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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Michael Stroud, a seasoned investor and real estate professional. Michael shares his journey into real estate, starting from a young age with a small investment that led to a successful career in construction and property management. He emphasizes the importance of building relationships in real estate, surrounding oneself with smarter individuals, and fostering ethical partnerships. Michael discusses networking strategies, marketing’s role in business growth, and the significance of buying properties at the right price. He also highlights the fulfillment he finds in helping others achieve their investment objectives and the value of mentorship. His approach is centered on connection, ethical investing, and delivering long-term value to investors.
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Investor Fuel Show Transcript:
Michael Stroud (00:00)
Yeah, so the first piece is the thing I tell everybody, I say it 10 times a day, if not more, it’s on my website, it’s everywhere. If you don’t buy right, you can never sell right. There is absolutely nothing you can do in a transaction to make up for bad purchase. So if you purchase the price too high, even just a little, you will never make it back anywhere.if you don’t buy right, can never sell right. Like, I should have it tattooed on me. ⁓
But then I would also say, you know, being in business with good, honest people. ⁓ I’ve gotten out of plenty of deals and business partnerships and relationships and bought people out and been bought out because I did not agree with the business ethics at the time and honesty. And if you have to question yourself too many times, just move on to the next one. ⁓ Even if you, you know.
lose some short-term money, the long-term is much better to be with good, honest, ethical people.
Michelle Kesil (02:35)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Michael Stroud, who is an investor and real estate professional as well as owner of a construction company. So, excited to have you on the show today, Michael.Michael Stroud (02:54)
Yeah,excited.
Michelle Kesil (02:57)
Awesome. Yeah, I think our listeners are really going to take something away from how you’re approaching your relationship based business and all of your investments and real estate endeavors. So let’s dive in.First off, for those not yet familiar with you and your world, can you share what your main focus is?
Michael Stroud (03:20)
Yeah, so I kind of have a careeron three things. So construction and real estate direct investment and ⁓ helping other investors acquire and sell real estate. So those three things ⁓ kind of all work together. I’ve been an experienced investor and which helps me advise other investors, but also, you know, we can identify, generate a, you know, immediate
⁓ scope of work and based on experience and then help sell the property for a profit, whether that’s for rent as an income generator or a flip.
Michelle Kesil (04:07)
Awesome.Michael Stroud (04:07)
And we’re righthere in Detroit. So Metro Detroit, Southeast Michigan is really the large bulk of my business. But I’ve done deals with investors from all over the world. I’ve done a deal with investor from Dubai, China, Ukraine, ⁓ all over the United States. think we’ve dealt with investors in most every state at this point. So ⁓ kind of a global reach, but local expertise.
Michelle Kesil (04:36)
Awesome. How did you get started as an investor?Michael Stroud (04:41)
So I kind of knew always this is what I wanted to do. And when I was 18 years old, fresh out of high school, I borrowed $2,500 and I bought a foreclosed empty infill lot, 40 by 120 foot lot in Ferndale, Michigan, real estate market. I saw a lot of upside in that lot.So I borrowed $2,500, bought it and…
I’ve had great plans. I was gonna build on it. It was gonna be a great property. I was gonna start spec building houses. No one wanted to lend me the money to do that. So I turned around and sold the lot for about $30,000. I paid my investor back triple his money, paid the taxes and have been turning that profit about $20,000 ever since. So I’m just gonna use that to…
keep reinvesting and building ⁓ a portfolio.
Michelle Kesil (06:28)
Awesome, that’s so cool. And your construction company and brokerage were built off of that endeavor as well.Michael Stroud (06:37)
Yeah, so I, ⁓ my brother started a construction company when I was still in high school, he’s my older brother. ⁓ And then I bought his partner out about that time when I was 18 years old, his original partner, and he parted ways. And so we had a contract to do a lot of foreclosures coming out of the 2010 foreclosure crisis. And so we learned a lot about quick flip properties and we learned how to do it on someone else’s dime.So ⁓ we’ve taken that experience and built kind two wings of the business. My brother runs the customer construction home, you know, $2 million custom, beautiful homes. And I handle the spec, ⁓ you know, investor side. So we go in, we have crews ⁓ that go in and can do everything very quickly, you know, and efficiently exactly how an investor is looking to do it to, you know, deliver that value.
