Unlocking Real Estate Success: Mark Shuler’s Journey from Architecture

Dylan Silver (01:32)
Hey, folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have architect and ⁓ capital raiser, ⁓ designer, builder, investor, overall real estate entrepreneur in Seattle, Schuller. Mark, welcome to the show. It’s a pleasure to have you. I like to start off at the top by asking guests how they got into the real estate space.

Mark Shuler (01:53)
Thanks for having me.

Well, you know, I’ve been a practicing architect for 40 years and had a lot of developer investor clients along the way. ⁓ Just kind of was looking over their shoulder and figured if they could do it, I could do it. so ⁓ also I am just to my core an entrepreneur. And then finally everybody in my family’s in real estate. I’ve got five family members who were brokers.

My kid brother is the foremost authority on real estate taxation in the country. He’s the managing principal of a very large accounting firm based on the East Coast and they’ve got satellite offices all over the country. And he’s the in-house guy who teaches real estate to all of his direct reports.

Dylan Silver (02:50)
So growing up in the real

estate game and around real estate, did you know from an early age that this is what you were going to be doing? Were you passionate about it at an early age?

Mark Shuler (03:01)
Well, I was passionate about architecture from a very young age. I was one of these savant kids who figured out one and two point perspective when he was like six years old. And, you know, I’ve been designing and building stuff for as long as I can remember. got into high school and I’ve got this really creative mind, this really analytical mind and was able to fuse all that into a career path with architecture. That’s when I really discovered it.

Um, and then, you know, just went to college and went to architecture school, did really well there, and then got out and had been practicing for lots of years. Uh, but, uh, the real estate thing came along later. Um, I really got the bug in the, you know, late nineties, early aughts. And I went back to business school here at the University of Washington and got

certification in commercial real estate development. It took me a minute to get going in it, but by about 2012 or 13, I started really pursuing deals, specifically apartment deals.

Dylan Silver (04:12)
How common is it for architects to be investors themselves? that a typical ⁓ career growth path that you’ve seen, or is that maybe less common?

Mark Shuler (04:23)
You know, I’ve always wondered about that. I don’t think the vast majority of architects get anywhere near it. A lot of architects are, you know, want to be artists. And they think about, you know, redesigning the landscape and, you know, doing whatever they do. But it’s not taught as part of architecture curriculum. I can tell you that. And it should be. I mean, you should understand who your clients are going to be throughout your career. I mean, a lot of what

architects do is interface with developers and they are not speaking the language. So, you I’ve always thought of architects as highly paid technicians, but they’re not on the deal making side. And I was like, you know, I don’t want to sit over here. I want to be on this other side of the table. Yeah.

Dylan Silver (04:55)
Yeah.

on the other side. What’s

the what’s the ⁓ career path typically look like for an architect? And I’m sure it’s changing drastically right now, right? But what what what what does a career path look like? And are there, you know, steps along the way where, you know, when people think about their their, you 1520 year plan is this like, hey, this is my trajectory? Is there a typical path for an architect these days?

Mark Shuler (05:20)
boy. Yeah, it is.

That’s what’s really interesting about architecture. You can do the traditional thing, which is what I did for a lot of years, which is you’re just setting up a practice and hanging your shingle out and you start designing and building structures. ⁓ I did that and I think a lot of people do that, but it’s… ⁓

it, you end up doing the same thing for 4050 years. And I just, after a while, I’ve, you know, I’ve done 500 projects, I just like, okay, I’ve done this, what else can I do? And so I pivoted. And that, you know, and when you pivot in your late 40s, that’s, that’s a hard pivot, you know, you’ve got to, you know, you got to learn whole new skill sets and redefine yourself. And that’s, that’s pretty damn hard when you’re

Dylan Silver (06:53)
Yeah.

Mark Shuler (07:20)
you know, kind of an old grumpy guy like me. So, you know, but if you stick with it, you can really redefine yourself and become a much broader practitioner and speak the lingo.

Dylan Silver (07:22)
You

Yeah, I mean,

I had a similar, at least perspective because when I am a wholesaler, that’s what I’m passionate about. enjoy deal making. We may share that similarity between us. But when I was thinking about getting a real estate license a couple months back, I eventually did. I was kind of aware, but I wasn’t totally aware of just how little real estate agents know about real estate investing. I mean, very, very

Mark Shuler (07:59)
Ain’t that bitch.

