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Show Summary
In this conversation, Michael Gray shares his unique journey as both an educator and a real estate investor. He discusses how he stumbled into real estate while serving in Alaska, transitioned from teaching to becoming a real estate agent, and navigated the complexities of the Arizona real estate market. Michael emphasizes the importance of building relationships and surrounding oneself with the right people in the industry. He also shares insights on shifting from flipping properties to investing in multifamily units and the challenges of ground-up construction.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Michael Gray’s Phone Number: (951) 370-0578
- Michael Gray’s Email Address: [email protected]
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Michael Gray (00:00)
No, not at all. It was 100 % by word of mouth and ⁓ I had to ask a lot of questions. It was crazy. I just showed up. very first stock just showed up. I had cash and I just showed up. Somebody told me this is where you buy them. So I go down there. I had a thousand dollars because that’s what they required back then to auction. had to sign in by hand and ⁓ then once I would buy one, I wouldjust find the right people and then I’d either go down and check on the job in the morning before work pretty early or after work I’d go check on the job.
Dylan Silver (02:08)
Hey folks, welcome back to the show. Today’s guest, Michael Gray is a California based educator and investor for over 20 years. Michael, thanks for coming on today.Michael Gray (02:19)
Hey, thanks for having me. I’m really happy to be here.Dylan Silver (02:23)
great to have you on here. And when we talk about ⁓ being an educator and an investor, was mentioning to you before hopping on the show here that I really like talking with folks like yourself because I think this is a segment of the real estate space that is not often highlighted that you can be, you know, a educator and an investor and you don’t have to pick one or the other.Michael Gray (02:49)
Absolutely, that’s correct. That’s right.Dylan Silver (02:51)
Now, getting into the real estate space, we were talking before hopping on here about how it was almost happenstance. You were in Alaska, of all places, and that’s how you made your entryware, got interested in real estate.Michael Gray (03:04)
Yep, I came across one guy in an area that I was serving in for my church there and he was actually a contractor working for a guy and we were just trying to serve anybody in the community to really know. I didn’t know what the guy was doing. And he went in there and he was drywalling a whole house and I just started asking questions. What’s this about? Well, there’s some guy’s investor. I’m going to help him fix it up and he’s going to turn around and sell it and make money. And I’m like, what?And, ⁓ and that was it. went home and started kind of researching it, looking into it. And I went to college and I had friends that were going to college and some really, really close friends that started doing it. And, they were contractors and going to school at the same time. I couldn’t believe the guy was doing the exact same thing. And I started asking him a lot of questions and, know, then I got married and moved away. And then one day I just showed up at an auction at a, at a courthouse and.
That’s where it went. It’s been wild ever since.
Dylan Silver (04:09)
Now was that auction, was that in California, was that in Arizona? I know you’re California by way of Arizona.Michael Gray (04:15)
Yeah, that was in Arizona. ⁓ I thought we would never ever live in California and just happen circumstance work wise, opportunity wise, we ended up in California. So that was in the early 2000s when I went down there and did that. So that was in Arizona. Yeah, that was great.Dylan Silver (04:33)
Arizona,I’ve had quite a number of guests from on this show from Arizona and all of them have been wonderful. I’ve never actually, I shouldn’t say never. I went to the Four Corners and Sedona when I was a young kid, but I haven’t gone as an adult. every guest that I’ve had from Arizona has been wonderful. I almost feel like Arizona is like, and I say this lovingly, so I hope I’m not offending anybody. It’s like country.
Michael Gray (04:45)
Yeah. Yeah.Dylan Silver (05:49)
Florida. It’s like there’s a lot of maybe retired people and they seem all to be happy and I’ve got lots of great stories from people on the show in Arizona.Michael Gray (06:01)
Yeah, there is a few retirees, but that’s all pretty much six months out of the year. Most of them come down in October and they hightail it out in April and they go back north to the cooler country. But Arizona’s a wonderful place and that’s where I’m still mostly active. I do very, very little in California. And I’m like you, I’m real estate agent in Arizona and California. I did them both, so it’s been kind of fun.Dylan Silver (06:16)
You knowOkay, so you became an agent at some point too. Walk me through that, because now I’m seeing the multiple different segments that you’re active in.