Michelle Kesil (07:39)
Amazing. What are some of the keys that have allowed your business to be able to grow and to continue to run smoothly?Michael Stroud (07:49)
Yeah, so I pride myself on relationship building. I am just a relationship business person. I’m always on my phone. I prefer a call to a text because I’d rather the human connection. So I talk to people all day every day. I’m the easiest guy in the world to get a hold of. And ⁓ as a result, I’ve built a relationship based business in all aspects. ⁓ so whether that’s someone who’s, you know.selling a property, to buying a property, to looking for someone to partner with on investment, finding, you know, asking me quickly for a scope of work or, I just need a plumber to fill in here because this is my guy, you know, ditched town, whatever it is, I’m here to help. And there’s not always a direct result in, you know, there’s not always a transactional benefit in that moment. But in the long term, I believe there always will be. Right. So if I can help anyone out all the time.
⁓ and keep the market moving, keep people, good people doing good business, then I believe that it all comes back around.
Michelle Kesil (08:56)
Yeah, absolutely. Relationships are everything in this space.Michael Stroud (09:00)
Yes,that’s all I have. I don’t have some magic bullet. I have some great marketing strategy. There’s nothing. is truly just a relationship-based business with me. ⁓ People joke, like, you seem to know everyone. I make it my job to know everyone. ⁓ that’s where my passion is, is to know everyone, to serve the industry, and to do it well.
Michelle Kesil (09:30)
Is there like a specific networking strategy that you have? Whether that’s going to events or cold calling or how do you get these relationships?Michael Stroud (09:40)
Yeah, so I started off with mentors. I had some really awesome people early on in my career that are big investors, big developers, guys. really had no, if I was smart, I would say I have no, I don’t deserve to be in the room with these people, but Ithink I had enough ego and not enough fear, so I put myself in those rooms. ⁓
and then kind of over and over again, I just put myself in the next room, right? You don’t have to be the smartest one in the room, you just have to know who the smartest one is. And I learned that and kind of have lived that. And I’ve always tried to smart rooms with smart people and
Michael Stroud (10:59)
Yeah, you don’t have to be the smartest. You just have to know who the smartest in the room is, be able to find that. So I’ve always just kind of found myself into better rooms all the time. sit on the board of a credit union, tried to help out with nonprofits and other groups and stuff just to put myself in better and better rooms ⁓ with smarter and smarter people. Do that well, listen more than, you know, I listen more than I talk. And that’s resulted in…a lot of good relationship building, good introductions.
Michelle Kesil (11:32)
Yeah, definitely that’s great advice for people that are maybe afraid of getting out there.Michael Stroud (11:39)
Yes, yeah, and I don’t, I’m not afraid of, like, I’ve never spent a ton of time with, the headset and cold calling, because I don’t think it’s, like, the most personal way of doing it. But when I’ll call someone cold, I’ll ask to sit down or to set up a real meaningful call. I want to listen and learn and develop relationship, not go right to transaction.Michelle Kesil (12:04)
I think that value add is really important and takes things further.Michael Stroud (12:09)
For sure.Michelle Kesil (12:12)
What are you most focused on solving or scaling to next for your business?Michael Stroud (12:18)
Yeah, so for the first time in 13 years really, we’re spending some money on marketing and ⁓ coming out with like our custom, you know, personal app ⁓ in our business so that, you know, our partners and our clients can have first access to things that they’re not getting anywhere else. ⁓ Spending money on marketing and all of the tools. ⁓ I’ve never spent money on those things and, you know,I’ve always said, that served me well, but I think I’ve left money on the table by not ⁓ putting some gasoline on it. So we’re throwing gasoline, going into a good buyer’s market.
