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In this episode of the Real Estate Pros Podcast, host Pedro Pereira interviews Mike Harter, a seasoned real estate investor. They discuss Mike’s journey in the real estate industry, the challenges he faces in property management and construction, and the importance of building relationships in the business. Mike shares insights on navigating market volatility, financial strategies, and the significance of networking for success in real estate investing.
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Investor Fuel Show Transcript:
Michael Harter (00:00)
I did a lot of these deals with,dollars in my bank account.
I said yes to a hundred thousand dollar house when I was completely broke.
I called a friend of mine who had capital and said, hey, I found a hundred thousand dollar house that we should do. He says, ⁓ and he’s simple minded older fella. He goes, I’ll go have these with you. I got 50 grand.
And then I called a hard money lender and said, me and my business partner have a 50 grand down. We’re going to, we’re going to flip this house. So he loaned me the other 50. So my business partner’s half was my down payment. And then, I had a, even though I was a broker, I had a friend in the office, be my listing broker on this. And, and then we ended up just barely cleaning up the property and selling it to another flipper.
Pedro Pereira (00:18)
That’s great.Michael Harter (00:39)
for about $139,000. And my cut was $10,000. And it was in like six weeks, right? So I made $10,000 in six weeks, but you know what was better than $10,000? Cause that’s not life-changing money, that’s groceries and gas for a couple of months, right? ⁓ What was life-changing about that was that wholesaler, that broker, that hard money lender, that business partner.Pedro Pereira (00:53)
Mm-hmm. Very true.Michael Harter (01:03)
We’ve gone on to do millions of dollars in deals.Pedro Pereira (02:38)
everyone, welcome to the Real Estate Pros Podcast. I am your host Pedro Pereira and I’m joined by someone who we’ve been looking very forward to have a chat with. This is Mike Harter, who’s been making some serious moves in the real estate investing space. Mike, glad to have you here.Michael Harter (02:53)
Thanks for having me. Appreciate it.Pedro Pereira (02:54)
I think our listeners are going to get a lot of information and really be able to take away some really good nuggets of knowledge over here from how you’re approaching just real estate investment dealing with ⁓ all of the experience that you’ve had before in acquisition, finance, property management and construction management to be able to sort of put the whole picture together and give us some really good tidbits. So let’s dive right in. So first off.For the people who may not be familiar with your world, with your business, give us the short version, that elevator pitch that we want to hear. What kind of markets are you operating in? What are your main focus these days?
Michael Harter (03:31)
Well, like a lot of people, read Kiyosaki a long time ago and set out to build cashflow in the housing industry. so we’ve basically got a pile of two bedroom, bathroom houses in the Spokane area, a few out in Montana we’ve ventured out as regulations changed, but we’re really focused locally now. our goal is just…being a housing provider, taking unlivable houses, making them safe, and functional so that somebody can use them and building cashflow for my family. So yeah, that’s what we’ve been at. And we’re at 14 properties today. We’ve bought and sold them and built a stable little nest for us to be able to live the good life. It’s starting to feel that way, but it’s a long road to hoe.
Pedro Pereira (04:10)
Of course well it seems like you guys are definitely on the right path Could you tell me a bit about the experience that sort of led you here? Were you always into? ⁓ Into going to real estate I believe you mentioned you had some brokering experienceMichael Harter (05:10)
I originally approached the industry getting a broker’s license so that I could have a front row seat to the market. And I think that’s a great way for somebody to start. The brokerage business is harder than ever with how the Missouri lawsuits unfolded and just the ratio of brokers to deals in the market. It’s more challenging than ever, but it’s good if you go at it with the approach of, want a front row seat to the market.because what we’re really looking for as real estate investors is although we can target a specific asset class, we need distress. We need some reason why there’s a discount so that there’s an appropriate margin for us to try hard every day at this. so we’re looking for some reason somebody needs to sell quickly, some reason somebody needs to sell with creative finance.
because we can’t just go pay market for things and make money. And so because we’re looking for that, it changes the dynamic, it makes it a people business. But yeah, we’re always hunting, it’s like we’re sharks looking for distress, but if you’re gonna make a deal work, it’s like you really gotta understand people’s problems with their real estate, you know,
Pedro Pereira (05:57)
course.Mm-hmm.
Michael Harter (06:16)
Everybody knows real estate’s expensive. They could just go to the market. So why can I buy any houses? You know, it’s like if I can’t be creative and pay attention to people, I’ll never have any success. So that’s what my business has developed into is just trying to sit with sellers and figure them out, you know?Pedro Pereira (06:21)
Exactly.That’s great. No, I love to hear it. Definitely relationships and people really drive this business as much as we think that just the properties do or just that the capital does. You really have to be able to create those sort of relationships to drive yourself forward to both learn and to execute. So it’s great to hear that with both your experience and everything you were able to ⁓ create what you are doing today. And what really caught my attention is the amount of experience that you’ve had to be able to bring into all this with both property and construction.
the world. through and outsourcing that. So that’s not very easy to do, especially in this climate. I just wanted to ask how is it that you’re able to keep things running so smoothly with the chaotic world that we’re living in today?