Michael Gray (06:37)
Yeah, so I don’t know what took me so long, but I was mostly an investor and I had a real estate agent friend and did a lot of stuff. And then it’s kind of interesting back when the economy took a real serious downturn in whatever it was, 2006, 2007, real estate kind of got a little, crazy for me there. And it was supplementing my income as a teacher. Cause you, you’re, you’re right, Dylan.Teachers, you you just don’t make it real well on a teacher’s salary. And so I decided to go get my real estate license and wouldn’t you know it, I got laid off as an administrator and was gonna be put back in the classroom and I just didn’t wanna do that. And so here I am getting my real estate license, getting laid off as an administrator. It wasn’t.
Dylan Silver (07:20)
Hmm.Michael Gray (07:34)
because of performance, they just got rid of me and two other coach friends of mine. We all got laid off the same day, walked into a district office, walked out, what are you doing here? Oh, I’m here for the same reason you are, probably that type of thing. It was a really, really difficult time. And I got my license and then two months later I got a job in California. So I didn’t really put my license in place until I got to California. And then I came to California and realized that…Dylan Silver (07:49)
Yeah.Michael Gray (08:02)
California was a little expensive and I came over as an administrator and making it work and I said why not? So I got my California license over here.Dylan Silver (08:11)
Now, when we talk about these segments, ⁓ Investor Arizona, courthouse steps, you have to buy it with cash, right? You can’t finance these properties at the courthouse steps, Active as a realtor. And then of course, you’ve got the education career. At that point,Michael Gray (08:19)
Yeah.Dylan Silver (08:33)
What’s your bandwidth? you looking at deals every day? Are you talking with clients? Is this something like when you have time that you’re doing? What’s the day to day like at that?Michael Gray (08:43)
Yeah, it was either early in the morning or at night. Now, interestingly enough, auction.com, know, some of those some of those websites like that weren’t really happening in the early 2000s, right? So where I was living at the time in a little place called Yuma, Arizona down on the Mexican border has talked about snowbirds are winter visitors. That place is hopping for winter visitors. But it was in the newspaper and I and I didn’t understand it.how it all worked until I was getting subscription to this newspaper and they actually had the houses that were gonna be possibly going up for auction. There wasn’t a website. There wasn’t websites to go check it out. So every day I would check the newspaper and then it would have an auction date, but I had to call a number, a phone number, and gave me a house number and sometimes they would be postponed a month or two months or completely canceled and so I’d have to keep
looking again and then sometimes you know my realtor friend would come across one and he’d call me say here’s a deal for you so sometimes it would be transactional but I did a lot of auction deals but you know what didn’t have a ton of cash at the time and so I was flipping as quick as I could you know turn around and get the cash and going again yeah
Dylan Silver (09:49)
Yeah.So.
How’d you learn to manage these flips? Did you grow up swinging a hammer? What was that like?
Michael Gray (10:43)
not at all. It was 100 % by word of mouth and ⁓ I had to ask a lot of questions. It was crazy. I just showed up. very first stock just showed up. I had cash and I just showed up. Somebody told me this is where you buy them. So I go down there. I had a thousand dollars because that’s what they required back then to auction. had to sign in by hand and ⁓ then once I would buy one, I wouldjust find the right people and then I’d either go down and check on the job in the morning before work pretty early or after work I’d go check on the
But I’m telling you, Dylan, you have to surround yourself with the right people or it could be really, really bad and people could take advantage of you. And most of my deals were so close. I can remember one time that I had a deal that was going to auction the next day. had a young daughter at the time, she was a baby and she just wouldn’t sleep.