Michelle Kesil (13:03)
Definitely. And is this marketing geared towards like the brokerage or yeah, what does that look like?Michael Stroud (13:11)
Yeah,so it’s geared towards ⁓ really two ways, Like we’re trying to, again, build as always building a deeper bench of investors and real investors, right? We have to weed out the people who aren’t real or just talking versus the people who can close and make deals. ⁓
Then also to the seller, right? There’s a lot of marketing that has to happen to sellers in order to go find good deals. And I think good deals are gonna be plentiful, but finding them is going to be where the real work has to happen. So I’m excited to kind of pour that money into finding those off-market, know, don’t call them distressed, like under duress sellers.
⁓ that may have been laid off for a while. ⁓ Works a lot of that and can’t afford their mortgage payments anymore. So avoid foreclosure or avoid tax problems. Avoid all of that because they can’t refinance right now. And ⁓ really try to help get them in a position and connect, on my end, connect them with an investor ultimately or purchase it ourselves. And we’re looking to do.
100 deals like that this year. Just like that. There will be a lot of other deals that happen too, but we have targeted 100 deals that way this year.
Michelle Kesil (14:45)
Awesome. And for your own investments, are you also partnering with outside investors or are they separate?Michael Stroud (14:52)
Yeah, no, I partner with outside investors. I’d rather have a smaller percentage of a lot more than control everything.So partnering with outside investors, we have kind of some personally, we have more targeted criteria. There’s a couple of neighborhoods specifically that we’re looking at. I like to follow all their people’s money. I didn’t mentor to tell me once, universities.
and institutions that are not, you know, like hospitals and stuff, like go build around them, invest around them because they’re not going anywhere. ⁓ So we’re making some investments around hospitals right now because they’re investing large amounts of money. And I don’t have to invest $2 billion to invest a couple hundred thousand next to them and benefit from their $2 billion investment.
Michelle Kesil (16:28)
What would you say your goals are for where you want your business to head to?Michael Stroud (16:37)
Yeah, personally, we’re looking at flipping ⁓ a good number. We don’t have a set number that we want to hit. It’s more of a goal of return. We’re looking at end of year quarter of a million dollar ⁓ profit after everything, like truly to the bottom line, just in flips. And then the goal is to get to the money while you sleep, right? The cash flow.Everyone wants to work when they want to work, how they want to work, not be told, not have to wake up and have to work. ⁓ we’ve got a pretty substantial monthly ⁓ return goal to get us to the point where it’s money will always sleep.
Michelle Kesil (17:27)
Absolutely. That is most of everyone’s goal.Michael Stroud (17:30)
Yeah,that’s everyone’s goal, right? Like, how can I not worry about getting up and working for my money? How can I just sleep and wait for the check to come in? And that’s what we’re trying to do. And I actually like helping other people do that, right? I mean, my passion for this business isn’t a selfish one. It’s I really do like to help other people. I want to learn their goals, help them build on their goals.
Michelle Kesil (17:42)
Yeah.Michael Stroud (17:59)
and help achieve with them, it’s a lot more fulfilling. And I’ve learned that in the 14 years too. And I had a mentor tell me, he’s like, he’s a small part of a lot of deals, a lot of big deals, deals that have big headlines and big shovel, know, shuffle ceremonies and all of that. And he said, I’m a small part in a lot of deals and that’s really fulfilling. So ⁓ I heard that from a mentor and I definitely agree. It’s more fun to… ⁓to how to help more people for me and partner with more people than just rip profit in the short term.
Michelle Kesil (18:39)
Absolutely. Yeah, it can be tough to hold it all on your own.Are there certain requirements that you look for from the people that you partner with? Like what would make someone the right partner for you?
Michael Stroud (18:53)
Yeah, so ethics is a big one and I’ve lost, I’ve gotten rid of partners. know, ethical, know, shadiness, really high debt, like people that don’t really have any cash to play. And I know that that’s like, seems like a sexy thing these days ⁓ in the, in this world is like, I don’t really have any cash. I’m just, you know, investing in this kind of unique ⁓ way or whatever. ⁓I don’t really do business like that. I think there’s just a lot of unnecessary risk in that. I like cash. I like real transactability. And I think that that’s one of the things I look for is people that can do that, right? One of the things that scares me with individuals that are over-leveraged too, is that when they are over-leveraged,
it can make a deal go bad quick because all you need is a call. All they need is one call that they gotta get some money back in and then now they’re taking money out of a deal that ⁓ they shouldn’t. So I think over leverage can sometimes and often result in some bad decisions. So that’s something I’ve looked for. Ethics is a really big one. ⁓
And so those are kind of my two criteria.
