and they're one bedroom or studios in this area and they're priced basically under a million dollars, then we're interested.

[Brody Fawcett]

Yeah. Yeah. So good. Dude. Yeah. If you don't know where you're going, any path will get you there. So like the more clear and specific you can get, which is creating this buy box. These are the types of homes that I buy because I've thought this through. I know what I have to work with. I know where my skill set is. All these things that we go through a lot of, with a lot of our students inside real estate, my school. But understanding that is huge. So I love that you, hey, this is my buy box. It fits. Yes, I'm interested. It doesn't fit. No, I'm not interested. Super cool. And then this is a short term rental or an str. So it's a nightly rental. Which, the, the other cool thing about this is you knew it had to fit in that box. So like the big thing right now going around is a lot of these towns, a lot of these cities are cracking down on what actually is a short term rental and where you can do it. And the difference of like, is it 30 days or less? A lot of times they'll say 30 days or more. Most places where we live. Right. It's, I think it's three months or 120 days. Is that, is that kind of the standard?

[Mike Neubauer]

Actually anything under 180 days is considered short term rental. Yeah. So for us, you know, we look at stuff that is zoned hotel. That's the stuff that we're holding on to anything. There are things that are grandfathered in. Okay. If the deal good enough. This was a grandfathered in property. So we knew we didn't want to hold it long term. The stuff that we want to hold is the stuff that's hotel zoned. And we love regulations. We love when regulations are in place because we know if we play by the rules, we're good, right?

[Brody Fawcett]

Totally. Yep. Yeah, I love that. And, and the reason you know that it's hotel zone because that's what, in this specific area, that's what's allowed and what's regulated to be able to be used as a short term rental. So you know all those things. So that's how you're looking. So there's, there's work that goes into it. So I love that. And then the last thing dive into the numbers is you said they wholesaled it to you. Touch on that really quick. And even, even if you know the numbers on that, you can share that as well.

[Mike Neubauer]

Yeah. So, you know, this guy reached out to me because, you know, I, I was buying short term rentals on Maui and he had gotten it under contract by doing his, you know, due diligence, he connected with somebody else somehow on Maui and they ended up, you know, I think direct mail, I think they were using direct mail to, to get these properties and they found a property. This, this particular property, somebody had interest because of the estate sale. And you know, he put it under contract and it was basically like, hey, I can, I'm going to buy this or I'm going to sell this off. And so the language in the contract allowed him to take the sale of that property and pass it over to me instead of him having to close on It. So we basically assumed the contract, and we took it down like that. And then as far as the numbers go, I don't think that he was not asking for anything. He just wanted me to be able to take it down if I could. So we ended up giving them, like, a free two weeks or something at the unit after we. After we already remodeled it.

[Brody Fawcett]

Yeah, that's cool. That's awesome. And the nice thing with that and, like, for those who listening that don't know what wholesaling is, there's people that do this for a living, right? Like, they put in all the work, they spend the money and send out the mailers. They find out where the distressed sellers are. Like, they're doing that and essentially flipping contracts, right? So they'll mark it up and sell the contract that they have to purchase the property without ever purchasing it, and they'll keep kind of the spread on that one. What's cool in this scenario? And I've. This has happened to me as well, Mike, where someone comes to you and they're asking for your help, and you're just like, hey, this is what I would do here. This is this. And then they haven't been able to close on it, and then it comes back, and they're like, hey, do you want to do something here? Maybe I can make something out of this and you can take it over. And so I think that's cool. And that says a lot about you just willing to, like, share your stuff, and you got a cool deal out of it, so.

[Mike Neubauer]

Yeah.

[Brody Fawcett]

Anything else to add on that?

[Mike Neubauer]

No. I said, you know, there wasn't really enough on the bone for us to partner on it. And I think that was what he initially was trying to get at, but there just wasn't enough there. And so I told him. I encouraged him to take it down because I thought it was a good deal for him, but it wasn't something that I was really interested in partnering on. And, you know, we. We helped him out to the point where he just wanted us to take it if we wanted it. So, yeah, it was good. It was a win win. And we made a good connection out of it, too.