Dylan Silver (11:24)
Yeah.Michael Gray (11:39)
And I hadn’t looked at this house and I stuck her in the van and said, come on, we’re going to go for a ride. And it was like a 25 minute, 30 minute ride to get her to sleep. And so I drive out andfour wheeling in our mini van to find this house out in the back woods. I found it and I bought it the next day at the auction, you know. So you just got to learn to navigate and make things work for you. you have got to have the right people. And, you know, I would clean up, do some other things, but
Dylan Silver (12:02)
Yeah, yeah.Michael Gray (12:09)
A hammer, no. Paint, no. You know, laying down tile, no. Yep, gotta have the right people to do it. That’s right.Dylan Silver (12:13)
how to have the right people around you. That’s the game.The ways that I’ve ⁓ been able to be most successful in the real estate space have not been through really brute force effort, although that has helped a lot, but it has been through a number of strategic relationships, really. Some them that I stumbled upon and others that were very intentional, but those have been
what have have really helped me the most. I do want to get a little bit granular here and ask about Arizona real estate and for folks who are out of state investors looking at places like Arizona or they’re
Arizona themselves. What are the markets you mentioned Yuma? What are the markets in Arizona that you’ve been active at and that you look at today?
Michael Gray (13:04)
⁓ I’ve been in the Yuma market. I’ve also done a little bit in the Phoenix area market. But the craziest story, I’m pretty much like I got a phone call this week for Tucson and I don’t know, know, the spread on is pretty good. So I’m gonna be doing a little bit of homework in that. But the craziest story I did is I went to this old mining town where my dad was raised once. I mean, it’s probably 2,500 people. And I actually went in and bought a Tenplex that he lived in.Way back in the 1940s. It was the craziest thing and where did I find it Dylan in like a wampum saver like a paper catalog where you sold cars or Household items and this just happened to be there. I don’t even remember how I came across all I know is in paper I called the guy and I went down and I bought it and that was probably one of the dumbest things I ever did was sell that thing because you know, it’s taken off price wise and and and the really
Dylan Silver (14:00)
Come.Michael Gray (14:03)
You know, the rentals were just fantastic. I mean, all it was was a shell. That’s all it was. And then I walked in and the house was so old that I could see on the bottom of the concrete where the walls went. I mean, there was no wood. There was nothing. It was just a shell with a beautiful metal house on it. I went in completely redid it. Yeah, it was pretty crazy.Dylan Silver (14:25)
Now, the multifamily space, going from single to multi, I think is more interested in this now than maybe times in the past because right now for flippers going in and competing with some of the builders, I’m licensed in Texas, right? And you’ve got builders that are putting up homes for $230,000. It’s hard to flip when you’ve got brand new homes that are at lower rates, that are brand new, right? That have the brand behind them.Michael Gray (14:50)
Absolutely. That’sDylan Silver (14:53)
corporate national brand and you’re a mom and pop flipper, it’s tough to compete with that. So people are pivoting into ground up construction if they can. It’s a totally different ball game, putting up homes and foundation versusMichael Gray (14:57)
Yeah.Dylan Silver (15:45)
flipping. And then they’re also looking at multifamily as well. And people will go into two categories. It’ll be the folks who are thinking like, well, if I’m doing one, I might as well do five or 10 or 20 or 50, right? The economy of scale.But then it’s also people who maybe have gotten burned in the single family space, either fix and flip or managing some type of rental. they’re saying, okay, maybe I’m out of this. So I’m looking at multifamily now. you’re looking at these multifamily deals today, is there any specific lens or exit strategy that you’re looking at? Would you be looking at a flip in multifamily? I know you mentioned holding onto that deal and wishing maybe that you had.
Michael Gray (16:30)
I won’t flip another multifamily deal. will hold on to it because it’s going to supplement my retirement income way better than I think a single family residence. And now this just for me. You talked about ground up construction. I’m on the last two years. I’m on ground up construction four and five down in Arizona. I’ve already built three of them. I’ve got one on the market right now. And then I’m going to be starting my other two here this month. And then I have an opportunity toto build a 12plex on a lot that I bought down there. if you’re asking me, ⁓ I want to find the right deal, but for the last two or three years, it’s been ground up construction for me. I haven’t done a lot of quick flips, and you’re right. I am not like the big real estate companies syndications, obviously, syndications companies, whatever, that are now offering lower rates to get people in their homes.