Michelle Kesil (20:27)
Yeah, absolutely, that’s important. Do you have any advice for people that are maybe newer in the investing business, maybe some obstacles that you’ve overcome that looking back and hindsight you wish you knew?Michael Stroud (20:45)
Yeah, so the first piece is the thing I tell everybody, I say it 10 times a day, if not more, it’s on my website, it’s everywhere. If you don’t buy right, you can never sell right. There is absolutely nothing you can do in a transaction to make up for bad purchase. So if you purchase the price too high, even just a little, you will never make it back anywhere. So if you don’t buy right, can never sell right. Like, I should have it tattooed on me. ⁓But then I would also say, you know, being in business with good, honest people. ⁓ I’ve gotten out of plenty of deals and business partnerships and relationships and bought people out and been bought out because I did not agree with the business ethics at the time and honesty. And if you have to question yourself too many times, just move on to the next one. ⁓ Even if you, you know.
lose some short-term money, the long-term is much better to be with good, honest, ethical people.
Michelle Kesil (21:51)
Yeah, absolutely. That is good advice. I think those are important things to know. How can someone know that they’re buying at the right price? Like you mentioned your quote, but maybe like someone doesn’t know.Michael Stroud (22:05)
Yeah.Yeah, so I’d say, know, learn how to underwrite, learning how to underwrite your own deals is really important. And if you can’t do that, or if you don’t, you know, can’t get boots on the ground, if you’re investing somewhere that you’re not physically present, partnering with somebody who you do trust to underwrite the deal. And then when you underwrite a deal and you have a ceiling, just stick to that ceiling, right? Like don’t don’t let anybody or anything
bringing you over that price. Right? Like that doesn’t mean that’s necessarily like your first offer price, but your max offer. That’s, that’s, that should be your max, right? When you’ve decided that that’s your max walk away. If you, if the only, that’s the only other option to stay under it. ⁓ You know, the old Donald Trump art of the deal, right? Like, like be good at walking away from deals.
It’s really important to be able to do that. again, you can’t, our egos may tell us we can make up for it somewhere. ⁓ I have a better contractor. I can just get him to squeeze something out. It never works. I promise you it doesn’t work. It never works. Don’t do it. ⁓ Wherever that price is, don’t let anyone sell you. And one of the things that I do when I’m making deals with people is I tell them that when I’m trying to sell them something. So when I’m trying to sell somebody an investment property,
I am very upfront and honest with them. say, if you don’t buy right, you can never sell right. So if you tell me this is your price, and I know I can’t get it to you at that price, I’m going to tell you, and that’s okay with me. I’m never going to force another investor. I’m never going to ask another investor or another partner to go, even if it’s not how I underwrote it, it’s how they underwrote it, I will never push them past their own underwriting. ⁓ What you think it’s worth, that’s the number you’re going to…
let you stick to. ⁓ Because that’s, I fundamentally believe in that concept that if you don’t buy right, you can’t sell right.
Michelle Kesil (24:11)
Yeah, absolutely. Thank you for sharing that. think that’s helpful advice for people to hear. So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you?Michael Stroud (24:25)
Yeah, so my website is luxmichigan.com, L-U-X Michigan dot com, Instagram’s CEO Stroud, S-T-R-O-U-D. And I’m the easiest guy in the world to get ahold of. You’ll see my cell phone number on my website, it’s on my Instagram, it’s everywhere. That’s my direct cell. I don’t have some Google voice number that weeds out numbers, and I answer everyone’s phone calls. So call, text, I…promise you I’m the easiest guy to get a hold of. ⁓
Michelle Kesil (24:55)
Yeah, thank you so much. Really appreciate your time and your perspective. So thanks for being here.Michael Stroud (25:02)
Yeah, absolutely. Thank you.Michelle Kesil (25:03)
Of course. And for those listeners tuning in, if you got value, make sure you’ve subscribed. We have more conversations with operators like Michael who are building real businesses and see you on the next episode.