Michael Harter (07:14)
Well, the truth is I’m not, it’s not smooth. It’s just, there’s a hundred problems to solve every day. ⁓ It’s just, I just got to be ready to roll with it. I didn’t think on this, this current house we’re working on, ⁓ it’s like I designed that cabinet pack four or five times. took seven hours. It took seven hours of struggle and figuring out how to trim out the transitions and how to not have conflict in the design. And that’s something thatPedro Pereira (07:17)
Mm-hmm.Yeah.
Michael Harter (07:39)
It’s easy to overlook the details. But yeah, it’s a detail oriented business because if a cabinet drawer opens into a door jam, right? And you have a non-functional house, you don’t have a sellable product. You have a tenant that hates you or a buyer that discovers it later. What an asshole. it’s a, you have to, and yet we do.Pedro Pereira (07:58)
OfMichael Harter (08:03)
none of my houses are perfect. They’re still old, even though we fix them a lot. And so, yeah, it’s actually just a constant struggle. When it’s a big business, we deal with a lot of problems and we just have to stay rolling with it. The finance category is not easy. Hard money is, it’s very squeamish as it should be because the market’s going down.Pedro Pereira (08:09)
Mm-hmm.Mm-hmm.
Michael Harter (08:27)
And so who’s gonna loan me on my next project? If the deal’s good, there’s always somebody to loan it. But ⁓ it’s the same as it was in the beginning. I have to go pitch to a hard money guy, I can make money on this asset, stand up straight and pretty please give me a loan so that we can do more business. It was like that in the beginning and it’s like that again today.Pedro Pereira (08:28)
Sure, exactly.Mm-hmm.
Of course so.
Yeah. Yeah. No, I-
Michael Harter (08:50)
But I have watched that runin a cycle too, because the hard money people, you do a successful project, return their money, and they actually have frequently called me and like, when are we doing another deal? And so that’s a good position to be in.
Pedro Pereira (08:53)
Mm-hmm.That’s
good.
Definitely, that building those relationships and making sure that like you said keeping a happy tenant a happy client Making sure that you deliver the product as it’s supposed to be delivered So we touched up a couple of construction issues that were going in and a couple of finance ones You know when could you go through maybe an experience that you had when sometimes you know things kind of got real when you really had to deal with a With a challenge that sort of threw things sideways or where you had to pivot fast It’s a lot of good ⁓ information for the listeners to be able to
to learn from the problem solving.
Michael Harter (10:11)
Gosh, seems unexciting, but let me just try to contrast between two. I think a lot of people approach real estate thinking that the four major categories that I have to be well-versed in the acquisitions, finance, construction management, property management, I need to always be cultivating these skill sets.Pedro Pereira (10:29)
Mm-hmm.Michael Harter (10:30)
And I think a lot of investors, approach, okay, I’m gonna set up a rental house so that my family has some long-term cashflow, right? And they try to delegate one category. They underestimate at least one or two categories. every one of them, a failure in any of them is the whole deal goes belly up, right? And so, but what makes you fail, it’s not exciting details.Pedro Pereira (10:44)
Mm-hmm.Mm-hmm.
Michael Harter (10:56)
Like we just, I just bought, uh, 800 square feet of flooring for this house and tending to do one product throughout and carpet in the bedrooms. And the guys that I hired, they started running that flooring product because I failed to communicate. They started run that floor flooring product into the bedrooms. And now that product’s discontinued and we had to adapt and, uh, change over our kitchen to a different flooring product. There’s a thousand dollars we didn’t anticipate. And, uh,Pedro Pereira (11:06)
Mm-hmm.you
Mm-hmm.
Yep.
Michael Harter (11:22)
Causewe want to use higher grade products in the main living areas. And so it’s these little non-exciting things that just eat you alive when you have a miscommunication, when the plan doesn’t go according. and, and I’m responsible for all of that. know, nobody, nobody’s to blame, but me being asleep at the wheel, you know, me not being perfectly present in construction management can cause can that’s thousand dollars. Well, that’s a huge percentage of the budget.
Pedro Pereira (11:26)
Mm-hmm.Yep.
Michael Harter (11:46)
And it’s just these non-exciting things that we take for granted and just drive a whole project of failure. And we just got to be committed to survive and figure it out. And okay, where are we at now? And keep navigating forward. but yeah, it, it’s really unexciting. The finance is a lot more interesting to me. The market and the finance, it’s like, I have spent a lot more time.Pedro Pereira (11:59)
That’s definitely the right mindset to be in.Mm-hmm.