Dylan Silver (08:01)
little I would say and I am a real estate agent I’m a realtor now so I can say this as being one there’s effectively at least in Texas no I would say zero training on real estate investing so most real estate agents not just because they’re tired of low offers or from you know people trying to haggle over every dollar which real estate investors certainly will

It’s also because they’re unfamiliar with like the jargon, you know, how to communicate with these people. And also, I hate to say it this too, a lot of real estate investors have a big ego. So then you’re dealing with, you know, personalities on top of that. But, you know, I noticed the same thing that you would think that a lot of real estate agents may know about investing, but no, it’s a totally different skill set.

Mark Shuler (08:48)
Very different. It’s one thing to ⁓ be a hired gun. It’s another thing to ⁓ shoulder risk and personally guarantee a loan.

Dylan Silver (09:01)
Absolutely. I want to ask you,

Mark, about your experience in raising capital. And before hopping on here, you mentioned private equity, right? And I think I’ve spoken with lot of investors and I spoke with people who’ve raised capital from Wall Street and took that skill set into ⁓ residential real estate or multifamily or commercial real estate, but without having any prior real estate background, just maybe their partner was involved in it.

and you’ve managed to raise capital. How did you learn this capital raising skill set that had come naturally to you? Did you have partners along the way with this?

Mark Shuler (10:16)
And you know, capital raising is an art and a science and I’ve been parts of masterminds. I’m part of one right now. That’s all we talk about. And how do you do that effectively? And it’s a lot more complicated than taking down a deal and going to all your friends and family and whoever else you can scramble to try to invest in it. It’s not, that’s not the game.

I mean, it’s, you have to have relationships established and you have to before that, be credible. You know, and in your first deal, it’s like, how do you take down a deal when you don’t have the money and how do you raise the money when you maybe don’t have a deal? So it’s a chicken and egg thing. ⁓ You just grind through and you know, here I am, 17 syndications later and I’ve raised 50 million.

Dylan Silver (11:06)
Yeah.

Mark Shuler (11:15)
So, but it’s always a challenge.

Dylan Silver (11:17)
I’d like to get a little granular talking about capital raising because you know I think most people who are on the outside looking in don’t think that this is something that they can do. You mentioned credibility but I also think that on a smaller scale a lot of the same principles that apply to raising lots of capital can work on a smaller scale even if you’re not raising millions of dollars some of the same mindset and tactics can apply. ⁓ what are without giving away all the the gold here Mark but

What’s some of the tactics and processes and maybe situational awareness, strategic relationships, ⁓ and just general advice that you would give folks if they’re trying to start raising capital?

Mark Shuler (12:01)
Well, I mean, one thing you mentioned is ⁓ ego. There are, there’s a lot of cowboy attitude in the industry. A lot of, let’s say unfounded optimism. And, you know, I’m a big believer in ⁓ data-driven metrics. ⁓ You have to understand.

not only your marketplace, but understand your deal, having done your due diligence, having done your underwriting, just be armed with all of these metrics. It’s just gonna make you look more credible. And too many people are like, bloviating out there with aspirational language, it’s just error. And you know, that doesn’t get deals done. And you have to like seriously…

View yourself as a steward of your investor capital and too many people get into real estate for one reason and one reason only to make money. And you know, you can make money a lot. A lot of different paths. It’s probably a lot easier. ⁓ So the stupidest reason to get into real estate is to make money, in my opinion. ⁓ You have to want to do this because it is a grind and you are drinking from a

fire hose every day and you just have to have the DNA and your fiber to want to do this. Otherwise, you know, you’re going to burn out and you’re going to lose deals and you’re going to lose all that investor money potentially. know, so there’s, you know, you’ve got to understand the deals. You’ve got to understand the business. Most importantly, you have to understand the regulatory environment and too many people get into the business without a clue as to the regulatory.

And that’s what makes me like really dangerous is I understand it very, very well. I’ve permitted 500 projects. So I know how invasive government can become. so knowing how to navigate all that is ⁓ I think one of the main points of being successful in the business.