[Brody Fawcett]

Yeah. That's awesome. That's awesome, sweetie. Let's. Let's dive into these numbers. So you bought this thing for 450,000 bucks, which a lot of people would like. They realize, how many square feet is it?

[Mike Neubauer]

About 400.

[Brody Fawcett]

400 square feet. A lot of people hear that, and they're like, what it needed to rehab. And it was 450k. And it was like, right, well, welcome to the market. But it just shows that it doesn't matter if the numbers work right. And then you put 40k into it. This mostly kind of cosmetic stuff. I know you put some sweat equity in there.

[Mike Neubauer]

Yeah, we completely gutted this place. I did all of the work. I actually really enjoy doing that. I shouldn't say all of it. I didn't install the granite or do the tile or anything like that for the plumbing, but, you know, most of the stuff I did, I laid the floors and all that kind of stuff and put up some walls and whatnot. But I enjoy doing that kind of stuff. So, yeah, we. We took it down, tore it up and put it back together. Cost us about 40 grand to do that. So as far as funding this project, we. We took it down with 30%. We put 30% down to get the loan and we had it on a 10 year. Yeah, it was a 10 year ARM at 5.5%. So it was fixed. Basically a fixed loan for 10 years at 5.5%. It was a 30 year amortization on the mortgage, but we paid 30% down because it is considered a condotel. That's the going rate that we have to put down. So we funded that myself and a partner, we paid cash for that and then we paid cash for the 40 grand that we use for the rehab on it as well.

[Brody Fawcett]

Did you guys split all that? 50. 50?

[Mike Neubauer]

We did, yeah.

[Brody Fawcett]

Cool. You're a good partner if you're doing a lot of that labor.

[Mike Neubauer]

Yeah, I take a little bit of a property management, but this guy is in my will to take my kid and all that kind of stuff. And the other thing too is, what is the Mark Cuban line like? 40% of a watermelon is better than 100% of a grape. We weren't taking this deal down by ourselves. Right. So if it wasn't for my partner and the cash that he's bringing to the table, that deal would have passed us by. And where it's gotten us to would have passed us by as well.

[Brody Fawcett]

So that's super stoked. Yeah, he's solid too. He's a super good dude. I guess he's now a business partner of mine too. Now. I know, I'm excited to go there. Yeah. Yeah, me too. So. So you guys rented this thing out. I just want to touch on the numbers really quick. As you rented it out, what was. You said average 200 bucks a night. What was kind of your occupancy and what was. What was Your expenses. What were, what was your mortgage?

[Mike Neubauer]

Sure. Yeah. So let's see. Mortgage on that was probably. Gosh, I'm trying to remember off the top of my head. I want to say we were around, around 1800, 1900amonth in mortgage. And then we had HOA fees on top of that and insurance, I think all in. We were maybe around 2400. I think we were around 2400 with all of that. And then we do, let's see, you know, other than our property management costs and stuff like that, which, you know, we have a little bit there, but it's pretty minor because we run all the property management. So then our nightly was about 200 a night. We were averaging. I'll have to look up the exact numbers, but I want to say that that unit ran at about 86, 87% occupancy. Certainly our numbers were a lot better during the winter months and then a little bit, little bit less in the summer months.

[Brody Fawcett]

Yeah, I'd say average.

[Mike Neubauer]

Average 200.

[Brody Fawcett]

What do you, what do you think you brought in on average per month?

[Mike Neubauer]

Yeah, so we were bringing in around 6,500amonth, I'd say on average. That's. That's gross. You know, our net on that was, you know, I don't know, you could probably do the math better than me, but probably, yeah, 3,000 somewhere in that range.

[Brody Fawcett]

Yeah.

[Mike Neubauer]

When all of a sudden.