Michael Harter (12:09)
researching markets and knowing the loan products over the years and you know largely neglected to be as present as I should be in in construction management and so it’s like but it’s like it’s a teeter-totter right if I buy a house cheap enough and and I am and and I just totally wing the construction well it’s a green number at the end of the day I win I get likePedro Pereira (12:18)
Mm-hmm.Yeah.
Mm-hmm.
Yep.
Michael Harter (12:31)
a hero’s welcome, I come home profitable. But it’s like, that’s just doing really good in one category and bad in another. Well, as distressed homes get fewer and far between, we get competition for distressed homes and people are paying more and more for them. Cause everybody watched Property Brothers yesterday and wants to be a flipper today. And we’re all competing with that. It’s like, we have to be holistic in our approach in order to stay in business.Pedro Pereira (12:39)
soon.Michael Harter (13:37)
And so, yeah, I’m learning those boring little details.Pedro Pereira (13:37)
Yeah? Yep.No, yeah, that’s definitely.
That’s definitely the kind of stuff that people do not talk enough about. So, you you mentioned that it was, it was the boring stuff, but that’s, those are the things that really can delay projects. They’re the things that people sometimes miss in the details. It’s, it’s not all exciting. It’s not, all, you know, big Hollywood movie red carpets. So you got to go through the mundane things to be able to get the business done, to be able to get the job done. And focusing on that is something that really, I believe separates folks who just sort of dabble in the market versus the ones who actually stay in the game longterm. So very.
Very insightful for that. I wanted to ask you this for your business, know, dealing with everything that we’ve been talking about, what is it that you’re most focused on solving next? What is the next, you know, real goal for you and your company?
Michael Harter (14:24)
want to, ⁓I wanna survive and pay attention, right? That’s the, right now I’m at a place in my life I could highlight my wins, some of the windfall profits I’ve made and the really extraordinary deals that I’ve done. And I could get a stack of cash on Instagram and sell books, like I’m a made man and I’ve made it. That’s not the reality of the real estate business.
you know, what you see the gurus selling, what the, it’s so easy to come away from the closing table with a fat check, right? And be like, look what I did. You know, it’s so easy. it’s, there’s such a glut of that. And, and, and that’s not, it’s not realistic. It’s, it’s actually hurting people to the realities of this, this business. Just as far as, as far as for me, what’s
Pedro Pereira (14:55)
Yeah.Michael Harter (15:07)
What’s next? It’s a, we’re still in, in a rough market conditions, right? As things lean up, I want to just stay the course right now and continue to try to find a distressed asset. I still knock. I’ve been knocking on foreclosure doors for gosh, eight years, just going to the courthouse, getting the list, knocking on their doors. And it’s like, ⁓ I only need one home run a year.one like great real estate deal a year to just continue a trajectory to a great lifestyle and wealth and prosperity. The base hits along the way is what makes me eligible for that. So you cannot find those home, those, I’ve had a couple of deals where I’ve made a quick hundred grand. And, the only, the only way you’re ever going to find those is if you’re actively prospecting and, and you’re, you’re doing deals regularly. And so,
Pedro Pereira (15:37)
Great.Mm-hmm.
Michael Harter (15:53)
the base hits, small little, the little flips where I peeled out 20 grand. and that’s not, I would actually advise people saying that that’s not an appropriate profit margin for a flip. Right. It’s like every business has, if the profit margin is not appropriate, it’s too risky. Most flips, I could take them apart. Most flips that most people do that, that brag at the closing table. If we deconstruct those,Pedro Pereira (16:04)
Got it. Yeah.Michael Harter (16:16)
They’re too risky for too much risk for too small of a profit margin. And they should have got a job at less Schwab for that same duration of time. It would have been, it would have been better for them, but they, but they end up bragging at the closing table with a huge check, right? ⁓ And that that’s, I love to celebrate the wins and stuff. But yeah, we don’t want to doing those base hits is what makes it makes you eligible for the, occasional home run.Pedro Pereira (16:23)
HahahaYep. Yep.
Michael Harter (16:41)
the market serves up to you. And yeah, so it’s like I just want to stay the course and be more conservative in the coming year, but keep on trying to make deals, keep on prospecting ⁓ and survive.Pedro Pereira (16:49)
Got it.That’s good, especially with the volatility of the…
especially with the volatility of the market and everything, being able to survive and just keep going, doing what you’re doing well is honestly one of the best courses to look forward to. Not every time does someone need to be exponentially growing to be doing well. So that is a very real look at a business and what you could be looking towards in the future and just being able to be profitable, sustainable, and again, changing lives of the people that you can go into those foreclosure homes, seeing where you can have those houses flipped for, that’s really big. And especially when you got all the experience,
and the construction area that you go through and that you manage everything hands on as well. You’re not someone who just externally hires and makes sure that the other company did it and blamed them. You’re the one that’s there directly managing everything and that’s big. Now, I know that for a lot of people listening here, they’re either very early in their journey or they’re sort of looking to level up and I think that they benefit from hearing this. When it comes to building relationships and growing your net,
What’s made the biggest difference for you in this space?