Dylan Silver (14:16)
You know, not everyone, certainly not every aspiring real estate investor, but not even every accomplished and seasoned, you know, full cycle real estate investor may have an opportunity to ⁓ manage, you know, tens of millions of dollars of investor capital. But that is a tricky spot to be in, right? Because you’re dealing with lots of pressure. You’re also dealing with execution. You’re also dealing with teams and people. And then on top of all of that, you’re

if there’s a situation where you’re looking for deals, you’ve still got to find deals, right? You’ve got to kind of keep the machine going. And so

Mark Shuler (14:48)
Yeah. And

in this day and age, we’re dealing with blacks, one of them.

Dylan Silver (15:34)
Yeah, we talked about that before before hopping on here. What what what sort of meant psychological attributes and you know, personality traits do you think make someone equipped to handle? You know, investor capital and also all the moving parts that go along with all this pressure. It’s not just being able to handle pressure, you have to really have kind of a mind for it. Am I wrong in saying that?

Mark Shuler (15:36)
Yeah.

No, you do. First of all, you to be comfortable with the risk. And then also comfortable managing that risk. And finally, you need to be able to look at that landscape and see something coming and then pivot on a dime. Let’s just take one thing, insurance. What’s going on right now in government? You just see that I can tell you what’s going to happen in a year and a half.

FEMA is getting gutted. And what do you think is going to happen in the insurance industry?

Dylan Silver (16:37)
I mean, either state governments are gonna have to do more or private insurance is gonna go up a lot.

Mark Shuler (16:42)
They’re all broke. you just nailed it. We’re going to have a massive insurance event very shortly nationwide because FEMA is getting gutted. So I know what we’re doing. My partner’s got on a plane and flew to England and met with Lloyds at London and tried to get an umbrella policy for our entire portfolio, trying to cut our insurance costs and just lock that rate in.

And then, you know, we monitor flood maps very carefully where we’re at. And in this age of ⁓ increasing global warming and fires in the West and all these hurricanes coming in out of the Gulf, you know, this is a real challenge. Try getting insurance in Florida right now and see where it may cost you. And, you know, everything’s become so politicized. know, the insurance commissioner’s office is just like, you know, paralyzed.

Dylan Silver (17:30)
Yeah.

Mark Shuler (17:39)
So that’s coming. That black swan is coming. And we’re trying to be out in front of right now.

Dylan Silver (17:43)
night

You’re involved in this at such a high level. It’s actually a unique conversation. You mentioned going international to secure an insurance policy. Who would ever thought something like that would happen? When you’re seeing these kind of pressures occurring, are you thinking about, well, what’s the timeline to this happening? And are you thinking of contingencies, including we have to go out of the country to look for insurance?

Or is it you kind of reacting to once it already affects your business?

Mark Shuler (18:15)
By the time you react, you’re cooked. You gotta be out in front of it. You have to, I mean, that’s where experience comes in. And look, we lie awake at night worrying about this stuff.

You know, right now seems to have stabilized a little bit, a year and a half ago. It was terrible. You know, I have friends who, acquaintances I should say, bought at the exact wrong time in New Orleans. And, you know, they were getting insurance quoted at like 850 bucks a door, went to 2,500 bucks a door. A door. You know, and that’s for an apartment complex. And they didn’t under…

So, and you can’t cut costs fast enough to kind of make up the added expenses in a way. So you’re upside down.

Dylan Silver (19:08)
I mean, with some of these things, I mean, certainly it does feel like we’re experiencing maybe more of them. know, L.A. fires and then, you know, insurance costs. And then we had, you covid. How do you I mean, was it even possible to see a situation like a covid? I don’t I don’t think maybe. I don’t know. But how do you pivot when you’re in the middle of that, especially when you’ve got so many doors and now people have like a moratorium on rents and so on and so forth. But investors are still expecting a return.

Like what, what happens? Like what is the, what are the conversations between someone like yourself and the investors? I mean, of course they’re wanting to see a return, but at the same point in time, you know, you’re kind of at the behest of the government.

Mark Shuler (19:52)
Yeah, I do a lot of things. ⁓ First of all, if you underwrote your deal correctly and you created value, I mean, we’re deep value ad guys, so we’re doing a lot of construction. And, you know, we’re moving the NOI needle way north on these projects. And so we’re creating, I mean, and the nature of a big deep value ad like that is that it works in up markets, it works in down markets, it works in sideways markets, but it works if you do it correctly.