[Brody Fawcett]

Phenomenal. Yeah. Yeah. That's great. That's awesome. And we could take a step further and get your cash on cash return that you had all of these things, right. But without going too deep into, into all of that, I think that was enough to kind of like, that was a good return as. As it was. You know, you got a partner on this deal, like you rehabbed. It was in a cool spot. And this is, I think this is a good note to bring up because I suggested to you, I was like, hey, I had a small, like Airbnb like this. And what I did was I added, you know, multiple, like, sleeping areas. Even though it was just a one bedroom, but I was able to do this and with this built in bunk bed thing. And I remember your response because you're like, yeah, we've actually played around with this in some other areas and you were catering to people like coming on their honeymoon, like that was your goal. So you actually didn't want to have more beds than that. It didn't make as much sense.

[Mike Neubauer]

Yeah, I mean, for us, like, we, we noticed when we had the bigger units and this is why we Were kind of focusing on more like the one bedrooms and the studios was that we had so much wear and tear and so much damage from like, kids or like, you know, Maui's an expensive place. A lot of times, you know, people can't afford to get there unless they're sharing a room with another couple or something like that. And it just got to be where the expenses were so high on the two bedroom units that we decided, you know what, let's focus on the smaller stuff. Let's gear this towards, like honeymoon couples. I mean, people like that are out exploring all day, they come in to sleep and that's it. So our places have stayed, you know, a lot more manageable and we don't have as much wear and tear. So, you know, different things work in different areas, for sure. Like obviously in Utah you want to have as many beds as possible, right? Because a lot of people travel together and bigger families and things like that.

[Brody Fawcett]

All the wives, everything. All the wives, yeah. I'm just kidding. Somebody's thinking it out there, so we just had to throw it out there. Someone's thinking it. No, definitely the big families and the kids. It makes a difference. And you actually brought up to me like, dude, I'm looking at these different properties. Why does every single one have like this bunk room? I'm like, because everybody has a bunch of kids.

[Mike Neubauer]

We're looking at some stuff in St. George right now. And it's like I'm seeing all these like three level bunk beds. I'm like, what is this? And there's like six of them in a room. Who are these people?

[Brody Fawcett]

Gotta be able to cater to the families. You know, I just thought that was a good point to bring up because I never even thought about that before. I'm just thinking like, oh, the more people you can sleep, the better you can charge more per night. And at the end of the day, the juice wasn't worth the squeeze. Right? And I think that that's just a principle for real estate investing through and through and through. It's like, hey, what do the numbers say? And when we look at this, it just doesn't make sense. And so I love that. And thanks for teaching me that. So.

[Mike Neubauer]

Yeah, well, I mean, I think there's, you know, with real estate, there's. There's no wrong answers, right? Like, I. We could have put three bunk beds in there and we probably would have made more money doing it. But for me, I don't like headaches and I know that there would be a lot of headaches. When. When trying to do that. So I try to avoid that at all costs. So for me, it was. That's what I needed to do. But if I needed more cash flow, then that would have probably been something that I would have looked into.

[Brody Fawcett]

Cool. No, I love that. And then you exited from it, and there maybe there were some. Some more fees, but essentially you bought it for all in with your, you know, your rehab and everything about 490. And then you sold it a year later for 650, which is like $170,000 spread. 100.

[Mike Neubauer]

That's correct.

[Brody Fawcett]

Yeah. Is that right?

[Mike Neubauer]

Yep.

[Brody Fawcett]

160. I don't know if I did my math right, but yeah, love it. Okay, cool. And then. And then what did you do? We need a whole other episode for this.

[Mike Neubauer]

So this is the fun part, right? So we decided to 1031 exchange that. And so we. We knew that we needed to spend at least $650,000 in order to satisfy the 1031 exchange. Now, we were looking at all kinds of different deals. We were. We were kind of close to coming down on this strip mall in Arizona and some single family home stuff. We have some stuff out there in Arizona as well. So I do like that. That Phoenix, Gilbert kind of markets out there. So we're looking at some stuff out there that we do some midterm stuff in. And, you know, I put it out there to everyone that I know that, hey, you know, we're. We've got a 1031. We have X amount of days left to close on something. I was like, if anybody has a deal that you know that you need help with, let me know. And you actually came to me and like, hey, I'm working on this thing. Not sure if you're interested or not, but here's what it is. And when you sent it over, this is. Can it. Can I open the bag on this? Are we.