Dylan Silver (17:02)
Wow.Michael Gray (17:27)
I just went in and found a neighborhood and I bought five lots in that neighborhood. And now I’m just building and moving them and exiting them. However though, if there’s a good flip I’m gonna do it because I just love it. I just really, really love it.Dylan Silver (17:43)
Yeah.You know, when we talk about the new construction space, ground up construction, there’s a learning curve that goes along with it. And it’s everything from zoning and permitting to finding the right people. So then now you’re having like you have this on a flip, too, but on a new construction, even more, you’ll have like materials and equipment stolen. Right. And then there’s all this spinning plates in the air that you have to manage. Plus, now you’re managing like increased holding costs, potentially, depending on how
Michael Gray (17:51)
my gosh.Yeah.
Dylan Silver (18:12)
your financing, your lending is sourced. What was the learning curve like for you in the ground up construction space?Michael Gray (18:20)
Well, the best thing for me is, again, going back to finding the right people. I had a contractor who was actually my real estate friend down there in Arizona. And he went and got his contractor’s license, and he actually built the homes for me. So that has been a good thing, ⁓ a really, really good thing. It’s really made us work because he had his own stuff that he was doing, and I was doing my own stuff. But I also found ⁓ private investors.who I don’t know, you may be familiar with negative amortization, that he would fund my deals. I basically would buy the lots cash, you know, I’d buy them cash. And then he would fund my construction costs to it, but he wouldn’t want his money till the deal closed after I found a buyer. So that was a real benefit to me because I didn’t have to worry about a monthly payment. So if I were to go out and get a regular
private investor through a company, that would be a little bit different. So, because they would expect something every month, a payment every month. So it was really, it’s been a learning experience, but you’re right, dealing with permits, with again, going back to the right people, the costs of it. My suppliers would always say, hey, prices are little bit up. Like I just talked to one last week, goes, hey, prices are going down.
a little bit, so it’s gonna be good for ya. So you know, again, even the suppliers, down to the suppliers, you just have to find the right people. And, especially in ground-up construction, you need to get two or three bids, because there’s a lot of people in the business that are looking for work, and some of them will work with you and you’ll get a better price, but you have to be careful about that too, because they call it pricing out a bid, or pricing it out, or.
Dylan Silver (20:05)
Yeah.Michael Gray (20:18)
lowering your prices so much just to get the job and you know sometimes cheaper isn’t better. So you have to be kind of careful about that too.Dylan Silver (20:23)
Yeah,Everyone I’ve spoken with that has been doing this for some time has stories with contractors and you know, that’s a that’s a huge part of the business, right? It’s not just the deal itself. It’s the operator and their team. And I’ve seen that create distress in the single family space. Right now I’m seeing it create distress in.
Michael Gray (20:36)
Yeah.Dylan Silver (20:46)
multifamily, especially when you’re talking about rates that might have doubled over the last five years, material costs that have increased rents ⁓ in places like Austin, Texas, right, that have stabilized or maybe even gone down. And you’re dealing with kind of all of these different factors that could contribute to to a distressed operator. And that kind of makes for an interesting time. And in a lot of these spaces, ⁓ we are actually coming up on time here, though, Michael.Any new projects that you’re working on or any new homes that you’ve got on the market or where can folks go maybe to reach out to you as well.
Michael Gray (21:24)
Well, I don’t have a website. I want to talk about mom and pop, Dylan. There’s no website for me. But you can call me on my cell, 951-370-0578. Call me, text me, or even my ⁓ email is [email protected]. You’re welcome to reach out to me. I’d be happy if you have any questions or give me my own opinion and thoughts on things. You know, I’d love to build up my network.Again, mom and pop, very small, don’t have a big network, so be happy to help any way that I can.
Dylan Silver (21:59)
Michael, thanks for your time today. Thanks for coming on the show.Michael Gray (22:01)
Thank you. -