And so we’re generating enough income to pay distributions. Now, did we have to cut distributions? Yes. And was there one or two quarters where we couldn’t afford to pay distributions? Yes. But those distributions accrue. And so we’ll make people whole, but you have to be able to kind of pivot very quickly and get out in front of this. And finally, you know,

What a lot of deal sponsors don’t do is communicate with their investors. I just have a fanatical need to keep my investors in the loop. so, you know, like in the middle of the pandemic, one of our deals, we just couldn’t pay. And so we had to, I spent three weeks writing a letter to all my investors and just explaining where we were. you know, CDC issued this unconstitutional nationwide eviction

Dylan Silver (20:55)
Yeah.

Mark Shuler (21:20)
know, moratorium and then, you know, and then you got into like people not being able to pay their rents we can’t get them out of the units. And so we’re like all of a sudden upside down. And so you’ve just got to like grind through. We did not lose any of our deals. We were able to, you know, start up at distributions again, post pandemic. And lo and behold, we were able to, you know,

Dylan Silver (21:33)
Yeah.

Mark Shuler (21:49)
start evictions again, the eviction process. If you don’t think people were gaming the system, yeah, they’re not paying their rent, but they’re driving in with 70 inch flat screens. ⁓ So we got a lot of non-payers out and ⁓ kind of got things ⁓ on the right track again and the deals are working fine.

Dylan Silver (22:00)
Yeah.

Now, I mean, from a much smaller standpoint, people always say, you make your money on the buy, right? But when these big events happen, like, like I said, they seem to be happening more. It does affect even, you know, the psychology of the smaller investor, I can imagine it may affect, you know, you when you’re when you’re looking at these deals, maybe people are maybe less aggressive than they were beforehand. And they’re thinking, well, what if this happens? Again, what if some iteration of this?

Mark Shuler (22:20)
yeah.

Dylan Silver (22:42)
happens again. So then you’re having to kind of adjust and realize, well, we have to actually have more buffer in case you know, what I don’t even know what right? Who knows what could happen, but we have to have this buffer set aside. Because we can’t be in a situation where we’re accounting for all of the investor capital right now. And then something happens. And now we’re in the red tremendously.

Mark Shuler (22:44)
Yeah.

Yeah, what you’re describing is the bid ask spread. And, ⁓ you know, that has been far apart for years now, ⁓ certainly past in the post pandemic era. That bid ask spread has been consolidating. ⁓ At one point, there was like a consistent 20 % spread. Now it’s down to like six or 7%. And even then, we’re trimming back our offers even more. As you said, you make your money on the buy.

You can’t overpay. And with these Black Swan events and interest rates and the bond market and all this uncertainty coming out of it in Washington, I mean, you’ve got to evaluate your deals on a risk reward continuum. And I’m not in the business to be a nonprofit. And I have investors. I got to pay in distributions and returns too.

So yeah, I mean, we have to like stick to our financial fundamentals and underwrite our deals very carefully and make sure that we do not overpay.

Dylan Silver (24:11)
I want to ask you a pivot here, Mark, and talk about two subjects, but first land. think I’ve had a lot of investors, including today, talk about land deals, land deals. as someone who’s a wholesaler myself by trade and then looking at the landscape for fixing and flipping and seeing that the margins are slimmer, new builds seem to be the way to go for smaller investors.

And I also think that there’s a lot of opportunity potentially for maybe some alternative housing or affordable housing to go up and land in general. I’m bullish on land in general. I’m curious to get your take on on land in general.

Mark Shuler (24:55)
You know, they’re not making it anymore. And, ⁓ you know, if you can figure out where the path of progress is and get out in front of it, your greatest profit opportunity in any development deals in the land. what you have to do is develop shovel ready land. So you buy the land and then you do all the civil and infrastructure, get that ready and then sell it to one of the big boys like toll brothers or.

can’t remember all the national home builders, but they’re always out there prowling around for shovel-ready land. So if you can do that, that is where you’re make, you know, gobs of

Dylan Silver (25:35)
I also, I also want to ask you about AI. That’s a big topic, right? In real estate. And certainly I can imagine investing, but also in architecture, right? I mean, it’s gotta be just a massive impact on the field of architecture in general. I can speak actually outside of here. I’m a software engineering student and AI really kind of took off sometime in the last 18 months to where most of what we were doing is now kind of like, you don’t even need software engineers. So we’re all kind of.