[Brody Fawcett]

Yeah, yeah, yeah, yeah.

[Mike Neubauer]

Okay. All right, cool. So you're like, this is. It's this luxury glamping resort that I'm gonna do. I was like, luxury glamping resort? What? He's like, yeah, yeah, yeah. And so you showed me the, like, these mock ups that you had and whatnot. And like, the location where it was right outside Zion. I was, wow, that's super cool, man. So my partner on this, we have to take it under the same name as the unit that we're selling with the 1031. So I talked to my partner. I was like, and he knows you from a mastermind as well. So For. For, you know, for all intents and purposes, we all get along just fine. And so I talked to him. I was like, dude, this. This could be such a huge upsell for us, right? Like, it's something where we didn't really ever like this property. We knew we wanted to get out of it. This is a potential 10x. Even though we're partnering on something that's going to cost less than what we're selling this thing for, like, the benefits down the road. This is an asymmetrical bet that I am willing to take. Right? And he looked at it too, and we got on a zoom together, and it's like, look, this is Brody Fawcett, man. This. This guy's like, you know, the Heisman Trophy winner Brody Foster. So we knew that we wanted to do a deal with you for sure. That was not the problem. And so when we looked at the.

[Brody Fawcett]

Numbers, like, you guys actually. Right.

[Mike Neubauer]

We paid extra to have Brody on board. But yeah, no, we looked at the numbers and, like, I thought the numbers were going to be inflated at first, but, you know, we did our research too, and. And the numbers that you put out there, I thought were pretty aligned with the numbers that I saw. And I thought that, you know, you were underwriting everything conservatively. Like, we like. And obviously, you're the king of Southern Utah, so we. We knew that you could get something like this done. And so now we've transitioned into that property, which I'm super excited. In fact, we're going up there in a couple of days to go check it out. I'm super excited to help in any way that I can and really level up. From a studio condo to a 20 unit luxury glamping resort in Zion National Park. I mean, that doesn't get better than that, right?

[Brody Fawcett]

Yeah, dude, it's. It's like I said, we need a whole entire show on that, which we will do just because it's. It's so fun, exciting. We haven't actually, like. I haven't talked about it a ton just because, you know, it's. I don't know, it's been busy working on it so much. Like, we'll share all the deets, but.

[Mike Neubauer]

Yeah.

[Brody Fawcett]

Yeah, man, I love it. And it's funny because, like, I was talking about it, we met up for. It's like a barbecue and like, what are you working on? What are you working on? And it was just like, I didn't even. I didn't even, like, need a partner at the time. I didn't. I thought we were good, you know, and then like, well, if something like falls through or whatever, like, let me know if you need somebody. And it was just crazy. Like one, me talking about it, two, like you saying that. And then I'm like, you know what? Like, maybe there is something here that would work out. And just you saying that, like, it got enough on my mind. And then. Yeah. And then we like dove into it and it all worked out.

[Mike Neubauer]

So anyhow, we closed on that like a week after we had that conversation too. Yeah, right.

[Brody Fawcett]

It was very quick.

[Mike Neubauer]

And it was like, okay, I'm leaving for bpcon. I was like, okay, cool. And we have to close on Friday. I was like, okay, let's get on a zoom and we'll talk through it and let's go. And it worked out. So, yeah, super, super excited.

[Brody Fawcett]

So cool. Yeah. And I'm excited for that deal. I like how you put it in perspective. Like we took this, you know, whatever 400 square foot condo and now we're going to have, you know, 2020 plus, like Lamping Resort. It's going to be so fun. That's going to be so plus, plus more. You know, we have like a cool, like, big gym meeting center and like there'll be a pickleball court and all the fun stuff. So it's going to be awesome.