Michael Harter (17:56)
I always say network is key. So I always say like my net worth is made up of four categories. Most people know that we keep score on money. And like there’s a whole, that’s a huge subject, know, assets, liabilities, accounts receivable. It’s three dimensional and complicated. Time is a very huge part of our net worth because how much time you trade for how much money, how much…How much do have to spend to maintain that financial net worth? But ⁓ the knowledge and relationships, that’s part of our net worth. That’s why like some of us who have built a good business, it’s like if I started over, it might go better for me if I started from scratch, right? Because of my knowledge and relationships. And so I wanna focus on everybody that does business around me winning. And this reminds me of a…
Pedro Pereira (18:20)
Mm-hmm.Mm-hmm.
Mm-hmm.
Michael Harter (18:40)
of a story. This deal I did about five years ago. A wholesaler came to me, I think this was in 2020. He said, got a house in this neighborhood. I knew the neighborhood pretty well. It’s $100,000. And I just said, yeah, I can do that. Like, I’ll buy it. And the beautiful thingPedro Pereira (18:54)
Ha ha ha!Michael Harter (18:56)
I did a lot of these deals with,I made all my best.
deals with
dollars in my bank account.
I I got grocery money, like effectively no working capital, right? So
Pedro Pereira (19:01)
Yeah.Michael Harter (19:06)
I said yes to a hundred thousand dollar house when I was completely broke.I called a friend of mine who had capital and said, hey, I found a hundred thousand dollar house that we should do. He says, ⁓ and he’s simple minded older fella. He goes, I’ll go have these with you. I got 50 grand.
And then I called a hard money lender and said, me and my business partner have a 50 grand down. We’re going to, we’re going to flip this house. So he loaned me the other 50. So my business partner’s half was my down payment. And then, I had a, even though I was a broker, I had a friend in the office, be my listing broker on this. And, and then we ended up just barely cleaning up the property and selling it to another flipper.
Pedro Pereira (19:22)
That’s great.Michael Harter (19:43)
for about $139,000. And my cut was $10,000. And it was in like six weeks, right? So I made $10,000 in six weeks, but you know what was better than $10,000? Cause that’s not life-changing money, that’s groceries and gas for a couple of months, right? ⁓ What was life-changing about that was that wholesaler, that broker, that hard money lender, that business partner.Pedro Pereira (19:57)
Mm-hmm. Very true.Michael Harter (20:07)
We’ve gone on to do millions of dollars in deals.And I’ve made so much money and any of those people, they will pick up my phone call and they’re excited to do business with Michael Harter. And that’s what I really achieved there. And the relationships are absolutely key. So everybody else winning is better than $10,000. That’s kind of the moral of that.
Pedro Pereira (20:18)
That’s fantastic.Wow.
I completely agree,
Michael. Relationships are everything’s
in this space and you really can’t fake the important ones to have those that you can keep going to and to even as you said starting from scratch for those of you who are out there you know connect with people build those relationships grow your network because as from the example that we see here they can lead to some great great things in the future and I wanted to say you know before we wrap if anyone uh out here wanted to connect with you maybe collaborate partner in any sort of business with you what’s the best way for them to reach you is it either linkedin
Michael Harter (20:49)
Mm-hmm.Pedro Pereira (21:00)
Facebook, phone number.Michael Harter (21:02)
Email address, michaeljharter at gmail.com. Yeah, I’d love to help anybody get started or collab on a deal. Let’s do business. I don’t if they got that.Pedro Pereira (21:03)
Email address? Perfect, we’ll make sure to have that for-Perfect. Well, listen,
I appreciate-
Of course. Thank you, Mike. I really appreciate your time here, man. Your story, your perspective. I appreciate you reach out to the listeners here. I’m sure that they’re going to gain a lot of benefit from your insights and being able to reach out to you. We definitely need more people in this space that are doing it the right way. And you are one of them, my friend. Thank you so much again for being here. For those of you tuning in, if you got some value for this, make sure that you’re subscribed and be sure to be ready for some more conversations as operators just as just like Mike, who are out there building real businesses.
Michael Harter (21:31)
Thank you.Pedro Pereira (21:44)
Mike, thank you so much for being with us.Michael Harter (21:46)
Thank you. It’s been a pleasure. Appreciate you guys.Pedro Pereira (21:48)
All right, we’ll see you guys on next episode. Thank you.