Mark Shuler (25:59)
Yeah, it did.

Dylan Silver (26:05)
here thinking like what are we actually doing here you know some me basically anybody can just ask ⁓ prompts to write code and write the code how how is this impacted architecture and ⁓ is is it been a huge disruption

Mark Shuler (26:23)
where I’ve seen it…

First of all, I’m not an expert in this. You’d think I would be, but I’m not. I primarily do a lot of urban infill stuff. And people’s notion of AI and architecture and engineering is you just click a button on your keyboard and the next thing you know, the AI has designed the whole building for you. It doesn’t happen that way. Yeah, I don’t see it happening that way.

Dylan Silver (26:49)
It’s not there yet, yeah.

Mark Shuler (26:55)
But where I have seen it become really effective, for instance, ⁓ one of the areas anyways, ⁓ is ⁓ plate plans for office layouts. You can have an AI generate three, four different layouts ⁓ for a plate plan. That’s pretty effective. And they can do it. It can do it really quickly. your client can look at it in real time and pick door A, door B, or door C. ⁓

Dylan Silver (27:05)
Hmm.

Yeah.

Mark Shuler (27:24)
That’s kind of the low level stuff of what I do. I mean, I used to design plate plans for offices and it’s not that hard. So, but what I do are very complicated. You know, I do a lot of houses and especially these, you know, where I live throwing a million bucks at a house is nothing. I mean, to remodel it, those are really complicated remodels and

Dylan Silver (27:45)
Yeah.

Mark Shuler (27:53)
We are engineering for a 9.0. so intuitively understanding how you’re in schematics on a structure, what the structural implications of that are at the inception of the project. It’s not something that I’ve seen AI quite master yet. And also, mean, ⁓

Dylan Silver (28:14)
That’s good.

Mark Shuler (28:19)
It’s not like an AI bot can go out and become a licensed architect. So I kind of have job security ⁓ given what I do as long as I want to do that. That said, I use AI all the time. I have a professional subscription to ChatGPT. I use that thing all the time. I’ve got three things crawling around the background right now that are going to be delivered in four days. So it is…

Dylan Silver (28:44)
Hmm.

Mark Shuler (28:47)
Crazy. I started using Chad GPT at 1.0. It’s up to 4.0 now. The progression in two years is nuts. is scary nuts. And I was reading two or three weeks ago that there was some group, they were building their own little AI thing and that AI thing started extorting the engineers. Did you read about that?

Dylan Silver (28:51)
Mm-hmm.

is nuts.

I know.

haven’t heard of this iRobot scenario, but that is concerning.

Mark Shuler (29:19)
Oh, yeah, no, it’s saying,

oh, we’re gonna and it’s just making this stuff up.

You know, I hate the way chat GPT writes. I just can’t stand it. I mean, it’s got lots of tells, you know, and so I’m forever telling it not to don’t do that. Tell it likes to write and then put a dash, you know, when it’s like got an intro and then a conclusion and it’ll put a dash there. It’s like, don’t use a dash, use a comma, you know, and so, but then, you know, I wrote this thing and then told it to adopt my article. I wrote a 13 page kind of mid year report and another thing recently and.

uploaded both of those. said analyze it and saved that as my voice and tone. And it was scary accurate. Now it cranked up. Yeah. Yeah.

Dylan Silver (30:06)
It was able to replicate you. Yeah, this

stuff is amazing. I’ve seen so many of this. And it’s good to know that it’s not going to take over architecture. But I mean, certainly in a lot of other areas, you’re seeing it just take over. So we’ll see what the next couple of years look like. we are coming up on time here. If folks wanted to learn more about your business or maybe get in contact with you, what’s the best way where they could learn more or reach out to you?

Mark Shuler (30:12)
not.

Yeah, I’ve got a couple of addresses. You can just email me. It’s either mark at Schuller architecture calm and Schuller is shul er there is no C and Schuller. I’m on the real estate side, you can use the other one but you can also use invest or at s g r e investments, plural calm. I’m in front of this box all day long and generally respond to email.

Dylan Silver (31:03)
Mark, thank you so much for coming on the show here today. Congrats on your success and to your continued success. Thanks for coming on here, Mark.

Mark Shuler (31:13)
Thanks for having me.