[Mike Neubauer]

So cool.

[Brody Fawcett]

Yeah. But yeah, dude, with, With. So this was cool. Just kind of take your. Your deal in a year's time and kind of all those things and how it came together. We went over how you found it, we went over how you funded it. The cool thing with talking about how you forced it is it just comes out as we're going. Like, we pulled out so many just nuggets that, you know, from. From creating the buy box, from understanding, you know, putting yourself out there. We didn't talk about that one a ton, but like, you know, you're sharing, hey, this is my buy box. These are the things I'm looking for. And then someone came to you for your expertise. Like all of those things I feel like are ways that you're forcing this deal. You're doing these things that other people aren't thinking about, you know, and it's rolling into other other opportunities and so really cool. Anything else that you would add to, like, how you force this deal or somebody else listening to this, looking for the outside is like, man, I want to make me like Mike. I want to be like Mike when I grow up.

[Mike Neubauer]

Yeah. You know, I think the important thing with this deal is, is how we really found it was through networking, right? We put ourselves out there on. On social media platforms. We put ourselves out there in forums and wherever else, and it's like, hey, we have nothing to lose. But, like, this is what we're looking for and this is what. What we can help with. Right? And so we. We found this deal through networking, and like I said, this deal found us. And the deal that we pivoted into, we networked to find that, too. Like, you and I met at a Mastermind, and we just kept a great. And we had no intention of working together for the first two years that we knew each other. And it just so happened that this deal came up and you were like, I'm comfortable working with you. Are you comfortable working with me? And we were absolutely comfortable with that. So, you know, networking, to me is one of the biggest things when it comes to investing in general. So get out there, network, meet people, talk about what you do, what you want to do, all that fun stuff. That's how deals get done.

[Brody Fawcett]

Yeah, yeah. And that credit goes to you, dude. That's the probably the hardest thing for people to replicate is, like, you're just a good, genuine dude, you know? And, like, I even told my wife that because, like, I like, the reason I wasn't as stressed about, like, we already had one partner on the deal, and I was like, oh, I like this enough. Like, I'm just going to, you know, take. Take the rest of it and put up my money for this part of it. And then I was like, I literally told my wife was like, mike's actually somebody, and I'm picky. Somebody that I would do business with, you know, or you're like, you're. I feel like that's just so crucial. And so it's like, how do you go be that person, you know, that you add enough value that people are like, oh, I do business with it. And we were at the beach, like, two weeks ago. I introduced you to one of my friends, and then I run into her, and she's like, yeah, we were over at Mike's house and doing dinner and. And you guys will probably do something together. So it just. It's cool, man.

[Mike Neubauer]

It's super cool, man. This mic is going out, so I'm going to take it out, but you sound great. Okay, great.

[Brody Fawcett]

Well, dude, do you have anything else to add? Anything?

[Mike Neubauer]

I mean, yeah, I mean, I'm an open book, so anyone that has any questions for me as well, you're welcome to reach out to me. Happy to talk about it. And you know, if you ever need anything, Brody, you know where to find me. I'm happy to come back on and talk about anything.

[Brody Fawcett]

I love it, dude. I love it. What's the, what's the best place people can reach out to you or connect? Yeah, sure.

[Mike Neubauer]

I'm you know I'm really a lot older than I look. All these gray hairs and receding hairline. So I'm not great on social media but I am trying Instagram's probably the best. I I'm at Earth Trot or at Maui Investor. Yeah. So reach out to me there and I'm happy to to respond to anyone.

[Brody Fawcett]

Yeah, love it man. Well enjoy. Enjoy saying we switched places. Enjoy St. George for me for the next little bit and I'll enjoy boy Maui and look forward to to seeing you soon. Dude, thanks for dropping some some knowledge bombs today. Perfect.

[Mike Neubauer]

Anytime brother. I appreciate you.